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Comment by JS_startup | Hacker News Reader

There might be a few, but I'd be willing to speculate that there are many MANY more examples where it did not work and the company either went under or had to perform a complete reversal like this one.

I'm not saying freemium will never work, but let's face it: it's ubiquity is because it was at one time the flavor of the month startup model that VC money was pouring into, not because it is a superior or effective business model.

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> I'd be willing to speculate that there are many MANY more examples where it did not work and the company either went under or had to perform a complete reversal like this one.

So the freemium model is like any other small business?

"There might be a few startups that work, but I'd be willing to speculate that there are many more examples where they did not work and the company either went under or had to perform a complete reversal."

Not perfect correspondence, but pretty close. :)

There are two things to consider when thinking about freemium.

1. Can you monetize free users with your product? In many cases you can, using ads, affiliate links, search partnership, ...

2. Is it cheap for you to support free users? This have to be compared to conversion rate. If it is really cheap to support free users than you can have bad conversion rate.

In some specific cases the freemium model is the only model that works: products where interaction with other users is required for product to be usable. Only example I can think of right now are online games. You need players in order to attract more players, some of which may convert to be paying customers.

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