Revised: the *four* kinds of FREE

A few weeks ago, I posted a diagram grouping free business models runescapeinto three categories: cross-subsidies (eg, razor-and-blades), three-party runescapemarkets (ads) and "freemium" Final

Fantasy XI GIL(what economists call "versioning"; in this case most people get the free version). lotro goldBut as I was writing through that chapter, I realized that wasn't quite right.
The problem is that they're all cross-subsidies in one way or another:
• Paid products subsidizing free products: wow goldThis is a staple of business, from the popcorn that subsidizes the loss-making movie to the expensive wine subsidizing the cheap meal in a restaurant. Free just takes that further
• Paying later subsidizing free now: runescapeThe free cellphone with a two-year subscription contract is a classic example of the subsidy over time. It’s just shifting phone service from a point-of-sale revenue stream to an ongoing annuity. In this case, your future self Guild Warsis subsidizing your present self, with the hope that you won’t think about what you’ll be paying each year for the phone service but are instead dazzled by the free phone you get today.
• Paying people subsidizing free people: From the men who pay to get into nightclubs where theFinal

Fantasy XI GIL womrunescapeen get in free, to “kids get in free”, to progressive taxation where the wealthy pay more so the less wealthy pay less (and sometimes nothing), the notion that segmenting a market into groups by their willingness to pay is a conventional part of pricing theory. Free takes that to the extreme, extending to a class of consumers who will get the product of service for free. The hope is that the free consumers willdofus kamas attract or bring with them paying consumers (the aforementioned women or kids) or that some fraction of the free consumers will convert runescapeto paying consumers. When runescape goldyou walk through the amazing interiors of Las Vegas attractions, you get the view for free on the hope that some people will stop and gamble or shop.
So here I'll try another pass at getting this taxonomy right. The below has four kinds of free, with "gift economy" as the forth. That's still a form of cross subsidy, but it's lotro gold so diffuse--threading from the reputation and attention economies back to money through some long process that's often impossible to quantify (like the way I'm going to financially benefit from this post)--that runescape goldI don't include money in its diagram at all.
I've alsolotro gold modified the first to describe it as a direct cross-subsidy, which is to say that's typically you subsidizing yourself. The others are dofus kamasall other people subsidizing you, or you subsidizing other people. Final
Fantasy XI GILFinally, for economic purists out there, note that what I'm calling three-party FFXI GIL
markets (FREE 2) is what economists call "two-sided markets".