This "freemium" business model is dynamic. Look at what it has already accomplished. It has proved that mutual collaboration around the world can accomplish wonderful things via The Net. Now, emergency services like 911 have an more resources - like Twitter. The world's largest and fastest-growing encyclopedia, Wikipedia, can be run by just FIVE people. Craigslist, which is known around the world, does not have a large staff either to help people find employment, sell merchandise or announce special events. Squidoo.com has more than a quarter-million lenses (one-page "now blogs" on its server) and is run by a small band of people.
In many instances, these Web 2.0 innovators are not running short of cash, they are giving it back to those who voluntarily contribute to their cause. In the case of Squidoo, money is routinely sent to lenssmakers who create outstanding lenses and charitable causes as well.
Mark "Rizzn" Hopkins
· 1 year ago
Another example of freemium in action is the consulting and analysis gigs like what TubeMogul seems to be doing lately. It's not the plan for everyone, but if it fits your business niche, it can be highly profitable.
Steven Hodson
· 1 year ago
ummm .. care to explain how Twitter is monetizing itself in any fashion whatsoever? Who's paying the bills?
At least Wikipedia is supporting itself in part (or in whole) by the donation model and free labor
Deal Filter
· 1 year ago
I like this Guest Writer thing. This was a very informative post.
Mark "Rizzn" Hopkins
· 1 year ago
As opposed to my normal fare. :-p
Glad you like Steven's work.
Steven Hodson
· 1 year ago
thank you.
Orrorin
· 1 year ago
This is another example that shows how our "modern" capitalism is doomed to dissapear (old news). Globalisation was a driving vector, freemium is the next step. We all know advertising is just a temporary solution, a transition phase. The question remains: what will be the new economic paradigm? When the real world only knows crazy inflation, how can we continue speaking about free online services. Are we going to shift to a new form of meritocracy where contribution (generally speaking) will become a currency?
Tara Kelly
· 1 year ago
Yes and No.
The Freemium model can be easily decoupled from advertising. And not all Web 2.0 is social media. Sharing, community built content/data and the right to data portability can exist even outside the "I'm here to socialize" context.
So when analyzing the Freemium model, you'll need to look at the various combinations available:
1. Freemium | Advertising | Social 2. Freemium | Advertising | NO Social 3. Freemium | NO advertising | Social 4. Freemium | NO advertising | NO Social
The "cons" set forth in this article only address problems with advertising (#1 or #2 above).
My company is a #4 - a pure Freemium play, no advertising, and we're not a social network. We're a password utility, just like Carbonite is storage utility. For products where there is a clear upsell on premium services it really is just about finding the right balance between free and not.
It'd be interesting to attempt an analysis of the pros & cons of Freemium when advertising isn't a factor.
Adam Posey
· 1 year ago
I am disappointed by this content. It is posts like this that add to the echo chamber effect in social media.
Business models happen, if freemium is effective, it should be allowed to run it's course. The web, and people, have a tendency to adapt to these changes pretty well. Freemium is effective right now, and as long as it remains that way it will continue to be used. The same as ad-supported pages, and micro-payments.
Steven Hodson
· 1 year ago
I see the micro-payments have been a rip roaring success in the market place.
Adam Posey
· 1 year ago
It's a long-tail kind of world where one-size-fits-all isn't a good business model. Micro-payments are effective in some areas, and not so much in others.
Steven Hodson
· 1 year ago
I agree that there are probably places where micro payments would work but everytime you see this method mentioned it usually in conjunction with how it isn't working. In relation to other forms of income production this is one that has had the hardest time taking root.
Christopher G
· 1 year ago
Points of the post aside, this, kiddies, should be bookmarked, read, studied, and preserved, if for no other reason than it stands as one of the most hideous abuses of English currently on the web (at least in the attempted guise of an 'article').
It was maybe the most maddening bit of writing I've read in awhile, and it took me a minute to figure out why I was getting so angry reading it. Now I know.
Would it be possible for the author to consider not attempting to conjoin every single thought to every preceding thought? A sample of the opening words of the article's sentences:
"At some point" "The problem is" "So the question remains" "The other solution" "This is fine but" "Another problem is" "So the question remains" "Plus" "Not to mention" "This is definitely" "One such" "Another such" "While the" etc.
Conjunctionitis? It's like listening to someone who speaks for minutes at a time without taking a breath. You know what I mean. Murder.
**Also**, **not to mention** this showpony sentence of the freakshow:
"As utopian as these very smart people like to make out that such a model is there are equally as smart people who warn that this is a dangerous road to travel down and one that could come back to bite you on the ass."
Indeed.
Now the moniker of "Guest Writer" makes sense... a mashable 'author protection program'?
Steven Hodson
· 1 year ago
Let me guess - yer a frustrated English professor
hiredgoon
· 1 year ago
Apology: I have nothing heavy to weigh in.
I liked the article. It is the ONLY article that I clicked through to read the comments - and I read Mashable every single day.
The discussion around monetizing web based services needs to be explored from all angles, and this is just another one.
p.s. I can't believe i used the word "monetize" and equally, i cant believe people will use the term "freemium". Will someone please write an article about butchering language to make new buzz terms...
searchgov
· 1 year ago
spot on sir - u r so right here!
