Slashdot Mirror
Why Freemium Doesn't Work
itwbennett writes "Tyler Nichols learned an obvious but important lesson with his freemium Letter from Santa site: 'most people who want something for free will never, ever think of paying you, no matter how valuable they find your service.' He also discovered that non-paying customers are more demanding than paying customers, which only stands to reason: If someone likes your service enough to pay for it, they probably have an affinity for your brand and will be kinder."
... seems to contradict his argument. The game is free to play but there are aspects of the game that are enhanced if you pay.
The article raises "freemium" in a wider business sense, but I suspect that a lot of slashdotters will be used to coming across it in discussions of massively multiplayer online games.
I'm a long-term pay-to-play MMO gamer (Final Fantasy XI, World of Warcraft and now giving The Old Republic a whirl - just made a fairly long post about my experiences with it in my journal). I've also given some of the new generation of "freemium", "free to play" or "pay to win" (pick your favorite term) MMOs a go. However, I couldn't stick with any of them for long - from my point of view, this model provides a much inferior player experience.
It's not just about the money - though that is an issue. With a subscription based MMO, I know how much money will be going out the door on the game every month. So I pay my $15, have that as a line in my personal budget, and that's it. On a sheer time/cost ratio, MMOs tend to come out extremely well. With a Freemium MMO, I may end up telling myself that I'm going to spend a certain amount each month, but I also know that if I get stuck or frustrated, there's going to be a strong temptation to go beyond that.
But the really key point in TFA is "non-paying customers are more demanding than paying customers". That may be true from the service-provider's point of view. But it also has implications in the MMO world for the player. A subscription model game requires a degree of buy-in and committment from its player base. The other players you meet all want to be there and are paying for the privilege - and aren't, except in extreme circumstances, going to do anything to jeopardise that. The result, in my experience at least, is that levels of vulgarity, abuse and griefing - as well as outright cheating - are much lower in traditional subs-based MMOs than in the Freemiums.
My response to this article is: GOOGLE
Freemium doesn't work for Google?
Google Adwords... Gmail..... Google Search...
This company is a super star in Freemium.
I also disagree that freemium customers don't pay, the freemium model in itself means we are paying by just using, but Google again for example has many products you can buy with real money from Google directly for instance if you're a business who likes Gmail, you can pay to take your business onto Gmail.
So 1 site gets it wrong, and the whole model is broken ?
I think not !!
I will buy additional storage from dropbox soon. However if they didnt offer 2GB in the first place, I wouldnt even know or try their service.
Seriously.
I can think of examples where Freemium works (EVE, JIRA).
I am very small, utmostly microscopic.
Let's not be stingy here. I second the contention that non-paying users are forthcoming with questions and reports, but I won't call them demands. The education tools (http://www.glean.org - mainly information literacy-related) we provide serve a number of schools, and some sites have heavy user traffic. All are free, but we do try to ask for donations to support our (nonprofit, 501c3) work.
And, when the sites glitch - or don't function properly, or as expected - those same users let us know about it. Quickly!
While few are likely to donate money to support our work, many are involved in bug reporting, formative evaluation and the testing of new education tools that we're launching. It's these kindnesses - in-kind support, you might say - that has been so valuable in helping us move forward.
At the end of the day, it's not cash - which is needed to move the organization forward. And, yes, our free users do have expectations - not unreasonable, as they rely on our services as well, and that the site has likely set some expectations about the service(s) that will be provided.
Of course, the lack of cash can be frustrating. However, I suggest against labeling, or reading, their expectations as demands. Instead, it's more helpful to understand how the audience is willing to help, and if/what can be done (in the case of TFA) to turn the free user base into paying customers.
Cheers,
--Dave
'most people who want something for free will never, ever think of paying you, no matter how valuable they find your service.'
Just how valuable is a gimmick letter template with some cheap clipart background images which you have to print out yourself?
The final product is something that could be done with any word processor in about 10 minutes.
These comments are my personal opinions and do not necessarily reflect the opinions of the other voices in my head.
From Forbes magazine's Nov 2011 edition; emphasis mine:
[Dropbox] has solved the “freemium” riddle, with revenue on track to hit $240 million in 2011 despite the fact that 96% of those users pay nothing. With only 70 staffers, mostly engineers, Dropbox grosses nearly three times more per employee than even the darling of business models, Google. [CEO Drew Houston] claims it’s already profitable.
