Tag Archives: free

Succeeding With Freemium (Case Studies)

A look at how to suc­ceed with freem­i­um, through a num­ber of case stud­ies:

  • Exper­i­ment with dif­fer­ent freem­i­um mod­els: When Pan­dora offered 10 hours of free radio before requir­ing users to pay an annu­al sub­scrip­tion, the vast major­ity of their users left once their alloc­a­tion of free time expired. The com­pany then exper­i­mented with a free, advert­ising-sup­por­ted mod­el with a premi­um option avail­able (that also included a desktop applic­a­tion, high­er qual­ity streams and few­er usage lim­its), and the sub­scriber con­ver­sion rate grew to 1.7% of their 20 mil­lion users.
    Auto­mat­tic does­n’t employ the con­ven­tion­al tiered premi­um mod­el, but instead offers “a‑la-carte freem­i­um ser­vices”: premi­um ‘add-ons’ such as domain map­ping. The prob­lem with this, says CEO Toni Schneider, is that it can be dif­fi­cult to mar­ket the dis­tinct ser­vices effect­ively.
  • Dis­cov­er where your mar­ket­ing costs should go (where are you acquir­ing users?): Drop­box star­ted attempt­ing to acquire users through con­ven­tion­al search mar­ket­ing, the acquis­i­tion costs of which were thou­sands of dol­lars per cus­tom­er (for a $100 product). Noti­cing that user refer­rals were a big source of growth, the com­pany then changed tac­tics and star­ted offer­ing an incent­ive (more stor­age space) to all exist­ing users for refer­ring friends. Drop­box CEO Drew Hou­s­ton says that “the big les­son there is if you adopt a freem­i­um busi­ness mod­el your mar­ket­ing cost is the free users” and “search is great for har­vest­ing demand, not cre­at­ing it”.
  • Focus on deriv­ing max­im­um value from users: After fig­ur­ing out the dynam­ics of their user base (that inact­ive users drop off over time and act­ive users star­ted paying–there was min­im­um free­load­ing), Ever­note real­ised good growth and invest­ment interest. The com­pany’s CEO says freem­i­um can work for any busi­ness if you have 1) a great long-term reten­tion rate, 2) a product that increases in value over time and 3) vari­able costs.
  • Beware and identify/remove abusers: Not (neces­sar­ily) free­load­ers, but those who use free ver­sions for nefar­i­ous means. MailChimp’s leg­al costs increased 245 per­cent after abuse-related issues (spam­ming, etc.) increased by 354 in the first sev­en months of mov­ing to a freem­i­um mod­el. They had to devel­op ways to auto­mate their detec­tion (a waste of resources).

I also like the intro­duc­tion to this art­icle:

Don’t spend money on mar­ket­ing, do offer flex­ib­il­ity and data export­ing to elim­in­ate buy­ers’ regret, make sure to cap­it­al­ize on and value good­will, and only charge for things that are hard to do. That’s what some star­tups say is the key to suc­cess in the freem­i­um busi­ness. But the biggest reas­on […] Pan­dora, Drop­box, Ever­note, Auto­mat­tic and MailChimp are doing well is because they have great products that people want. They’ve been able to get those products to a broad audi­ence by using the freem­i­um mod­el — that is, offer­ing a free ser­vice with the option to upgrade.

Cory Doctorow’s Experiment: Does Free Work?

For his next col­lec­tion of short stor­ies to be pub­lished, titled With a Little Help, author and blog­ger-extraordin­aire Cory Doc­torow will be run­ning an exper­i­ment so that he can see wheth­er his strategy of offer­ing his work for free is work­ing.

With prices to range from $0.00 to $10,000 for vari­ous pack­ages, Doc­torow is to track his fin­an­cial pro­gress and the pro­gress of the exper­i­ment as a whole on his new column at Pub­lish­ers Weekly.