Al Sargent
· 1 year ago
Another datapoint that seems to support the Freemium pricing model: Mozy versus Carbonite. They're similar businesses, with (afaik) only one major difference, and different outcomes from an investor perspective.
Both are offsite backup services. Both have nearly identical "premium" pricing models. Both have nearly identical features.
Where they differ: Mozy has implemented Freemium, while Carbonite only offers its service free for a limited amount trial period of 15 days.
Mozy got acquired by EMC a few months back. Carbonite didn't. Assuming EMC did their due diligence, they probably looked at things like how quickly each service was growing. They chose to acquire Mozy, not Carbonite.
Now, storage is a crowded space. Lots of competition. Plus rumors of Google getting into this space (Platypus). As such, acquisition would not be a bad outcome for Carbonite. You have to ask yourself why they didn't go that route. Did EMC pass them up, because they didn't get the users that Mozy did?
And if they didn't get the users, was it because they lacked a Freemium pricing model?
(I wish I could edit this post for clarity, but I can't seem to scroll up on Firefox / OS X. Apologies if any of this is unclear... but hopefully this provides a data point for further discussion.)
Burak
· 1 year ago
The user revolt mentioned in the article tends to be a flash in the pan. If the service is good enough to attract a regular user base, and then you add a premium service or advertising there will be lots of grumbling but in the end it subsides because the quality of the service justifies it.
When Twitter starts displauing ads on the site or appended to Tweets listen out for the howls of pain from users followed by the inevitable grudging acceptance and the minimal negative effect on its reputation.
All Comments
In many instances, these Web 2.0 innovators are not running short of cash, they are giving it back to those who voluntarily contribute to their cause. In the case of Squidoo, money is routinely sent to lenssmakers who create outstanding lenses and charitable causes as well.
At least Wikipedia is supporting itself in part (or in whole) by the donation model and free labor
Glad you like Steven's work.
When the real world only knows crazy inflation, how can we continue speaking about free online services.
Are we going to shift to a new form of meritocracy where contribution (generally speaking) will become a currency?
The Freemium model can be easily decoupled from advertising. And not all Web 2.0 is social media. Sharing, community built content/data and the right to data portability can exist even outside the "I'm here to socialize" context.
So when analyzing the Freemium model, you'll need to look at the various combinations available:
1. Freemium | Advertising | Social
2. Freemium | Advertising | NO Social
3. Freemium | NO advertising | Social
4. Freemium | NO advertising | NO Social
The "cons" set forth in this article only address problems with advertising (#1 or #2 above).
My company is a #4 - a pure Freemium play, no advertising, and we're not a social network. We're a password utility, just like Carbonite is storage utility. For products where there is a clear upsell on premium services it really is just about finding the right balance between free and not.
It'd be interesting to attempt an analysis of the pros & cons of Freemium when advertising isn't a factor.
Business models happen, if freemium is effective, it should be allowed to run it's course. The web, and people, have a tendency to adapt to these changes pretty well. Freemium is effective right now, and as long as it remains that way it will continue to be used. The same as ad-supported pages, and micro-payments.
It was maybe the most maddening bit of writing I've read in awhile, and it took me a minute to figure out why I was getting so angry reading it. Now I know.
Would it be possible for the author to consider not attempting to conjoin every single thought to every preceding thought? A sample of the opening words of the article's sentences:
"At some point"
"The problem is"
"So the question remains"
"The other solution"
"This is fine but"
"Another problem is"
"So the question remains"
"Plus"
"Not to mention"
"This is definitely"
"One such"
"Another such"
"While the"
etc.
Conjunctionitis? It's like listening to someone who speaks for minutes at a time without taking a breath. You know what I mean. Murder.
**Also**, **not to mention** this showpony sentence of the freakshow:
"As utopian as these very smart people like to make out that such a model is there are equally as smart people who warn that this is a dangerous road to travel down and one that could come back to bite you on the ass."
Indeed.
Now the moniker of "Guest Writer" makes sense... a mashable 'author protection program'?
I liked the article. It is the ONLY article that I clicked through to read the comments - and I read Mashable every single day.
The discussion around monetizing web based services needs to be explored from all angles, and this is just another one.
p.s. I can't believe i used the word "monetize" and equally, i cant believe people will use the term "freemium". Will someone please write an article about butchering language to make new buzz terms...
Both are offsite backup services. Both have nearly identical "premium" pricing models. Both have nearly identical features.
Where they differ: Mozy has implemented Freemium, while Carbonite only offers its service free for a limited amount trial period of 15 days.
Mozy got acquired by EMC a few months back. Carbonite didn't. Assuming EMC did their due diligence, they probably looked at things like how quickly each service was growing. They chose to acquire Mozy, not Carbonite.
Now, storage is a crowded space. Lots of competition. Plus rumors of Google getting into this space (Platypus). As such, acquisition would not be a bad outcome for Carbonite. You have to ask yourself why they didn't go that route. Did EMC pass them up, because they didn't get the users that Mozy did?
And if they didn't get the users, was it because they lacked a Freemium pricing model?
(I wish I could edit this post for clarity, but I can't seem to scroll up on Firefox / OS X. Apologies if any of this is unclear... but hopefully this provides a data point for further discussion.)
When Twitter starts displauing ads on the site or appended to Tweets listen out for the howls of pain from users followed by the inevitable grudging acceptance and the minimal negative effect on its reputation.