Freemium: The Web’s Counter-Intuitive Business Model

Think about the freemium model for a second, because it’s completely counter-intuitive. You create content or a piece of software, and instead of charging money for it as a good capitalist should, you give it away for free.

What?!

Hold on a second, because before you think it’s entirely nuts, there is a method to this madness. The idea is to get some people to pay while building a critical mass of users to allow you to expand the business much more quickly than you could with paying customers alone.

It’s not a simple way to go, though, because as Aaron Levie, CEO at online collaboration vendor Box.net, pointed out at a recent talk called “6 Reasons You Would Be Crazy Not to Give Away Your Software For Free,” presented at the Web 2.0 Expo in New York City last month, it’s not easy to convince people to pay for something they are getting for free.

Read more at Internet Evolution

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