Get three services for $100/moCan the 'freemium' model weather the financial storm?
George Carlin said that when you live in the United States, you're guaranteed a front row seat to the freak show. Events of the last few weeks only reconfirm how right he was.
(Credit: CNET News)But first, think back a few years.
The deflating of the Internet bubble, which began in 2000, wasn't a one-day blowup. Instead, the pain was spread over months and only ended after dozens of one-time high-flying technology companies got obliterated.
Out of the rubble emerged a new generation of start-ups that went on to operate under the Web 2.0 rubric. And since 2002, the innovation in consumer and social-network services has been the more interesting story in tech.
But this latest market upset takes place at a very inconvenient time. (When is it not inconvenient?) It's hard to know exactly, but most of these start-ups aren't swimming in cash. Before it's over, this may become a particularly hard transition for companies that depend on Internet advertising to pay the bills. Especially companies that operate according to the "freemium" model.
What's "freemium"? Fred Wilson of Union Square Ventures nicely defines how the model is supposed to work.
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.
The idea is predicated on the assumption that you'll be around long enough to collect. In normal times, that might work. Does anyone believe we're living in normal times? Even if Bush convinces congressional renegades in his party who opposed the Wall Street bailout, this economy's getting worse by the week.
If past is prologue, the technology business may emerge changed, and ready for the next big challenge. But that's the longer-term perspective. In the meantime, there's that matter of meeting payroll. "Freemium" was a grand experiment but its practitioners don't have the luxury of time any more.
Charles is an executive editor with CNET News. He has covered technology and business for more than 25 years. A graduate of Queens College and Columbia University, Cooper began his career in journalism at the Associated Press before moving to technology coverage. Before joining CNET News, he worked at Computer & Software News, Computer Shopper, PC Week, and ZDNet. He received the Excellence in Journalism award from the Northern California branch of the Society for Professional Journalists for column writing. In addition to his blogging and podcast appearances, he is a co-host of the CNET News Daily Debrief. E-mail Charlie.
Nice try at revisionist history - the Democrats in the house have the majority and could have passed it all by themselves - if Obama and Pelosi convinced congressional renegades in their party who opposed the Wall Street bailout.... but truth is always subservient to politics, isn't it.
The Democrats hold the majority - they hold the blame for any failures to pass a bill (just as the Republicans did when they held a majority).
And WTH is up with the Speaker of the House using a time of alleged crisis to score cheap ideological/political points in her opening speech - one that should have focused on bringing both sides together? Sure 'getting one's feelings hurt' is a lousy excuse to vote "no"; but looked at deeper, it's a pretty crappy leader who starts off a vote by immediately alienating half the people she needs to get the job done.
/P
This was supposed to be a non-partisan effort, yet she just couldn't resist putting in her 98 cents worth.
It is implied in your article and the way you use the quotation, that one must wait to offer the premium product. Why ?
Is it not just as possible to have a freemium model where you can buy the premium product right of the bat ?
If the alternative to freemium is offering the premium product without a free product, then I can not see how the financial storm makes a difference.
In both cases you have a premium product that might be hard to sell because of the financial climate.
Experience has shown that, for a lot of companies, offering the free product benefits the bottom line. I fail to see where this free product could hurt the sale of the premium, even in hard times