This first column looks at how he will be mak­ing money (his mar­ket­ing and pub­li­city strategy will be covered soon, too):

  • E‑book: free, in a wide vari­ety of formats
  • Audiobook: free, in a wide vari­ety of formats
  • Dona­tions: whatever hap­pens
  • Print-on-Demand trade paper­back: $16 (approx­im­ately; price TBD)
  • Premi­um hard­cov­er edi­tion: $250, lim­ited run of 250 cop­ies
  • Com­mis­sion a new story: $10,000 (one only)
  • Advert­ise­ments: TBD
  • Dona­tions of books: TBD

That’s how the money is going to come in. To be hon­est, I have no idea how much money that will be ($10,000 has already come in, of course). But I do know what I’ll do about it. I’m going to dis­close it, all of it, every month, in a run­ning tally in a monthly column here in Pub­lish­ers Weekly. And incid­ent­ally, this art­icle is gross­ing me all of $900, less my agent’s 15% com­mis­sion, and the columns $400 here­after. I will then put this into an appendix, which will be added to new edi­tion­s of the book and com­pared to the rev­en­ues from Over­clocked. That’s as close to an apples-to-apples com­par­is­on as I can come up with, but I think it will speak well to the ques­tion: what’s the best a writer like me can do on his own, versus with a tra­di­tion­al pub­lish­er for whom he does everything he can to aid in book sales?

via Mar­gin­al Revolu­tion

Free: Interview with Chris Anderson

Wheth­er you’ve read it or not, you’re undoubtedly aware that Chris Ander­son, edit­or in chief of Wired and author of The Long Tail, has writ­ten a new book: Free.

I haven’t read the book but can likely guess the premise—and giv­en that the unabridged audiobook can be down­loaded online I’ll no doubt be giv­ing it a listen at some point in the near future (Ander­son made Free avail­able online at no cost in vari­ous formats for a lim­ited time).

Until that time, this inter­view about Free between Chris Ander­son and Hugh MacLeod (of Gap­ing Void) will sati­ate my desire.

I think there are two classes of people who are afraid or skep­tic­al of Free: those who grew up before the web (ie, olds like me) and people whose indus­tries are threatened by the web (ie, medi­a people like me). Many in my gen­er­a­tion or pro­fes­sion (mostly, I hope, those who haven’t read the book) assume that Free is some­thing of a Ponzi scheme. Mean­while, my kids are also appalled that I wrote a book called FREE, but not because it’s wrong/scary, but because it’s so freak­ing obvi­ous.

Need­less to say, they’re both wrong. Free is neither a mirage nor is it self-evid­ent. Instead, it’s an essen­tial, but complicated, com­pon­ent of a 21st cen­tury busi­ness model—not the only price, but often the best one.

Some oth­er choice quotes from the inter­view (best read in con­text):

These are excit­ing days, and if ever these was a time to be over­ex­ten­ded this is it.

Easi­er: exper­i­ment­ing. Harder: pre­dict­ing.

Don’t wait to be giv­en a job to do some­thing cool. Fol­low your pas­sions, cre­ate some­thing every day, take chances and try to be the best in the world at some­thing, no mat­ter how tiny and trivial. Noth­ing impresses me more than ini­ti­at­ive. And there has nev­er been a bet­ter time to take it.

On a more pro­sa­ic note, I think that lead­ing people is per­haps the most import­ant skill these days.

Typography and Design (Two Free Ebooks)

Get­ting Real is the undis­puted bible of agile soft­ware development—a mani­festo that can change your view in a single read­ing. How­ever when it comes to typo­graphy and design, the closest I have ever come to such a doc­u­ment was Mark Boulton’s Bet­ter Typo­graphy present­a­tion. Now there’s a con­tender:

The Vign­elli Can­on (pdf)

I can­’t do this tome justice. Split into two parts—The Intan­gibles (semantics, syn­tactics, etc.) and The Tan­gibles (paper sizes, grids, type sizes, etc.)—Massimo Vign­el­li’s book cov­ers everything you could want to know about typo­graphy in graph­ic design.

One def­in­itely not to miss.

How Do You Design? (pdf)

Hugh Dub­berly’s book looks at “over one-hun­dred descrip­tions of design and devel­op­ment pro­cesses, from archi­tec­ture, indus­tri­al design, mech­an­ic­al engin­eer­ing, qual­ity man­age­ment, and soft­ware devel­op­ment”.

By read­ing this you can­’t fail to learn some­thing about design.