Freemium – A Net Business Model

Free is great, isn’t it? The Net is packed with free stuff.

Need a free dictionary? Use Dictionary.com. Need some free music? Listen to Pandora. Want some free news? Try CNN.com. Free classifieds? Try craigslist.com. Free phone calls? Dial Skype. It’s all free. I should know, I use all of these sites and services.

And, insanely enough, many applications are free. Years ago, you had to pay for word processing, spreadsheets, and databases. Now, you can get pretty powerful software, all for free.

As I noted in an earlier blog, free isn’t really free. Someone is paying for it in the hopes of earning money. While most of these applications and resources will remain free, there are a few that are starting to turn a profit on the “freemium” model.

That is, it’s free, but to unlock powerful premium features, you gotta pay. Hence, the techronym freemium.

Freemium in My Life

Here are some examples of free and freemium services that I use:

Google Docs - Google ApsGoogle Docs:
Free productivity software. Good stuff. I use it a lot. All free, until I want to roll it out enterprise wide to my coworkers or employees.

And if you use GMail, you may eventually run out of space. Yup, look at the bottom of the GMail window, and you will see a little “% used” message. After you exceed your GMail limit, you may be prompted to upgrade to a paid Gmail account.

Zoho PremiumZoho Docs:
Similar to Google Docs, Zoho is a productivity software suite. Actually much broader and more powerful than Google docs, but not as well known.

Similarly, you can do a lot with Zoho, but if you want more features and space, you pay a Freemium price. I’ve been impressed with Zoho’s software suite and may tap into a few of their premium features.

Flickr PremiumFlickr:
A photo sharing social network. I keep all my photos here. And now, with a pro account, I have greater control over my photo sets and I can upload videos.

Someone gave me a freemium Pro Account for my birthday and now I am addicted to it.

Evernote PremiumEvernote:
A free to use idea-and-stuff capture system. (It’s hard to explain. Check it out.)

A freemium account unlocks more space and flexibility in Evernote and some cool digital camera features.

WordPress PremiumWordPress Premium:
This very blog is based on free WordPress software. The free version allows me to blog on their platform or even install it on my own web server.

But a premium version unlocks some extra features and hosting options.

Will Freemium Work?

Will the freemium business model work? Will people pay for stuff that they are used to getting for free?

Let’s hope that the added features are an incentive to get people to shell out a few bucks. Because eventually, some of these programmers and content creators are going to want to get paid…they have to pay the rent and utilities too.

For now, most everything on the Net is free and freemium features may help to keep it that way.

In the future, freemium features are going to matter a lot. This will be the way that many sites capture revenue…and the way they attract advertisers and partners. (For example, “how many people are registered for the free service vs the freemium services?”)

For more on freemiums, check out:

And, as always, a visit to my personal website at buddyscalera.com is still free

Comments

  • http://blog.cullmanndesign.com chris cullmann

    You had forgotten the best free software of them all: LINUX! The freemium model is something I really believe in. It’s akin to supporting a local business. If you use a service or product and believe in it, rely on it, support the developer(s). Not only are you helping keep a service you like and use from disappearing, but you are also help create competition and innovation in the marketplace.

  • http://www.wordspicturesweb.com Buddy_Scalera

    Is Linux Freemium? The generic Linux operating system is free, but you pay a Freemium for brand names?

    Is there a differentiation? Trying to figure out how Linux figures into this.

  • http://thousandtinythings.vox.com Amy Jeynes

    Linux is sometimes packaged and sold with other products or services, but you’re paying for the packager’s contribution. Linux itself is still free, so I don’t think it counts as “freemium” in the strict sense. But it’s good to be reminded of it. Buddy, how about a post on freeware (GIMP, Linux, etc.) and how much (or little) business it has taken away from for-profit companies?

  • http://www.wordspicturesweb.com Buddy_Scalera

    Amy,

    Good point. The freemium label seems more suited to cloudware. Linux OSs like Ubuntu don’t have a freemium version. Even though I am a Mac user, I do quite like Ubuntu and they seem to make some money from their Ubuntu merchandise. And Red Hat is a fee-based OS.

    Good point about other freewares. I will definitely touch on that in the future, since I have used a lot of cloud applications.

  • Pingback: Top 5 Things I’ll Pay for on the Web : Words + Pictures = Web()

  • Pingback: Apple’s 10 Billion…eBooks? Apple’s 10 Billion…eBooks? : Words + Pictures = Web()