The summary cited MMOs as why us Slashdot geeks would argue freemium works.
Wrong. GaiaOnline. GaiaOnline makes a whole crapload of money for their in-world virtual currency. I don't think it qualifies much as a game.
Why Freemium doesn't work is because your "free" service isn't good enough for people to buy into the "premium" part(I'd say that it's also possible for your free to be so good you don't feel pressured into buying the premium product; but I suspect this is rare). That's why Dropbox, Gaia, MMOs(well, some; pick your favorite example), PSN(For sake of argument, let's just say this is a successful "freemium" service?), etc. work. The base product is fairly good, and the premium features are worth the extra out of pocket costs.
Non impediti ratione cogitationus.
"Results? Nichols found free customers are higher maintenance and more demanding than the paying customers. 20 or so paying customers asked questions while "hundreds" of free ones did. And when following up, paying customers never flagged his emails as spam, while many free customers did, and complained."
The numbers mean nothing if we don't know how many paid and how many didn't. I think 20 to "hundreds" is probably a good ratio for paid-to-free in the first place.
As for the spam, if you didn't ask for an email from a free service, and it appears to be advertising something (like his premium services), I think spam is a good label for it. I personally wouldn't flag it as such, but I understand those who would. Without seeing the exact email, it's hard to know why they might do it, though. And the paying customers... Were they annoyed by the email, too? Did they get the same email? How did he know which of the 2 flagged it spam or not? Merely the complaint emails?
In my experience, it's all fine and good to have free customers, so long as you keep them away from your paying customers and don't let it affect them negatively. Free customers really are more demanding. For some reason, they seem to feel you owe them something. It seems to be a bell curve with each end being more entitled, and the middle less so, approximately centering on the market value of the product.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
After going to his site, it looks on the surface the only thing you pay for is to create more than one 'letter'. This seems like a terrible example of 'Freemium' because there really isn't a lot of room for many potential customers who would want just one to pay for anything. Maybe I'm missing something....
Freemium usually manifests as ad-supported and/or 'the first hit is free' with priced DLC/in-game items. I've heard varying degrees of success brought up, but on the whole a more positive perspective than this site owner has experienced.
Given the relatively nice, straigtforward, and clean site design (e.g. ad-free), I would have assumed this to be mostly a labor of love. If he wanted or needed to get more money, he'd probably need to go ad-supported.
XML is like violence. If it doesn't solve the problem, use more.
This guy wanted to sell a worthless product and then blames it on the payment model when he failes. The only lesson from it is that people won't pay for shit.
After reading the article, the only "evidence" that the Freemium model does not work is that free users that got his "thank you" email flagged him spam. I bet he also attempted an upselling on that thank you email. People that get stuff for free tend to be very picky about getting emails even reminding them they can get a paid version.
Anyways, what he described is not even "fremium"; it’s a free edition of the site and a paid edition of the site. Freemium is a model where the product is entirely free and additional gimmicks or features are unlocked by micro-transactions (like 99c for extra Santa card layouts.)
Anyways, non-story, yada yada.
I will not engage in the this freemium model anymore either. Not only do the freeloaders ask for more support than do customers, they bad mouth your product more as well. I believe the process of transferring money from customer to merchant gives the customer a sense of "buy-in" in the product. The customers value it more because they are invested in it. Invested customers then feel MORE willing to invest time figuring out how to use it than do those who get it for free. It sounds counter-intuitive certainly, but I have lots of anecdotal evidence to support this in my career experience. The proof is in the pudding though. The higher I set the price of software in the app store, the happier my customers are with the product. Go figure!?!?
If you've done anything more than once you know people don't read what you post. I suspect his real anger is the number of people using the service for free compared to those that paid. Just in case someone else goes on one of these ventures...
The geek in the family uses it for free. He/She then tells brothers, sisters, grandma, and grandpa. He/She tells them the process. Those people then pay. The he/she that asked questions and got back, "It is in the beautiful FAQ I lovingly wrote. IOW Please feel free to go fuck yourself.", never send info up the chain.
Having to work for a living is the root of all evil.
