The goal of this site is to develop a comprehensive resource for news, trends, case studies, advice and discussion on all things related to ”freemium” business models. I’m far from an expert on it myself (at this point), but over time I hope to learn the intricacies of this established, yet burgeoning, model.
Freemium?
Many of you are undoubtedly familiar with the term “freemium”, coined by Jarid Lukin on Fred Wilson’s blog back in March of 2006. But for those who aren’t here’s a quick history lesson. In his blog, Fred described his favorite business model, then asked for suggestions on names. His description went like this:
Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.
Of the 33 names he got, he decided on Jarid Lukin’s suggestion of ”freemium”. And since then the name has been almost universally adopted. It’s got a Wikipedia article, and a Google Blog Search returns almost 3,000 results for just the past month.
Freemium, schmeemium
Now I know a lot of people out there will say “freemium” is a fad. Just the latest in a long string of monetization strategies for online businesses. But the fact is, freemium isn’t just limited to the internet. The model is taking off across a variety of industries - music, publishing, software, service industries and more. And while there are countless interesting examples of the model being use in these arenas, the Freemium Blend (this blog) will focus mainly on the use of the freemium model by online businesses and services.
Why? Because personally I think this model is just starting to gain traction online. Traction outside the porn industry that is. Think about it. Almost every porn site operates on a freemium business model. They lure visitors in with free content (teasers, trailers, etc - don’t pretend you don’t know), then get you to pay a subscription fee to access the good stuff. And they’ve done mighty well at it. Only recently did porn take a second seat to social networks as the hottest destinations on the web. But in terms of revenue pornography is still king, with approximately 3X the revenue of the major social networks in the U.S. for 20008 (by my rough estimates). So as a monetization strategy, the freemium model has been tried, tested and proven. Despite having fewer viewers, the freemium model has been able to monetize those viewers at a much higher rate.
So what’s the key to using the freemium model to make money online? If I knew I wouldn’t be writing this blog. So join in while we explore the ins and outs of the freemium business model.
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