free as a business Model 100 patterns In the freemium model a small base of customers paying for a premium service subsidizes a large base of non-paying customers. The insurance model is actually the opposite—it’s the freemium model turned on its head. In the insurance model, a large base of customers pay small regu- lar fees to protect themselves from unlikely— but fi nancially devastating—events. In short, a large base of paying customers subsidizes a small group of people with actual claims—but any one of the paying customers could at any time become part of the benefi ciary group. Let’s look at REGA as an example. REGA is a Swiss non-profi t organization that uses helicopters and airplanes to transport medical staff to the scene of accidents, notably in the mountainous areas of Switzerland. Over two million so-called “patrons” fi nance the organiza- tion. In return, patrons are exempt from paying any costs arising from being rescued by REGA. Mountain rescue operations can be extremely expensive, so REGA patrons fi nd the service attractive in protecting them against the high cost of accidents during skiing vacations, sum- mer hikes, or mountain drives. The Insurance Model: Freemium Upside Down insurance companies sponsoring patrons rescue operations rescue "insurance" rescue operations patron membership sponsoring patrons other rescue victims fl eet of helicopters and planes web publications fl eet of helicopters & planes rescuing sponsorship fee payments from insurance companies free rescue operations REGA fl eet of helicopters & planes VP CR CH CS KP KA KR R$ C$ Many paying users cover the costs of a few claims payments from insurance companies other rescue victims payments from insurance companies payments from insurance companies R$ payments from insurance companies payments from insurance companies other rescue victims sponsorship fee sponsoring patrons operations sponsorship fee R$ sponsorship fee sponsorship fee sponsorship fee sponsorship fee rescue operations free rescue operations free rescue operations "insurance" other rescue victims payments from insurance companies free rescue operations payments from insurance companies patrons free rescue operations free rescue operations bmgen_final.indd 100 6/15/10 5:37 PM