What about all those who use Linux, it's free and I think most of those users appreciate their operating system a whole lot more than Windows users. I think the article has it backwards. It's not the Freemium model that causes users to be more demanding, it's Freeloaders (users) looking for free services who are demanding.
-- By all means let's be open-minded, but not so open-minded that our brains drop out.
This article is absolute crap and comes off as more of a rant from an unsuccessful entrepreneur with a lame idea than a legitimate logical article with a point.
True some people really never intend on ever purchasing something, and brand influence can play a role, however they are a small subset and not necessarily the one that should be targeted. If you have a good idea that sells itself, and can actually make you realize that with the premium features you will get so much more then the majority of people will have a price they are willing to pay for it.
Other factors to consider are coffee table/water cooler talk. Is your wife going to bitch at you for spending money on premium service for a Letter to Santa site? Maybe. How about if you pay for a premium Dropbox site because she struggles trying to send large groups of photos or other documents to her friends? Probably not if the price was reasonable.
Further if the free service is too restricting or hard to use then potential clients may pass it up because risking ones time evaluating a product is acceptable to most people, but god forbid we pay $2 for a month of premium access to crap software. Then you have to worry about giving them your credit card information. Then you have to worry about their customer support giving you the run around when you call in 26 days and try to cancel the subscription from automatically renewing itself. To hell with all that. Even though its only $2, and we gladly pay more for a cup of coffee without thinking, we don't have to be stuck on the phone with Starbucks in a month trying to cancel future cups of coffee that we never really wanted.
'most people who want something for free will never, ever think of paying you, no matter how valuable they find your service.'
The flaw with this statement is that pretty much everyone would prefer to have services and goods given to them for free. And while I do enjoy(ed) many free services, some were valuable enough and reasonably priced enough for me to want to upgrade or donate.
Other services just were not valuable enough for me to want to pay for, or there were alternatives that were better, or stayed free, or the licensing terms were so onerous that it just wasn't worth the time and money.
Pile on top of that, there are many many products out there that people will try for free. But after evaluation, they determine it isn't worth a dime to them or even wasting time with the product or service at all. The market place is filled with competitive products people just have no interest in. Why does the author think that free products or services are critically evaluated on a similar basis.
Maybe a "higher resolution" letter from Santa for paying customers is just a stupid idea and this has nothing to do with the fee/paid business models?
A bad product fails, regardless of price (with a few exceptions, things like Internet Explorer).
that's his problem right there.
besides, his customers did provide him with 50k unique letters from santa.
but really his business model would have been better if he had said that his giving the profits to charity and pocketed the usual 10%.
world was created 5 seconds before this post as it is.
Right there is the problem. It was all I could do not to throw up into the waste paper basket. Ass backward marketing wank speak. Brand comes into being after every thing else is in place thats where brand value comes from. You can set things up so that that value is recognised when it develops but short of manufacturing a fake brand to sell to an enterprise that has already has the other stuff in place 'brand' has little place in this equation.
Evernote begs to differ....
'most people who want something for free will never, ever think of paying you, no matter how valuable they find your service.'
In other words, if you pirate and weren't going to pay for it in the first place, you shouldn't count it as lost revenue. And the DRM that stops them pirating doesn't make them pay (In other words, your company does still sustain a loss, a self-inflicted cost of DRM).
Doesn't have anything to do with the site, but with all the recent piracy discussion, I figured it'd help the few slashdotter left that think piracy == stealing.
Shocked! Absolutely shocked I say that people would gladly accept a letter from Santa wizard when offered for free, but question is value if asked to pay for it. I don't see how on earth he came to the determination that people highly valued a Letter from Santa wizard? I call bullshit. Perhaps he asked in a follow up questionnaire. Sure people will respond favourably when there are no strings attached. But I wouldn't pay a dime for that service. 5 minutes with google images & Microsoft word and I have something pretty darn similar.
"Nichols found free customers are higher maintenance and more demanding than the paying customers. 20 or so paying customers asked questions while "hundreds" of free ones did"
That, of course, are meaningless statistics to draw conclusions from, without knowing the ratio between paying and non-paying customers. We also don't know what the questions were. If there are 50 freeloaders for every paying customer and each class of customer is asking questions at the same rate, those 20 paying customer questions will be matched by 1,000 non-paying customers -- "hundreds" would suggest that non-paying customers are less demanding.
