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Free Association

There's an emerging trend in the video game industry called "free-to-play". In short, this is a business model whereby people can play a game for free (instead of going to the store to buy a $60 disc), generally via the web. Revenue is generated by other means, usually from advertising dollars or by selling premium items in the game (eg, fancy sword, access to a special level, etc).

This model was pioneered in Korea as a means to get over the piracy/blackmarket hump. As Korea had/has no retail market for games, companies had to find other means to generate revenue. And, for the most part, this approach is bringing great success. Some of the more successful games have player bases in the 15-million range, generating millions of dollars in monthly ad and item sale revenue.

Could such a model work for a large scale professional society? Membership dues are zero, and revenue is generated purely via "premium items" (ie, conference reg, book sales, DVD content, etc). Some of that discussion has come up as part of the whole "unbundling" trend, sure, but I've not seen it ever taken to the extreme of coupling it with a no-cost membership.

What issues would be solved or benefits accrue with a free-to-join model? Some thoughts:

  • potentially much greater membership base
  • broader reach into given industry/profession
  • better leveraging of network effects
  • more attractive to advertisers/sponsors
  • never have to debate/question "value proposition"
  • association output becomes more directly "market driven"
  • likely easier to deliver on mission (since you don't ever have to exclude non-members)

Possible side effects or negatives:

  • need to replace funds gap!
  • likely a more pronounced level of participation inequality
  • free = worthless perception
  • huge reliance on web/tech tools
  • likely more chaos and loss of control by staff

Admittedly, this is also very much inspired by Clay Shirky's "Here Comes Everybody: The Power of Organizing Without Organizations", as well as Chris Anderson's preliminary writings on "free" as the business model of the future.

Anyway, guess I'm getting bored with the yearly dues status quo... Hmm...

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Comments

I think you've hit on something that association execs need to take very seriously moving forward. What happens when you remove the price barrier to membership?

I'd argue that you could spend less time mailing renewal reminders and more time energizing your constituency towards a common goal or purpose. At the same time, you could devote more resources to engaging members, creating great products and designing fabulous experiences that are worth paying for.

It takes an entrepreneurial spirit and a revolutionary spirit to take the leap...but aren't those the same traits that lead our associations to be formed in the first place?

Shirky says "The systemic bias for continuity creates tolerance for the substandard," with the analogy of buying a movie ticket and staying to the end, even if it's a bad movie. How many of our members are sitting through a substandard experience just to get their money's worth? What are we willing to do about it?

This model has been used for many years by free magazines and newspapers and, more recently, by web-based businesses.

If an association adopted it, how would it handle current paid memberships. Would it refund the unused portion of members' fees?

@Lindy: One of the other Shirky comments that really stuck with me was how mission becomes secondary to organizational continuity. That is, as the org grows there's a cross-over point where more effort/resources is spent sustaining the org than doing the work it was created to do to begin with.

Not sure about other association execs, but a lot of my time is certainly spent on that kind of logistical friction - increasingly so...

@David: Ya, there would be some serious transition pain. Since the goal would still be to provide value, and that part of the join motivation is for the good of the whole, I think you could get away with keeping the dues as the member's "investment" in radically progressing the mission, etc, etc. And sure, have a prorated refund policy for those who really feel like they are being ripped off.

I don't think you should minimize the importance of a transition period. People join groups of any kind for benefits - not to support a business model - and are going to be ticked if they have to pay while other people get it for free. The logistics of implementation are no less important than the model.

Besides, the analogy of a free video game is a free conference, webinar, or other service, not a free membership. It's using third-party payment - like charitable donations, advertising, and sponsorship - to cover the cost of delivering free services.

Jason -

I have thought a lot about this, as I have read a lot of Anderson and am reading Shirky right now. I think the biggest obstacles are the free = worthless issue and the participation inequality. People may not feel the need to volunteer or take advantage of things they have to pay for.

