Can you make money by giving things away?

I tried scuba-diving (in a pool) once and clearly remember how difficult it was to take that first breath. It wasn't logical - you're underwater so you can't breathe. There's a similar logic barrier to overcome amongst businesses today, who are considering giving away products that they've previously sold.

McFly for example, gave away their new album Radio:ACTIVE with the Mail on Sunday on 20 July. Radiohead did it recently with making their album available foc for download, and Prince did a similar thing last year. Business analysts are applauding this as a shrewd move. Bands apparently make most of their money from live performances and merchandising, so free distribution of an album will hopefully widen their fan-base and reach new audiences.

Changing and evolving business models gives customers more choice about how they use or buy services and products. Hosted business models, for example, where you don't buy software you just use what you need, when you need it, and let someone else take the pain of installation, management, administration etc, is a great example. Businesses are still making money from the software, but in a different way. And users can benefit from reduced overheads (in time, effort and money).

Hosted services, or Software as a Service (SaaS) allow you to dip your finger in the water without having to dive in - take Customer Relationship Management (CRM) software for example. You want to develop and strengthen your relationship with your customers but you're not sure if you want to commit to purchasing an application. Hosted services let you try it out at a level that you're comfortable with. You can learn more about Dynamics CRM 4.0 here, and more on hosted services in the Small Business ‘How-to-Buy' website here.

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