The Free or Fee Decision
If your association is giving away products or membership for free and you're not getting anything else in return, you're doing it wrong.
In November, I wrote about why associations would be wise to embrace their freeloaders. In the March issue of Associations Now, however, I shared the story of an association that told its freeloaders, “Time to pay up.”
So, what’s the difference in these approaches? When should an association welcome a crowd of freeloaders, and when should it tell them to stop mooching? How do you decide between free or fee?
As explained in “Membership Memo: Free No More,” the American Land Title Association instituted a licensing fee in 2010 for the standard policy forms its industry uses, forms that had been free to both members and nonmembers for years.
Michelle Korsmo, ALTA CEO, said the change from free to fee for the policy forms arose from a simple question among ALTA leaders about how it could leverage the value of its intellectual property—or, perhaps, why it wasn’t doing so already. “The association and its members work collaboratively to profligate standard ALTA policy forms,” Korsmo said. “It had been something that the association had just been creating. They had been creating this intellectual property and putting it out there in the marketplace, but never doing anything to capitalize on this resource.”
The question of “capitalizing on a resource” was the tipping point for ALTA, and it’s the tipping point for many decisions between free and fee. “Free” is just a question of a monetary price tag. An association that offers content, membership, or an event for should still be capitalizing on that resource in one way or another. Maybe it capitalizes on free content through attention and an expanded pool of potential members and customers. Or maybe free membership returns greater lobbying clout and, again, an expanded pool of potential customers for other paid products. Free events can funnel people toward paid membership. And so on.
The simplest way to put it is, “If you give something away for free, what are you getting in return?”
This is where ALTA found itself, wondering what it was getting in return for its free policy forms. Perhaps it was gaining some exposure to new potential members. Perhaps it was gaining some general respect for the quality of its products that would rub off on its paid products. But neither of these, as ALTA figured, were enough to sustain the organization. And that’s when it was time to not embrace the freeloaders, because their presence wasn’t helping ALTA in any significant way.
In that November blog post, I suggested that upsetting your freeloaders could be dangerous, using the example of Facebook pushing marketers toward paying for “promoted” posts, which would gain more exposure at the expense of free posts, which were getting less. It ran the risk of sending a lot of marketers to different platforms, drying up its pool of potential buyers. Arguably, ALTA faced less risk, given that its policy forms were the standard for the industry. Nonetheless, it aimed for a reasonable license fee: $195 annually for nonmembers or free for members, with an “occasional use” waiver for small shops.
The change worked well for ALTA. Some nonmembers are joining the association to get the policy forms license plus all the other benefits of membership (ALTA membership has increased 40 percent in the three years since). Others still prefer not to join, but they’re not freeloaders anymore. Now they’re just paying customers.
How does your association decide what’s free, what’s members-only, and what’s available for a fee?