The good news is that freemium services could introduce a lot of companies to technologies they might never have purchased five years ago. They are also being used by people who aren’t necessarily in a traditional IT role, because they were developed with the needs of line-of-business personnel — the managers, the admin staff and even the CEO — in mind.
“In some ways, the approval cycle has gotten a lot easier,” Mr. Purves says.
“Instead of it being something where I want to buy a piece of enterprise software and have to engage the tech people, where there’s a window of installation some time next September, now people can access these programs through a Web browser.”
Insightful article by Shane Schick from the globe and mail today on web services and the “Freemium” model. I had a chance to chat with Shane earlier this week about some of the challenges and opportunities of selling Web services and the “freemium” model [the modern equivalent of shareware, where you offer a free version and try to make your money by holding back features to the pro version].
We talked about some of the challenges of the Freemium model in terms of getting users to pay, but at the same time how in the business world, the model is working as Web services can deliver a lot of value to companies relative to traditional installed IT – and your typical business manager has a higher discretionary spending threshold than, say, the average myspace teenager. Freshbooks for instance is a great example of a Canadian Web2.0 company that has successfully take a big bite out of a small business market traditionally dominated by the likes of Intuit and other desktop applications.
I would add to the conversation is that freemium is not the only model going. Charging for it directly, is just one way to monetize a Web service. because of the service/community rather than from it. Advertising is one example, or building your app “as a feature rather than a service” that can sometimes create much greater value (much greater than you could have earned on your own) once plugged into a larger existing brand community or infrastructure. YouTube is of course the spectacular example of this as an acquisition play, or closer to home, bubbleshare and no doubt Nuuvo will follow as well.
Full article: ‘Freemium’ services: A Web surfer’s paradise