Speaking of neologisms, I came across two good blog articles recently that discuss the “freemium” business model used by a number web sites. Freemium refers to the practice of providing a free level of service or membership, but providing a paid-for, premium service for people who want more features. Evidently the name was coined via VC Fred Wilson. About a year ago, he discussed the as yet unnamed freemium business model in one his bog entries and he asked for an appropriate name. Freemium was the lucky winner.
Anyway, back to the recent blog entries about the freemium model. Don Dodge discusses the financial viability of the model and Dharmesh Shah discusses issues and challenges when considering the freemium revenue model.
My wife and I have discussing the freemium revenue model in the context of Georneys. We’ve decided to provide a free service (as yet unannounced) as well as a premeium service. One of the issues that we will have to wrestle with is just how much should be free, supported by advertising, and how much should be premium, supported by subscriptions.
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