Free software + embody ads model changes software piracy into FREE marketing and sales tool

I read Chris Anderson’s book  “Free: the Future of a Radical Price” and other reviewers’ responses.

It is a good book that analyzes the differences between 20^th century and 21th century’s concept for Free.

I am from China, living and working in USA for 9 years now. Before that, I lived in China. Every year, I go back home once or twice to experience and absorb the country’s developing, changing, including the concept for “Free”.

 Here I would like to share my view of how Chinese make profit from “Free” Software – the infamous Software Piracy. 

-          Software must be free in China

China is a developing country with big population but average low income.

In early 21th century, lots of software companies localized their software to Simplified Chinese to catch this potential and huge market.

Software piracy issue became the biggest headache for software companies to face in China.

If one person has a copy of software, everyone in the country will have a free copy.  

The price of one license of consumer software usually is a regular family one month to one year living cost.

If people can make a free copy why they would pay for it especially they can’t afford it?

The same situation happened in music, movie industry.

 

While the oversea software companies were fighting the piracy, local Chinese software companies gave up the pricing idea because though they charge 1$ on one license, there are still people will piracy it.

They admit the customers’ needs software should be free.

After fighting the software piracy for all these years, today we see free software model is becoming a global phenomenon.

-          How did free software make profit in China?

It is through embody ads, communities, online communities, branding commercials as well as selling the products from the movies, etc.

For example, we have a local software company called Jin Shan, literally means Gold Mountain. Jinshan’s main product line is English-Chinese software dictionary. It was priced very low initially; soon it became free to align up with piracy’s huge volume. It is now the biggest selling local software company in China.

Their business model is embody ads. It is a feature with build in commercials. The build in commercials will play in the bottom of the software user interface property with enough room while not disturb user’s main focus too much.

 

Every time the computer connects online, it will automatically update the ads just like every time you turn on the TV, you will see different ads.  

With this build-in ads model, the company can charge different price based on the sales number. Piracy is not an enemy anymore, because the more piracy, the more copies are sold. Piracy is a free marketing and sales for the software company. Piracy also offers free software for the customers. Piracy raises awareness for the commercial companies. All of sudden, piracy becomes our best friends!! Welcome software piracy!

In summary, the software is designed for FREE with build in commercial as main business model. This model proved to customers that software should be free. This model brings many ads company platform to walk into people’s life. This model brings software piracy become free marketing and sales.

Side business models are: online communities, co branding, subscription and so on.

Jinshan website is also an active online community for English- Chinese language related topics.

Many other online communities are created for discussing the company and their products.

JinShan also has an online translation website offer free online translation which is similar as babelfish.yahoo.com.  

This online dictionary attracted so much traffic.

Jinshan also offers free English-Chinese dictionary for cell phone to serve the big cell phone market offer mobility.

Study aboard is a hot topic for Chinese people who speaks English and use English-Chinese dictionary.  Jinshan website also created community for these people to chat and share their experiences of success or fail story of studying aboard. 

Commercials are all over these hot popular online communities.

Free subscription and premium subscription is another side business for Jinshan.

Co Branding is another side business strategy that jinshan is leveraging.

Jinshan is cobranded with many other companies includes Google to enhance their brand and raise awareness.

So in summary, software is always considered “Free” in China, because of that software is designed free. It is using build in commercial business model to reach big Chinese market very successful. 

Next time we will talk about Chinese movie industry. Movie industry has unique history and today it is rising from near death to top profitable industry by pass Chemistry and other major industry.

-  How did the movie industry rise up from the hit of piracy instead become the top industry in China today?

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