Digital SOMA

"1. Perpetually Free with a Paid Upgrade Option – Under this model, you build a product that has a perpetually free version that is a degraded version of the paid product. The onus is on the company to properly delineate the free and paid offering such that the basic offering is sufficiently useful to the free audience and the premium offering is sufficiently valuable to those who choose to pay."

Thoughts on Free Powered Business Models and Why Time Beats Features | Charles Hudson’s Weblog

Rafer sez:
Content people and commerce people see freemium opportunities in entirely different ways. Both can work great, but Charles’ post made the contrasts more obvious than normal for me.

Charles sees the free version as the bastardized, “degraded” version” of the real, “paid product.”

Instead, I want to support users for Love or Money. I see the premium version as a tax on the 2% to 5% of the user base that abuses the free service. Any freemium I work on is free first and premium after because I want volume. The broadest adoption net is one that offers value for participation and attention and values the free users beyond their likelihood of conversion.

It’s not just an attitudinal shift. The two groups design their services and organizations differently. Most importantly, the 80/20 focus on earned media versus advertising is reversed. Earned media isn’t free, and it requires just as much forethought — and a completely different set of testing — as a great CPA plan.

It also obviates this problem the Hiten reblogged:

It is very difficult to properly segment users and features such that you provide enough value to both paid and free audiences.

(via rafer)