Free Minds

Bet the Company

Who

Ehren Maedge, 26, cofounder, president, and CEO of Radiate Inc., a Mountain View, California-based company that was launched in 1996. Radiate's technology allows software developers to embed advertising in their products.

The Bet

If Maedge and his team are correct, more and more software companies will be giving away their products for free — and will be richer for doing so. "When software is sold off the shelf, the customer relationship stops at the cash register," he says. "With the Internet, software companies have an opportunity to start a relationship at the download stage — and to exploit new revenue models." Radiate's model? Give away a free, stripped-down version of a software package, and build both mind share and goodwill. "As a relationship matures," says Maedge, "there will be opportunities to offer more services."

The idea of freeware is not totally new, of course. But Radiate adds a twist. Its technology lets developers display ads while their software runs on a user's computer. And Radiate can bundle those ads into packages that target different customer groups. Says Maedge: "We work with advertisers to determine what they're trying to accomplish — acquiring customers, building a brand, driving downloads."

Hedging the Bet

Will software users be willing to give up one of the last remaining ad-free zones in their lives? Yes, for a couple of reasons, says Maedge. First, since the ad window is active while a user is online, Radiate can collect information about user preferences, demographics, and product-related feedback, which he says benefits everybody. The second reason? "People like free stuff. More than 25 million people have already used our technology to download free software."

The Odds

Freeware and shareware have always been viable models for small software publishers. But how will Radiate convince giants — who are still making money the old-fashioned way — to give away software? Maedge believes that the logic of the Internet is compelling: "The Internet gives consumers more clout. That means that software is going to get cheaper and cheaper, and better and better."

Contact Ehren Maedge by email (maedge@radiate.com).

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