I like using Flickr. Infact, I liked using it so much I ponied up 20 USD for a pro account and have topped it up. I also enjoy Facebook, but would I pay 20 USD a year for Facebook now, probably not.
Now if facebook had begun by only introduced a limited function for free, with no picture posting, no messaging (only wall writing) no apps, and then said if you’re a pro user (for 20 USD per year) you can do all these things, I might, might have caved.
I believe in the freemium model, named by Jarid Lukin on Fred Wilson’s blog, and I think this is a great business model. But I don’t think you can reverse introduce a freemium model. It needs to be there from the beginning of the business or not at all.
I like a lot of services that give themselves away (twitter for example) and try and worry about the business model later. Google does a good job of this, where they create new products and worry about monetisation later. But Google can do this as they have a cash cow called search. So what if all their other products bleed cash for a couple of years, net profit is good. Start-ups don’t have this luxury so I find it confusing when start ups start without a monetisation strategy. How is this sustainable? This point is especially true during a down turn when eyeballs aren’t worth what they used to be.