Also, the questions itself might differ. Maybe those non-paying customers where asking questions about the benefits of paying?
You never offer tech support to free customers. Spell that out.
"Free customers get ZERO tech support, your questions will go unanswered, you will have access to the WiKi for common answers."
Do not look at laser with remaining good eye.
Even in 2012 online payments are a pain in the ass. I have to leave the site, log into Paypal, punch in my credit card number if it's not stored, then head back to the site to complete the transaction.
The problem is that this is a hassle. I hate doing this. If the site used Google Wallet, well, I am almost always logged into Google anyway, and I'd never have to leave the site. Then maybe.
Amazon makes buying easy, iTunes makes buying easy, the Android Market makes buying easy. These are the places I buy from.
If he really wanted to make money he should have made it an iOS and Android app, charged 99 cents for it, let users make as many letters as the wanted and have the app generate PDFs and email them to the users. Have a free version that does low res black and white and the higher quality paid app.
Just my 2 cents.
Send non-paying customer questions to a queue that you look at "if you feel like it" and give paying customers a different address (or mechanism!) for support, maybe even a unique one so you know if they've given it away. Problem solved! You can glance over the queue to see if there's any improvements you should make, without having to actually respond to any of that email.
Hilariously, ITworld registered me but I still don't know if they took my comment. When a site is even more incompetent than slashdot you wonder WTF.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Poor people are stingy and mean. In the Western society, divorced from any sensible unsociopathic ideology, that's the rule.
There is no intrinsic good quality in being poor. All the good qualities associated with people in financial struggle come with conjuction with their non-materialistic beliefs - mainly, religion, education, upbringing.
The job ALWAYS has to be paid. You can right a piece of software and put it out on sourceforge for free - that's personal entertainment. Support, bug fixing - ain't entertainment, it's hard work, and it should be paid.
That's how open software works - code is free, but support is not.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
I've seen Freemium work, but as a model you have to truly understand the up and down points. It tends to work best where socialization is part of the service you're selling. IE if it's easier to send cards to someone else that's also a free member, then there's an inherent value to having someone as a free member even if they never spend a dime: they attract and create loyalty in other potential paying customers.
This is why so many MMOs have latched onto the concept, and why it works for farmville and such. People only engage in these games because their friends also play: as solo experiences they are terrible and will quickly bleed customers.
In short, freemium probably isn't a good model for his service if he's looking to make money, but the model should not be altogether disregarded. In some markets, it's very useful, and those ignoring it will be quickly undercut and eliminated by those employing it successfully.
You can get 15 minutes of fame, but you can go down in history for infamy.
Never... ever suggest they don’t have to pay you. What they pay for they’ll value. What they get for free they’ll take for granted and then demand as a right. Hold them up for all the market will bear. -Lois McMaster Bujold
Big and small companies make a handsome profit giving away open source software. Red Hat comes to mind. You could even argue that IBM bet the farm on open source.
If you can't make money from freemium, you're doing something wrong.
Maybe the problem is his business model: he's offering a service that is already available for free. Canada Post had 9,000 volunteers responding to Santa's letters and emails last year. If his competitors offer a similar or better service for free, why would he ever expect anyone to pay for his?
A recursive sig
Can impart wisdom and truth
Call proc signature()
Think Freemium meets Mechanical Turk. The service is exchanged for "labor" of which the site takes a (possibly large) slice of the remuneration.
It seemed to instill an ethic in me as a child. Maybe it would work for the man-children of the interwebs as well.
So it didn't work for one particular site. For which the increment for premium payment delivered only a small increment, as seen from many people's point of view. The free product was good enough, the premium not better.
I don't think this invalidates the model at all, just this particular implementation. The value for the premium has to be perceptibly large. I have long subscribed to the This Is True newsletter, which has a premium version - 2 extra stories, no advertising, three days earlier. I see the extra value, and I want to keep the newsletter going. It works for him.
Consciousness is an illusion caused by an excess of self consciousness.
Skype is Freemium. You can make free calls from user to user, but if you want to call traditional phones you need to pay extra. If you want a traditional phone number you also pay. Seems to work.
I didn't really mind; it's how the world works. And the world doesn't change just because we give reality a new name.
