Saturday, October 23, 2010

FREE: The Future of a Radical Price and the Impact on Your Association

Session Review by Molly Lopez, CAE, Association Management, Ltd.
Excellent Content Leaders: John Crosby, CAE, VP Communications, Software and Information Industry Associations and Jeff De Cagna, Chief Strategist and Founder, Principled Innovation LLC

I attended the ASAE and The Center’s 2010 Virtual Conference and wanted to share some of my informal notes with AML’s client associations and staff team.

This unique session focused on the impact of “free” (information, products, and member services) on associations. The bottom line is, “abundant information wants to be free, scarce information wants to be expensive.” Free products MUST be high quality, so people who pay, pay for higher quality.

So, how is “free” changing the rules of the game for associations? It is all about the business model and innovation.

Three areas in associations:

Membership - What is the impact of “free” on dues-paying association memberships?
• Associations may need to be ready to consider moving in the direction of eliminating dues (only if is it not a large part of the budget). *Note: Do not just jump into this decision! Look at the business model of the association, financial status and projections, take a reasonable amount of time to research and determine if this is a beneficial decision.
o Why should I pay dues if I can get the information myself and if I can form my own relationships?
o Freemium – an option different layers of access to some level of participation, information or service. (This model is debatable but doable as long as value pricing is communicated.)
o What is the relationship we want to have with the stakeholders going forward? Psychology of Participation: I make the choice to identify with this association, once I am over the hump to join, be sure to engage me.

Education – What is the impact of “free?”
o Invest every drop of funds into education and content (real and virtual).
o Create incentives for people who want to connect in a live environment (free valuable content that is usually for sale, technology prizes – IPAD).
o Virtual conferences offer a “substitution effect” for a live conference (not a replacement). People will attend who want the valuable content, wish they could go to the live conference but can’t for some reason, and will risk getting some of the information versus none at all. It is not as likely that a first time attendee will select the virtual conference (although savings on hotel and airfare may be motivation).
o Webinars are used for more time-sensitive information and should be priced based on value of the access to information. It people can find the information elsewhere for free, it should be free. If not, it is a premium.

Publishing – What is the impact of free on magazine and book publishing?
o Most content developed through an association is an area where effectively there is money to be made.
o The mobile piece is disruptive to traditional information sharing, but can be an advantage if users still want the information and it can be combined into a format with digital access.
o Mobile adds a complex layer as we continue to determine what users need. (Mobile devices and don’t forget Kindles.)
o The generation of content (research) is not cheap. Licensing and selling of information to non-members may have potential of the content is worth it. Value to people who have chosen not to join, revenue for the association.
o The world will be less likely to use print for the future (environmental and digital purposes).

How can we make “free” an opportunity for associations? Build a new paradigm.
How can we use it to better do what we are currently doing? What is the next generation of stakeholders? Where are they coming from?

Consider strategic (trends) and business model (capture value) implications.

Business Model Elements:
Cost: Key partners, key activities, key resources, costs
Value: Customer relationship, channels, clients, revenues
Value Proposition: Combines both revenues and costs

Long tail companies: Amazon, Lulu, Netflix (sell popular stuff and niche stuff).
1. Head (popular)
2. Niche (content for small communities)
3. Long Tail (products for profit)

“Business Model Innovation” – An intentional effort to be “thrivable” (capacity to flourish by capitalizing on the powerful forces that are irrevocably reshaping our society).

Innovation should create value for stakeholders combine all three:
- Value creation (fuzzy front end, imagination, fill gaps),
- Value delivery (deliver, execution, right cost structure, understand dynamics)
- Value capture (stop thinking of ourselves as non-profit organizations – we are tax exempt organizations who must be able to profit, have to have resources to invest in the valuable services in your organizations – purposeful profit).

It is time to think about things in a new way. Thick value is deep, meaningful and enduring value created in a manner consistent with association’s organic purpose.

FREE is here to stay – think of how our competitors are using it, get the conversations started, look at existing business models (what are we giving away for free – is it valuable, is it enough)?