It is almost like you are just becoming a retail store. Come here to buy things. If you want to network with other folks that are here buying things, you can use these web tools. Sounds like Amazon to me.

I've been wary of the unbundled membership model for years, and as time passes, I become more convinced that while seductive, it is a mistake. A fully unbundled association business model is essentially a for-profit products and services model. That's a fine model, but it is not a membership model.

People belong to associations, clubs, communities and other groups because there is some kind of magic associated with that membership. Frequently that is based in some kind of belief in collective action. It could be cause related - my membership helps the environment - or industry - my membership support collective actions to help my industry - or any number of other things. Membership may bestow upon me a direct or indirect recognition, a credential, a member of a profession or group of people with whom I would like to be associated. The stated benefits of membership are like the features of the car I buy - important reasons, maybe even rationals for purchase, but the purchase itself is still an emotional one.

So, if those free communities and services online are in fact replacing the magic of associations, then the game may be over. However, I don't think they do, not by a long shot. If in fact association membership is something more than gatherings and meetings and training sessions and journals, then promoting it to the world as having zero value (i.e., is free) is probably the worst strategy one could possibly come up with. Associations should boldly promote the value of membership ... not the value of the things you get, but the value that results from the membership itself. Hard? Can be. But doable.

This is all great input. And, admittedly, my own thoughts are only half-baked...

The key here is that free membership should lead to a bigger membership, and bigger is different. Further to Shirky's arguments about big being different, he actually says that having heavy participation inequality if a good thing. It means that different type of folks can participate in different ways and that the community can leverage those varying levels of participation. This is healthy.

In terms of value, yes, there must be value. But value does not have to be purely a money exchange. In fact, I'd argue that eliminating the barrier to membership would in many ways strengthen one's sense of belonging, and it starts to get into the more pure "gift economy" like you see at Wikipedia.

I'm not suggesting a free-to-join model would be easy, or appropriate in all cases. But, heavy resistance does make me think of music industry dinosaurs who bemoan the end of music because of the Internet, etc.

What they are not willing to admit is that the business of selling music on a disc is nearing its end. Music, on the other hand, is more vibrant and diverse and accessible than it's ever been ;)

Again, classic combo of Innovator's Dilemma and the Entrenched Player Paradox...

Jason,

So -- do it. Report back how it works out for you.

Aha, well, my board is not as willing/ready to be so innovative...

However, with ~14k paying members and nearly 120k "free users" at our web site, the IGDA is not too far off the mark - just not as overt/deliberate as it would need to be to really work...

Jason, your 14K and 120K may be the right solution, actually. Presumably the former are getting something the latter do not. Each has chosen their level of participation. And each has the option to move up or down depending on their needs and interests.

BTW, one good dynamic of the free model is that the organization is challenged every single day to create value for their members. That relates back to the Shirky comment.

One other comment to Lindy's reference to the "price barrier" of membership. In my work with association and for-profit marketing, I would say the price barrier falls into two distinct camps.

The first is one where the cost is out of reach. No matter how much I might value the Telsla electric car, I simply cannot pay $100,000 for a car. With the possible exception of some trade association memberships, this is typically not the situation with association membership.

The second is that I could literally pay the cost, but I am not convinced that the value proposition warrants it. When asked, I may say the price is too high or I can't afford to spend the money, etc. These are common responses in purchasing research. But what it really means is I am not WILLING to pay that cost (or at least that much).

I worked with a professional society in a profession where many of the people are self-employed and a typical income was about $40,000. The annual professional dues was $125. They had a fraction of the market, and many of the nonmembers said that they couldn't afford the dues.

It simply is not true. Every single one of those people could pay $10 a month. Making the membership free might have enabled the association to sign up a bunch of new members, but the real issue would remain. It was not providing enough perceived value.

Bottom line. For many associations, I would assert that there is little or no price barrier to membership. Even if this is over stated, starting with that assumption will change your whole marketing strategy discussion.

