Paid Features: The Chicken Or The Egg
On more than one occassion I have questioned the lack of paid features on web 2.0 sites and realize that much of the problem is that people feel to reach a critical mass you need offer everything for free. There are two things wrong with this line of thinking:
- Since when do you need a critical mass to start making money?
- Why can’t free/paid features be rolled out simultaneously?
In essence the problem that people think they are facing is one with the chicken and the egg. You want to make money from paid features, but you want to bring people onto the site first. So what do you do? Include the features from step one or give everyone the free stuff and then include afterwards?
For 9rules sooner or later (hopefully more sooner than later) we will being to release paid features for my.9r without worrying about what the numbers with regards to registrations. We’ve had this planned from the beginning and it is only a matter of finishing the stuff up. However, I know that other companies get put into this situation and fear that adding features that must be paid for will cause people to rebel. Maybe some people will, but we feel that as long as we are not changing what you get for free already (and continuously making that portion better) then you have the option to pay for the “pro” features if you want to. If not you can continue on your merry way down the free path.
Why don’t we see this more often? I think it comes down to fear. Too many of us have become blinded by big numbers. If we can’t report a million pageviews or a million registrations then we are not at the same level as the other big boys and that is where we need to be first correct? Does it really matter as long as you are making money and building up?
Or maybe there is the fear that you can’t offer anything compelling enough for people to pay for so you just continue to release new stuff for free. However, why not set a line where the free stuff stops and the paid stuff begins? If it doesn’t work out then you can still release it for free down the road anyways.
I like the idea of simultaneously developing free and paid versions at the same time. I would rather have my chicken sitting on an egg instead of waiting for a chicken to lay an egg or watching an egg hatch.
Related reading:
Love it. I love watching and experiencing 9rules grow.
Best of luck with this.
By Daniel Nicolas on February 27, 2007 10:22 pm
Assuming your competitors don’t take your paid features and offer them for free… that would work fine,.
By Ro on February 27, 2007 10:28 pm
I couldn’t agree more. There seems to be a prevailing theory that just being popular will lead you right to a bucket of gold somewhere, when in reality there are lots of products that are incredibly profitable that few people know about, while many of the very popular services struggle to break even because there just isn’t a viable revenue stream (other than yet another round of VC funding). What good are 100,000 users if they aren’t generating any revenue? Wouldn’t you much rather have 20,000 paying customers?
By Brad Daily on February 27, 2007 10:46 pm
Hi, it’s definitely possible to build a site that’s both free and generates revenue at the same time. Two examples:
Stumble Upon - http://stumbleupon.com/
Anyone can use the service free, but advertisers can pay to have their sites presented to users. This is done carefully, so the sites are actually ones they’re likely to be interested in.
bla.st - http://bla.st/ (my own site)
Anyone can place ‘cards’ on bla.st free, but they can optionally pay money to have their card promoted to the top of their chosen categories or onto the front page.
Having the best of both worlds really is a great way to operate and grow.
By Tim on February 28, 2007 12:24 am
Ro: Just because competitors offer the same features for free doesn’t mean they pose a threat. You could go to xyz.com and get those free features, but you still won’t have the community that 9rules has. Thats
By Montoya on February 28, 2007 1:08 am
ugh, I didn’t finish my paragraph.
… that’s where the real value is, and it took years for 9rules to build it.
By Montoya on February 28, 2007 1:08 am
I think if you were to have a paid feature, that the feature would have to be something that could transgress the service and be useful in multiple platforms.
Aka if my.9r decided to provide “pro” hosted accounts that users
By Michael on February 28, 2007 2:25 am
could use to blog, I think that could be useful. Sorry about the double post.
By Michael on February 28, 2007 2:26 am
Strong competitors, this is the reason number one, why to release your stuff for free.
By Ivan on February 28, 2007 3:00 am
I’d be interested to see what the my.9r paid features would be. Flickr has pro accounts for heavy bandwidth users. MyBlogLog has pro accounts for real time and deep stats. I could see their being paid features that are connected to either heavy bandwidth usage or access to valuable information.
By Justin Kistner on February 28, 2007 12:32 pm
Wait,you lost me–perhaps I’m being dense but are you arguing 9rules is rolling out both free and paid services simultaneously? If I understand your point you think people shouldn’t worry about numbers of existing users..
..but isn’t the my.9r simply an extension of notes? Haven’t you been building the “numbers” for months now? Wasn’t that your “chicken”?
By Devin on February 28, 2007 12:36 pm
The way it is now, your my.9rules profile is essentially the 2nd-class citizen as far as functionality is concerned, with the main reason people have my.9r accounts is to post and respond to Notes.
What Paul is saying is that it won’t always be like this :)
By Mike Rundle on February 28, 2007 1:41 pm
Oh boy, free users including 9rules members are second class citizens of 9rules! ;)
I still don’t see this as a simultaneous release. You guys arguably had to build up a community and tons of visitors before you ever introduced these ‘freemium’ ideas.
You had a head start. ;)
By Devin on February 28, 2007 2:13 pm
Since you wish to get buried in semantics then no it isn’t simultaneous and I was more referring to the fact to how close it would be to the release of Ali instead of the release of Notes in general. Otherwise, yeah we have a community already.
As for worrying about competition and then releasing stuff for free because of it? I guess we shall just rely on advertising for the rest of our lives then.
By Scrivs on February 28, 2007 4:00 pm
Devin I said the feature of my.9rules that is “your profile page” is not the main focus, I have no clue how you think that means members or users. And regarding the simultaneous release, you have no clue what we’re talking about in regards to new features being released for free accounts or pro accounts, so how can you assume that what’s out there now has anything to do with what we’re adding next?
By Mike Rundle on February 28, 2007 4:07 pm
You’re right Mike, I skipped past the ‘profile’ part.
And yes, I have no idea what is coming. But since you already have something, which is what I thought Scrivs was talking about, then the freemium features aren’t simultaneous.
I see what you guys are saying, just wanted clarification. We’re on the same team, no need to get defensive, Rundizzle. ;)
By Devin on February 28, 2007 4:50 pm
Skype did it right when they gave away calls to a landline for a year. A couple months ago you had to pay for that service, but they discounted the rate for a limited time, and you could still make free calls to other Skype users. They kept the free plan and offered a paid plan where the value was worth much more than the cost.
Zoto has done the opposite just announcing that they’re deleting all free accounts and making everyone upgrade to a paid plan to be able to continue to use their site. No freebies whatsoever. If you’re ever looking to label your company as an asshole, this is the way to go.
http://mashable.com/2007/02/28/zoto/
By Travis on February 28, 2007 10:27 pm
We’ve found with WP.com that having free competitors actually doesn’t have that much of an effect, even when they give away what you charge for specifically.
By Matt on March 1, 2007 5:01 am
[...] Let’s ignore the grammar and focus on the message of this comment: Strong competitors, this is the reason number one, why to release your stuff for free. [...]
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