It’s a Trojan Horse pattern, really. They give away the service for free membership with billions of VC until their competitors collapse or fade away, then they start becoming more aggressive with ads and/or charging for premium access which used to be free.
I think Nestlé wins the most egregious example; where they gave free baby formula in developing countries for just long enough for the mothers to stop producing milk and then started charging them for the right to feed their babies.
Did they stop? It used to be every guy got a razor for their 18th birthday, which was creepy as nobody even signed up for it(unsure about women?). Myself and all my classmates got one.
I tried Googling this, and the last article I found was from 2019...
Loss Leader is not the same economically as Dumping. Gillette is the former, VC-backed companies are the latter. Loss Leader tactics are sustainable in a competitive market, but Dumping is profit negative until someone (hopefully your competition) goes out of business.
Veering off topic, I started using safety razors for just as good a shave, for 10cents a blade. At ten cents each, I use a new blade every shave and it's so much nicer than a 2nd use top-of-the-line gillette.
Exactly! This is a strategy that works even for markets without network effects. It just gets even more amplified (and profitable) when network effects exist.
In todays terms the equivalent would be an invite to a closed Gillette page/group/discord that has exclusive videos from the latest influencers (or whatever teenagers like and talk about).
For example OOP could get their daily cat based dopamine fix from a myriad of online sources, most open or easily bypassed but they want to see this one particular cat which is behind Meta’s wall and requires additional payment (in terms of data) from them.
