In business, they say there is no such thing as a free lunch. Everything has a price. But what happens when you redefine lunch?
There’s a rush of new services based on the freemium model and even more companies attempting to monetize what they once gave away for free. Popular legend traces freemium to the comment section of Fred Wilson’s March 23, 2006 blog post. Wilson connected the model to the idea of shareware and asked for name suggestions (by the power of the Internet, I present the original historical document). In a watershed Internet moment, one tossed-off portmanteau in the comments section gave freemium its name.
It’s a powerful model getting a lot of discussion. Here are a few industry leaders who get it right. Names are omitted, but you can figure it out.
Streaming Music Player: Every key component, and almost every song ever, is free, but with audio and visual ads unless you go premium. The upgrade ditches the ads, unlocks streaming mobile access and OMG every iPod ever made just wept a single salty tear. For those hooked on instant, legal access to music, the idea of turning your phone into a galactic jukebox is worth the admission price.
Record keeping/Note-Taking Service: Everything is free, even mobile access. Premium gets you more storage and functionality geared for powers users and business applications.
Popular online word-game: Free to play, but a small fee gives you access to tools that allow for deeper strategy.
I think the best freemium products/services give you a free starter kit to begin enjoying the thing. If you want more access, more power, or more control (and don’t we all want more of that?), you can have it for a price. Naturally, this kind of model works best if you provide self-serve access to something valuable. I wonder what other things the freemium idea could be applied to.
But if even if you’re not an Internet start-up company, and freemium isn’t for you, there’s something important to note. There’s a lot of free stuff out there! The Internet hosts a cornucopia of productivity tools and other resources that you can get without punching in a credit card number. So what new thing are you trying now? You’re trying new things aren’t you?
Let us know what you think about freemium in the comments. Share your favorite tools and resources (freemium or not) as well.