Freemium Is Not a Business Model, Trust Me(bnet.com)
bnet.com
Freemium Is Not a Business Model, Trust Me
http://www.bnet.com/blog/smb/freemium-is-not-a-business-model-trust-me/3338
2 comments
I think it really depends on your market. Sites like Facebook or Flickr depend on having a huge community, so offering free accounts makes sense. Others, such as the one described in the article, are hurt by all the resources it takes to support the free users when those resources really should be used to draw in more paying customers. Like all business models, I think you just have to ask your self if the freemium model is a good fit for your current product or not.
It sounds to me like they were giving away too much and the premium services weren't desirable enough for most people. Also, their initial target market -- "group and event organizers" -- are typically not the individual consumers he paints them as. Most of these folks will be organizing stuff for their kid's baseball team or doing something church-related or some such. In other words, they are basically charitable organizations, but often of the sort that has little to no funding. For an organization like that, coming up with $5/mo is a huge challenge.
And, yes, these types of people are frequently a pain in the ass to deal with: They typically don't have training for what they are doing, they are doing it "for the greater good" with little or no personal benefit (or vastly underestimating what they are getting out of it), they get no respect for the work they do and they often have a sense of entitlement based on the idea that they are giving their time and energy away for free so it is only "right" that other folks kick in something for free to help them out. If you have a business, they may well see you as a wealthy capitalist pig who is basically obligated to do some do-gooding to save your worthless greedy soul.
Trying to induce folks to pay a small fee when they don't have any money to give you is the thing that is "not a business model". That doesn't mean freemium has no place in the world.
And, yes, these types of people are frequently a pain in the ass to deal with: They typically don't have training for what they are doing, they are doing it "for the greater good" with little or no personal benefit (or vastly underestimating what they are getting out of it), they get no respect for the work they do and they often have a sense of entitlement based on the idea that they are giving their time and energy away for free so it is only "right" that other folks kick in something for free to help them out. If you have a business, they may well see you as a wealthy capitalist pig who is basically obligated to do some do-gooding to save your worthless greedy soul.
Trying to induce folks to pay a small fee when they don't have any money to give you is the thing that is "not a business model". That doesn't mean freemium has no place in the world.