I’m not a big fan of most business or other self-help books. It isn’t that I don’t need help in the professional or personal facets of my life. I need at least as much help in both as most people.
I’m not a fan of most of those books because rarely can one of the 200 to 400 page books impart more wisdom than if the author had published the book in the form of a pamphlet. And it is likely that the writing in the pamphlet would be more engaging.
One of only a few exceptions to my disdain for business books is Chris Anderson’s Free: The Future of a Radical Price. I read it a couple of years ago but hardly a week goes by without me considering how our pricing model or those of other organizations stack up against the lessons communicated in the book. The book could be boiled down to a pamphlet but that would do the reader a disservice as Chris has an engaging, entertaining style of writing and he tests his theory against example after example with his theory usually coming out well but not always.
In short, Chris argues – and I agree – that in the long run the price of digital goods such as downloadable music or videos will or already have dropped to $0 and that the organizations which deliver those goods are actually better off by generating no revenue than if they stubbornly attempted to generate revenue from those transactions. If your organization delivers such goods without adding significant value in other ways then your customers will migrate to your competitors who will deliver those goods at $0. You may ask how any organization can survive if it generates no revenue. It can’t in the long-run but Chris isn’t advocating for the abandonment of revenue generation. Instead, he advocates for finding revenues from new sources.
As the founder of CollegeRecruiter.com job board, I’m all too familiar with the race to $0 as it is sometimes called. Since the job board industry came into existence in the mid-1990’s, there have always been many boards trying to succeed by giving away job postings. None have stuck to that business model in the long-term and found their way to sustainable profitability because they haven’t been able to find sufficiently large alternative revenue streams. Some job boards generate decent revenue by encouraging job seekers to sign up for information about continuing their education and then selling those leads to on-line schools but few job seekers are interested and the revenue per lead isn’t high enough for education lead revenue to offset job posting revenue. Other boards have tried giving away postings for free and instead charging job seekers but that business model falls apart as it relies on selling access to postings that candidates can find for free on thousands and perhaps tens of thousands of free job boards. These boards therefore rely on generating revenue from candidates who are misinformed, deceived, or both.
I believe that not only is it possible but likely that job boards will emerge which connect legitimate employers with legitimate candidates in a way that generates substantial profitability for the job board yet does not charge a fee to employers to post their jobs and contact candidates or to candidates to post their resumes and contact employers. I suspect that the business model which will emerge will be what Chris refers to as the “freemium” model, under which the board will provide a quality but basic level of service and charge a fee to those who want more or better service. An example that Chris uses is Flickr, the on-line photo sharing site. The vast majority of Flickr customers use the service for free but those who like the service and want more or better features pay an additional fee.
I first learned of SmartRecruiters shortly after reading Free and immediately was struck by how consistent the business model of SmartRecruiters is with the model advocated for in Free. Virtually all other applicant tracking systems generate their revenues by charging licensing, consulting, or other such fees to their employer clients. Not SmartRecruiters. Instead, the wise folks at SmartRecruiters realized that they could make more money by giving away their ATS for free to the employers and instead generate revenue from other sources. Employers who purchase job postings from CollegeRecruiter.com through SmartRecruiters, for example, pay the same posting fee to SmartRecruiters that the employer would have had they purchased the posting directly from CollegeRecruiter.com. But when we invoice SmartRecruiters we do so at a discount. The difference between what the employers pays SmartRecruiters and what SmartRecruiters pays CollegeRecruiter.com is like a sales commission to SmartRecruiters. Similar partnerships with other job boards and partners generate a number of revenue streams to SmartRecruiters and allow it to give away its services to employers for free. Brilliant.
The premise of Free is that organizations can give certain things away for free and still make a profit. If Chris writes a follow-up book, he should feature SmartRecruiters as an example of a successful organization which does exactly that.
Steven Rothberg is the President & Founder of CollegeRecruiter.com, the leading job board for college students searching for internships & recent graduates hunting for entry-level jobs & other career opportunities. For job seekers, CollegeRecruiter.com features well over 100,000 internship & entry-level job postings as well as more than 25,000 pages of career-related articles, Ask the Experts questions & answers, blogs, & videos. For employers, CollegeRecruiter.com features a database of 10 million currently enrolled post-secondary students & seven million recent graduates & can connect those employers with the candidates they need through job postings, targeted email campaigns, & targeted cell phone text messaging campaigns. Photo Credit iCalvyn.
CollegeRecruiter offers a free job posting when you join SmartRecruiters free recruiting site.