Zynga's revenue for 2011 was roughly 1 billion:
http://blogs.wsj.com/venturecapital/2011/12/15/so-whats-zynga-going-to-do-with-all-its-cash/
EA's revenue for 2010 was roughly 3.65 billion, with roughly 800 million in 'digital revenues':
http://en.wikipedia.org/wiki/Electronic_Arts
So Zynga took in less than 1/3 what EA did this past year, still impressive, but quite far from beating EA so far.
Freemium doesn't work? Better tell the music industry.
Joking aside...
No one has figured out yet that the viability of the freemium model is dependent on the "size" and "slope" of the "wall" between free and paid customers. That wall, folks, is *price*.
If you put up a simple, tall "wall" - an entry price point that is unusually high with no graduated options for consumer buy-in, then you will absolutely keep free users on their side of that "wall".
Zynga has shown that with small, repeated purchase opportunities - basically a *series* of tiny *walls* to step over - you can convert a freeloader into a paying customer (and in some cases the customer won't even realize what they've done).
Paying attention to my own behavior, I've noticed that the more reliable conversions to paid come from a low-grade but high-unit-cost pay-as-you-go option among a menu of options. See SimpleGEO and Zencoder for examples that apply to me specifically over this last month. Both have pricing plans that fit what I've described here.
Makin' money, makin' friends, makin' whoopee and wearin' Depends
I set up a Santa letter site a few years ago. I think that the only way to actually make it work is to get active on the commission-based publisher sites and offer something like $1-2 per purchase. For me that was too time consuming, so I stopped. Anyone want to buy a ready to go business?
The author doesn't seem to understand the difference between the Freemium and Donationware business models.
In Donationware, you give away your product/service for free, and accept donations. Hopefully the donations bring in enough money...
In Freemium, you give away one product/service for free, and sell a second service. For example, you give away peanuts and sell beer. Hopefully the presence of free peanuts makes people drink more beer...
I tend to agree with the author that Donationware doesn't work very well. Most people have better places to give charity than to software developers.
Freemium can be more successful precisely because customers are not buying the upgraded service out of charity. They're getting real value in exchange for their payment. But in order to work, the free service and upgrade service should not be in competition with one another. If done right, the better the free service is, the more free customers are generated, and this eventually results in more paying customers.
The author's complaints seem to be that his customers complained about his peanuts, and didn't feel obligated to buy any beer. He should have made better peanuts, or just lived with the complaints. He should have made better beer, or found another business model.
http://xkcd.com/756//
weeeeeeeell, they did have to buy a stamp to send the original letter to santa, to the north pole no less, which costs money upfront, so not exactly free. The postal code ( how canada identifies mailing regions) Is pretty cool though- "H0H0H0"
Of course it doesn't work for a one-time service. People aren't going to send a free Letter From Santa and then decide to upgrade; they're only sending it once.
It's better to vote for what you want and not get it than to vote for what you don't want and get it.
- E. Debs
While he makes some interesting points, I think he misunderstands the spam issue, and why his users, especially free users, rightly marked his mail as "spam":
If I look at spam I get, some of it is "random" spam. E.g., someone I never heard of trying to sell me viagra, or asking me to help smuggle $10,000,000 he stole while being the president of his country. But a growing percentage of the spam are people who confused a one-time business relationship with my desire to read all about them and their products for the next 20 years. E.g., I'm constantly getting mails from a particular hotel I once stayed at, mails from some company I once bought from, etc. People *hate* that, and it doesn't really help that they once used your services - they still hate the spam.
But why did free users complain more? That's easy: Every paying user remembered you and your service, and most of them "forgave" the one time "thank you mail" (but be warned, they won't so easily forgive repeated annoyances). From the free users, a lot of them probably don't even remember what service you provided them. Heck, it is possible that half of them never even fully used (e.g., didn't even complete a card) or didn't enjoy your service, and you don't know that. These people have no recollection who you are, and thought that even a "thank you" letter was an outright spam.
What should you do about the spam thing next time? Don't make the "I want to get mails" checkbox hidden in some long form and default to on. You have two options - either make it default to "off" (so only people who REALLY want to get your mails will get them, but be warned that few people will actually want that), or, if you want it to default to "on" make a very very clear screen which basically says "I'm giving you this service for free, in exchange for the right to mail you in the future. If you do not agree, or would consider such mails to be spam, please do not use this service.".
And other free until you realize you have to pay or quit, How could that model work?
