Fred Wilson, a managing partner at two VC firms in New York, had a highly touted post on his favorite business model that a lot of SEOs and Internet marketers will be able to identify with:
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.
It's nothing new to the search marketing community that this is one of the most effective ways to build an online business, but what is new is the name Fred's given it - the Freemium Business Model. This is one of those terms (unlike Sandbox or Web 2.0 or SEM) that actually does a good job of describing the service.
A famous niche marketer in the fitness circles touts this as a strategy. I've tried it and it didn't work for me. Supposed to work on the Dale Carnegie principal, but I don't see a lot of merit in it.
Apparently it's just us three here tonight :)
I think advertising fits under the free model, freemium would be if you could buy a subscription and turn ads off, which has had some success.
It also depends on your definition of free. Is the use of ads on the page with content "free" or not?
EXACTLY.
I think that lots of Geoffrey's sites are based on the TotallyFree content model. Right? *lmbo*
You betcha! And I get more repeat visitors than you'd think I do :P
I even have people post comments on my splogs asking for more information - ahahhaha.
Freemium...ugh...lol
I like it... but they will be defeated in the SERPs by the TotallyFree Business Model.
I think not, my friend. The totally free model will never have the revenue to compete over the long term with the freemium. For every cool thing you can do for free, they can build a better one with their earnings.
It's a rare company that will have the brilliance to do this, but I think the "Web 2.0" trend encompasses a lot of people thinking along these lines.
SEOmoz itself is a good example - if we were totally free, we never could have produced resources like the beginner's guide or ranking factors. We had to have some revenue to create the experience, connections and time to make those happen.
That is for your biz model with a very high priced service to sell above that online document. Have you thought about all of the biz models? Some people have a $19 ebook as the top of the line sale. Lots of people work for a lot less per hour in entirely different industries.
Ugh. Yet another instance of taking a good thing and turning it into a marketing method by giving it a name.
There goes the neighborhood.
Isn't that what marketing is all about? I think the neighborhood is already gone.