Chris Anderson, author of the Long Tail, put out a call for help to visualize his "3 Kinds of Free" model. The above visual is what I've come up with. If you know Chris, can you give him a heads up? Of course, if the Long Tail is valid, he should be able to find this himself. :-)
From his post:
1. Here's the first, which dates back more than a century. It's the razors-and-blades model, as well as loss leaders of all sorts, from "free gift inside" to "free toaster for opening an account":
2. The second is the media business model, ranging from free-to-air broadcast radio and television to all ad-supported content online today:
3. The third is the new one, enabled by digital markets where the marginal cost of production and distribution is close to zero. This is the one that allows the "freemium" business model, where 90% of the users get the basic product for free and 10% chose to pay for a premium version. In economics this is called "versioning"...