Elite players spending 4.99 to outclass all free players regardless of prowess,
and countdown clocks that very subtly prevent gameplay over time.
Yea the game was free, Yea the paying players had numerous advantages
but still you enjoyed the game and lvl'd up.... to the point where the game
ends for free players.
You pay for what you get, _DO NOT_ waste your time on free services that
are functionally inferior in a meaningful way. Free stuff from sourceforge owns.
but free stuff from corporate machines is always just another trap.
This is even true in consulting. Some people get it. Others just do NOT pay their bills no matter how much money you make them.
Why Freemium always works: even if you don't think your software business model is freemium, it still is. Piracy forces freemium on all business models. Either accept it and face reality, or be in denial like the author of this article.
You're right, I wouldn't steal a car. But if it were possible, I sure as hell would download one!
Such "personalized letters" are a horrible, heartless, dumb idea even with pen and paper. But this? YOU should be paying THEM for wasting even a drop of ink on such bullshit :/
It seem like an oxymoron but in a sense, attaching a cost to something adds value to it. If somebody get's something for nothing, they will always expect it for free, regardless of anything you add to it that can be considered to increase it's value because it had no value to begin with. It's the old saying of why buy the cow when you get the milk for free. Now if you take that same service and start out by charging for it, you are building in a perceived value that the consumer psychologically attaches to it.
Consumers who get something for free are always the most demanding, in my experience, because they possess a sense of entitlement. You (the merchant) OWE it to them. These types of consumers tend to fall into one of two categories (or maybe both):
1. They don't understand the cost of doing business. For instance, I sell postage stamps which I have to pay face value for which is currently 44 cents. I charge 50 cents for a stamp and I have had a few cases of people accusing me of ripping them off. What they fail to understand is that not only am I offering them the convenience of not having to go to the post office, but the cost of that postage stamp isn't my only cost associated with operating my brick and mortar store. They tend to see it as I'm making a 6 cent profit when in reality, I'm probably actually losing money on it when you factor in rent, utilities and so on. This is a situation where convenience has become less and less costly almost to the point of being free (if not already) so people no longer perceive value in convenience.
2. They think because I own my own business that I must be filthy rich. I wish that were the case, but much like many other people out there, I struggle financially in this economy, as do many other self-employed folks that I talk to. I also probably chose the wrong line of business to go into, but it seemed like a good idea at the time.
In my 2 years of business, I've found subtle ways to weed these people out and built a solid core of regular customers but the entitlement folks still pop in from time to time and when they see that I won't give them anything for free, I tend not to see them ever again.
* Developer offers shitty product and is upset when customers don't want to pay.
* Developer doesn't understand that nobody wants to pay for a downloadable "higher resolution letter."
* Developer trades shitty free product for spam and is upset when customers mark it as spam.
* Developer doesn't get that people don't read privacy policies.
Did I miss any?
Per /. tradition, I have not RTFA.
From my experience, this is not true. The problem is that a lot of developers / distributors of "free" software assume that, because it is free, you will be gladly willing to accept a poke in the eye with a stick. I.e., they can make buggy, badly-documented and/or dysfunctional software, then berate the user for complaining about it. If you're going to compare free to non-free, you need to compare solid, fully-functional and well-documented free software against similar non-free software.
My time is worth something: it is absolutely *not* "free" if I have to spend 10 frustrating hours to determine that it was never going to work for my needs.
[spam removed]
Is it free to play?
I have a long-term experience to relate. I'm already in an area that doesn't pay -- I'm a composer.
My Bathory Opera site has been around a very long time and gathered lots of goth, vampire, and opera fans. Over the years I'd diligently answered their emails, provided research, and generally made it a useful site. So when it was finally time to produce the opera for about $25,000, I began fundraising. Of the 1,700 on my email list for the site, exactly five made contributions. The funds were raised from about 140 others (plus out-of-pocket) and the opera was eventually produced for about $27,500 (October 2011).
Many others then said, oh, yes, as soon as the DVD comes out, I'll get one (add lots of "!!!!!!!"). It's been available for two weeks as a physical copy with an opening night souvenir book or as a download. Sales: 1.
Yet these same folks continue to write, ask for information, photos, evaluations of their latest Bathory plays, etc. As long as their entertainment costs nothing, they're happy to play along.