Just a few random thoughts ... strange not being able to read the entire post in this little screen:

I had done a number of pricing/willingness to pay studies within associations for several years, forcing myself into looking at value propositions that we frankly never considered much in the orgs where I served on the management teams. I can imagine in any of those meetings now how odd 'free' would feel.

But the free alternative to an existing association probably confers a number of advantages in addition to cost: people can feel more secure that they can reasonably have their low expectations met, there is easy entry and exit, convenient a la carte picking and choosing when and how they want to participate, and the common thoughtful objection to membership--"I wouldn't be able to put in the time right now to get the value I need"--doesn't hold.

But of course, the real question is how do we adapt to 'free association' principles within our existing operations? One simple answer to me is that we don't. I was just thinking along these lines in a meeting at ASAE yesterday as we were considering pushing for a new service (actually resurrecting and remodeling an old service) and the staff indicated that there would probably be resistance, and the volunteers were split between killing the discussion, and investigating its feasibility as a service outside the association's umbrella. This, like most services, would not be free but rather be paid by user fees. It would incur overhead. But by NOT delivering the service, it would certainly be free to ASAE and be something they might informally refer members to. I thought it was a mature response from an organization that is the umbrella for an entire profession/industry--activities will occur across a very wide spectrum and doing small things to stay in touch with specific services, or reaching a broad audience who will never become members through one's web presence, is not a bad response in a world where free alternatives to our services are available and can be offered indefinitely by their providers. The key is to offer the best bundle possible so a sufficient subset of our eligible market will choose to pay for the bundle and subsidize us to provide our programs with reasonable quality & continuity.

I wonder how many associations actually invite rebels to meet in their offices, carefully consider the alternatives, and suggest that they launch this one thing.

I suspect any 'free association' will be very focused on a very narrow niche of an audience and/or provide a very narrow range of services, and will take advantage of an easier process of adopting and abandoning new service models. Perhaps over time the association world will come to more closely resemble the commercial world where, for example, there are some huge restaurant chains, and lots of small startups with a notoriously high failure rate.

At least the startup costs for a new association would be low and their investment of time in building a network and establishing relationships might provide opportunities for larger/conventional associations to merge/acquire some. In other cases the initial experience an individual has with a free association might whet their appetite for actually being willing to pay for the wider range of services provided by a traditional association for the first time.

Free groups might actually be incubators for new SIGs and a farm team for new membership prospects over time, rather than a threat to us?

Adding to Kevin's last post, I am currently working on a project developing a new 'free' association. But this free association is actually being seeded by a very large non-association (actually a union) - who wishes to use the association world as a mechanism to offer their content and thoughts to attract folks back to the nest, so to speak, regarding participation in organized labor. It's not as much of as stretch as you might think.

I think Susanne's post is a nice reminder of the diversity of our association marketplace in terms of structures, cultures, etc. I think of how many orgs I see in Gale's Encylopedia that originated from a variety of reasons--Lexus trying to create an outlet for their buyers/drivers, a Britney Spears aficionado founding a fan club--they're examples on the fringes of what we believe are legitimate associations (professionally-run, by/of/for the members, etc.) but any of us who have tried to explain what we do for a living to families and friends know how broad the definition can be, and in turn how a wide variety of entities would consciously or unknowingly adopt our forms of orgnizations and our best (or worst) practices as they develop.

There are much larger brains than mine that ponder the future of associations and the optimal structures, but the odd free-association part of my brain thinks of business references I never threw awsy from 20 years ago. It's actually quite amusing to leaf through an old printed Hoovers or a Fortune 500 list and to see just how few companies were there then and are there now. (Or conversely to read Tom Peters type texts from that era and to see how they have aged.) Our association world tends to change more slowly, but I do wonder how our association world will look in another 20 years, in terms of who's large, who's respected, who's defunct, and how the average professional, business owner, and person on the street will think of us, when and if they do....

-Kevin P.W.

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