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I’ve touched on the “freemium” philosophy of giving some content away for free and charging for extras before, but here’s a post on AllThingsD with some interesting new findings touching on video gaming. It covers a study by Flurry, an analytics provider for mobile games on Apple and Android devices, on the spending habits of freemium gamers. (Found via Slashdot.)
Of the people who play freemium games on iOS or Android devices, the study reveals, most will never spend money on the games at all—only 3% are likely to do so—but within that 3%, the average transaction is $14 and more than 5% will spend more than $50. And less than 2% spend only 99 cents.
“Why then would so few consumers spend just $1 in freemium games when this price point is so popular among premium games?” [Flurry GM of Games Jeferson] Valadares writes. “Because freemium games drive a different decision-making mindset for consumers. They simply are deciding whether or not to spend.”
An earlier study showed that mobile games generate more revenue if given away for free, but this provides some additional information on why the model is so lucrative. And it seems to hold true for desktop PC games as well, given that that the ones that explore the model have found they are able to make considerably more money that way, and more and more games are heading in that direction.
Even my own favored MMO, City of Heroes, is adopting a freemium model, in which players will be given limited access to the game for free, and gain various perks out of paying money to play it. (Existing players are grandfathered into the perks system based on how long they’ve been playing, which makes me happy given that I’ve played it for a total of 69 months myself.)
There should be a way to adopt this idea to printed media. Giving away the first book in a series is an obvious answer, of course, and one that has been in practice already for some time (most recently by Amazon and Barnes & Noble, but going all the way back to Baen’s Free Library). But what about giving away a basic plain-vanilla e-book version and charging for one with illustrations, annotations, personalization, or other bonus features?
As for that video game study, the advice it gives to game designers is to focus on the “whales”, that 5% of 3% who pay $50 or more.
“If you’re a game designer, your main take away is that very few transactions — and consumers who complete those transactions — make up the bulk of your revenue. Therefore, your ‘meta-game’ should be about whale hunting.”
This puts me in mind of what Cory Doctorow and Seth Godin are doing with high-priced collectible print editions of their books, while giving away or selling cheaply the basic versions. As of June 13th, Doctorow had earned almost $40,000 out of just one of those projects, With a Little Help.
Perhaps this could be one way to go for publishers, too?
Just about all publishers provide sample chapters for free, which is a fremium option if you look at it that way. For adult fiction, I continue to believe that the words themselves are the premium content. All of that other stuff, pictures, drawings, author interviews, t-shirts, are simply fluff. The value is in the content, not in the packaging. I think that free first books in series can work… I’ve discovered several series I like this way, but not every book is part of a series and I’d hate for the world of fiction to become more series-centered than it already is (all we need in the Science Fiction world, for example, is to go from 50% star wars to 90% star wars, with all due respect to authors who write those books). I’d rather stick with affordably priced novels selected for their quality rather than because they can sell a later book in the series. Rob Preece Publisher, http://www.BooksForABuck.com
So what’s happening is that printed books are indeed becoming a luxury item, and are presented and priced accordingly. The actual text itself is sent down to the near-free level. Which is, frankly, the best anti-piracy measure you can imagine. Make the price so cheap that it’s not worth stealing! And, for the people who are willing to pay, give them something worth paying for.