Dennis
We live in a free market. Businesses have the choice to use watever model they want. If a business model doesnt work for ur particular business then dont use it. But dont complain because others r successful using the same model that u cannot figure out how to drive a profit from. If u can not find any business model to make money then go out of business. I am not a supporter of the concept of artificially crippling progress to support old cash cows. Just because some model worked in the past doesnt mean we should reject those methods that undercut them and force people to move into jobs of the future. We dont really talk too much about how robotic systems replaced masses of workers in the manufacturing industry any more. Competition is what it is... the most lean companies providing the best service will always win in an open market and that is how it should be. If u seriously believe that there is less total money being spent on software worldwide then in the past... well u r wrong. There is lots of money to be made, it just comes through different channels and depends on reaching out to the world market. If u complain about open source software then I will tell you that perhaps the commercial version has reached its limits and it was time for it to be replaced. Do you really think ur browser software would be better if u paid for it?
He created a site that does a single thing, that people will only ever use once.
His terms of service essentially said, "by using this service you agree to let me spam you indefinitely even though our business relationship is concluded in 5 minutes".
People responded appropriately when his emails stated rolling in.
This article isn't about why offering a free service doesn't work. In fact, the author admits that his free service was actually quite successful in bringing in traffic. What failed was the author's attempt to monetize the traffic he generated. The mobile app market already figured this out: Make the free version chock full of annoying ads and you'll still be getting some income even if most people won't cough up the dough for the premium/full version.
As several people have already pointed out, the e-mails he sent out are spam. E-mail lists should be opt-in and the user shouldn't have to play a game of "Where's Waldo?" for the little opt-out check box, when signing up for a website. If the default behavior for the sign-up form was "opt-in", the author deserved every single spam complaint sent his way.
The bitching about technical support is his own fault. Don't want to offer free users technical support? Fine, don't provide contact information. Take a page out of eBay, Craigslist and Google's book - set up a user-to-user support forum and let people help each other. Or take the lazy route and just tell people if it breaks, they get to keep both parts.
The author concludes that he won't be offering the free service again next year. Well, guess what, there's a golden opportunity here for someone to offer the same service and put a coin in their pocket in the process. If you've got a bunch of people in "Christmas shopping mode" telling you exactly what their kids want for Christmas - that's gotta be worth something to somebody.
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DRM is like antifreeze, to the MPAA/RIAA it's sweet, to the consumers it's poison.
The freemium model works best when a customer adds value for other customers. This way each customer is a profit center, whether paying or not. An example is linked in, where nobody in their right mind would be a premium customer unless all those freeloaders were around. In the case of Tyler Nichols, a feeloader adds no value.
the purpose of computers is to serve customers, and if open source lowers prices for customers, its called 'capitalism'. artificial inefficiency is a hilarious thing to 'fight for' in a supposedly modern society. i imagine all these crying IT people never gave a second thought to all the factory workers etc they put out of work with their 'innovation'.'
This is a very common reaction: Deny categorically, the category or entity associated with my experiment (or experience).
You can read reviews that exemplify this all the time. "I got screwed so I will never ever use them again. 1 out of 5." Will you always get screwed? Have you always been screwed? Will anyone reading the review get screwed? Not necessarily. Ergo, Verizon (insert your favorite company) survives.
In any case, the blunt interpretation here is he created a spam site with problems, got complaints, and hardly anyone paid.... This really has little to do with freemium, and everything to do with why his venture failed... It sucked.
On the topic of freemium, if a service is valuable, people will pay for it. There is no denying premium as a model. If a service is free, people will try it. There is no denying the free model either. If any service provides both free and premium services, it is by its very nature freemium. And with such a scheme so easy to setup with web based services, freemium will never go away, nor should it. Always offer what you can for free. It works, and there is no doubt about it.
Sure, it doesn't work, IF...
- you're a dev team of ONE
- your customers are children (wtf?)
- your target market are people who are using your product to ask for more free stuff (letters to Santa are the ultimate in asking for free!)
- your competitors are really no different than you, and are free (the post office does it for free!)
Done with freemium? Should be more like done with selling online products to children!
Yes, many freemium users may be forever freeloaders. However, don't some of them eventually buy but in smaller percentages? Look at H&R Block going to a freemium business model in the brick and mortar world.