While the debate has died down recently, about a month ago the Internet was abuzz with the discussion of free goods. The debate mainly came about as a result of Chris Anderson’s new book, Free: The Future of a Radical Price. Anderson is the editor of Wired magazine.

Discussion of the concept of Free on the Internet centered around the “freemium” model of Free, which I will elucidate in a moment; and the old media/new media controversy.  The old media/new media controversy is basically where old media representatives such as Malcolm Gladwell from The New Yorker disparage the concept of Free, saying it won’t work and it’s cheating people, namely, hard-working journalists. The new media representatives respond by saying that it does work, many people are benefiting from it, and hard-working journalists will too!

The question of whether Free should or should not occur on the Internet is a moot point. Because it’s already occurring, and not only that, it happens to be the status quo. Most of what you see offered on the Internet as a service is based on the freemium model.

In the freemium model, there are two levels of service. The first level is a basic, free option. This can either be a trial version, or an ongoing free option. The second level is a subscription option, where you pay to receive more features (larger storage space, extra tools, etc.).

Flickr, the most popular photosharing website, uses the freemium model. For free, anyone can register an account, and upload photos to the server. The Pro Account, however, gives you unlimited uploads and storage, statistics, and various other features such as access to your original files. This costs $24.95 for one year.

The idea behind the freemium model is that the 5 or 10% of users who buy the subscription service essentially “pay for” everyone else. Flickr only needs 5 or 10% to break even (rough estimate); and then, Flickr can monetize in other ways, such as advertising.

You are probably reading this blog because you want to learn about how social media can help your business. The content we’re offering on this site is free, another example of freemium. As a consultant for Prechnology, I am paid to write these articles, but you are getting them for free.

If Prechnology decided to do away with the whole idea of having a blog and just sold our social media packages, what do you think would happen? Our clients would most likely go elsewhere for the information, and they would end up going elsewhere for the packages as well.

So the point I’m getting at is: Offer something free on your site. This can be free content, industry or niche-based free information like the Prechnology blog, or it can be a trial subscription or a free product.

Your free offering will attract people to your site, and that’s the important thing. Because before you can build a large consumer base on the Internet, you need an audience and you need traffic.

In an excellent article on freemium and freeconomics, Dan Wilson writes, “Once you have built that audience, you can deliver upsells via freemium models, you can monetize it via advertising and you can branch out into other services which are easier to monetize.”

You might be eager to get traffic to your site, but this is not going to happen until you entice people to return again and again. Free is one way to speed up the process. Check out my post on “The Truth about Social Media Marketing” to learn more about the bigger picture of social media development.