Freemium Business Model

Fred Wilson writes about his “favourite business model.”

Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.


Skype basic in network voice is free, out of network calling is a premium service

Flickr a handful of pictures a month is free, heavy users convert to Pro

This business model has been around for a long time. Shareware always used a model like this and there are many successful software companies that have been built with this model.

It works even better with web native services.

10 Emerging Technologies

Technology Review writes:

Nanomedicine and nanobiomechanics both illustrate nanotechnology’s increasing contribution to the understanding and treatment of diseases. In biology, epigenetics is part of an exploding effort to understand the ways that chemical compounds can influence DNA, while comparative interactomics is a compelling example of how researchers are beginning to visualize the body’s remarkable complexity.

Diffusion tensor imaging is the most recent in a series of astonishing breakthroughs in imaging the brain. Meanwhile, cognitive radio, pervasive wireless, and universal authentication reflect the continuing struggle to keep the digital world accessible and secure.

There is also controversy on the list: nuclear reprogramming describes the contentious hunt for an “ethical stem cell.” Finally, some of the technologies, such as stretchable silicon, are just cool.

Mobile Data Survey

Financial Times writes (via Yahoo News):

Mobile phone users are unlikely to pay extra to access the growing range of video and audio content available on their phones, according to a global KPMG survey. This trend could push operators into rethinking their business models.

“Mobile service providers will need to stop thinking of converged services purely as a revenue booster,” said Sean Collins, global chair of KPMG’s communications practice.

“They should consider them as a churn reduction tool, allowing them to present a much more stable, loyal subscriber base which should be attractive to advertisers and digital commerce partners.”

Software as a Service

InfoWorld writes in a special report:

SaaS ecosystems are emerging, such as the on-demand, SOA-based platform developed by Rearden Commerce, which connects business customers with travel, shipping, and other service providers through identity-based Web apps. And then theres Salesforce.coms (Profile, Products, Articles) exciting new AppExchange platform, which offers a hosted space for sharing apps that the company calls an iTunes for business applications.

All this activity, however, doesnt mean the SaaS wave is poised to engulf traditional licensed software. SaaSs share of the business application market today is more like a drop in the bucket. And enterprises have been slow to embrace SaaS, raising objections over reliability and availability, underscored by recent outages.

Yet the arrival of the big enterprise-software guns, the emergence of integrated business communities in the cloud, and increasing desperation on the part of IT to minimize application deployment and maintenance hassles, suggest that SaaS is on the verge of much faster adoption.

Live Clipboard

Jon Udell writes about an idea proposed by Microsoft’s Ray Ozzie:

The first bridge connects Web and Windows applications. Copy from one Web site, paste into another. Copy from the Web, paste to Outlook. Copy from Excel, paste to the Web. Web-style data, including RSS feeds and microformatted pages, is augmented on the clipboard with Windows-style representations. Finally!

The second bridge connects Web users to emerging Web activities. Subscribing to an RSS feed, for example, has never conformed to any familiar user-interface pattern. Soon copying and pasting RSS feeds will feel natural to everyone, and Ozzie hopes the copy/paste metaphor will also make advanced capabilities more accessible. Consider my LibraryLookup bookmarklet. Dragging it onto the browsers toolbar isnt something easily understood or explained. Using the clipboard as the wiring junction will make a lot more sense to most people.

The third bridge connects cultures. OReilly conferences are ground zero for the open source alpha geek tribe. Encounters with visitors from Microsoft have sometimes been tense. But Ray Ozzie strode into the midst of this gathering bearing an olive branch and an offering. The olive branch was Firefox, which he used for his demo. The offering was Live Clipboard, which he called a gift to the Web. This was exactly the right way to ask for the broad support that will be necessary if Live Clipboard is to become a Web-wide standard on all platforms.

TECH TALK: The MySpace Story: The Popularity

What made MySpace succeed where others failed? Robert Scoble spoke to MySpaces CTO Aber Whitcomb who pointed out the reasons:

1) They made sure influentials in Hollywood (stars, bands) were among the first users.
2) They listen to their users and add features frequently (usually noticeable new features every week).
3) They let the users tell them what to do. He mentioned that other services, like Friendster, tried to tell their users what not to do.
4) When MySpace visitors first log on they already had a friend: the founder Tom. That was in contrast to other services where you had to work to find your first friend. His page also gave you a template to get started.

Danah Boyd analysed the MySpace phenomenon in a talk recently:

I have been following MySpace since its launch in 2003. Initially, it was the home to 20-somethings interested in indie music in Los Angeles. Today, you will be hard pressed to find an American teenager who does not know about the site, regardless of whether or not they participate. Over 50 million accounts have been created and the majority of participants are what would be labeled youth – ages 14-24. MySpace has more pageviews per day than any site on the web except Yahoo! (yes, more than Google or MSN).

MySpace is a social network site. In structure, MySpace is not particularly unique. The site is a hodgepodge of features previously surfaced by sites like Friendster, Hot or Not, Xanga, Rate My Teacher, etc. At the core are profiles that are connected by links to friends on the system. Profiles are personalized to express an individual’s interests and tastes, thoughts of the day and values. Music, photos and video help users make their profile more appealing.

The friend network allows people to link to their friends and people can traverse the network through these profiles. An individual’s “Top 8” friends are displayed on the front page of their profile; all of the rest appear on a separate page. Bands, movie stars, and other media creators have profiles within the system and fans can friend them as well. People can comment on each others’ profiles or photos and these are typically displayed publicly.

When MySpace was initially introduced, skeptics thought that it would be just another fad because previous sites like Friendster had risen and crashed. Unlike the 20-somethings who invaded Friendster, the teens have more reason to participate in profile creation and public commentary. Furthermore, MySpace’s messaging is better suited for youths’ asynchronous messaging needs. They can send messages directly from friends’ profiles and check whether or not their friends have logged in and received their email. Unlike adults, youth are not invested in email; their primary peer-to-peer communication occurs synchronously over IM. Their use of MySpace is complementing that practice.

The community angle of MySpace has highlighted in a comment by Robert Young on Om Maliks blog: If you are a member of MySpace, its not the web-page and blog you spent time constructing, its your social network of cyber-friends youve cultivated and accumulated over time.”

The Economist wrote in an article about News Corp and Rupert Murdoch in January:

Like Google before it, has entered the English language. Its appeal is that its members create an anarchic mix of their own content. The site is a collection of individuals’ homepages with photographs, music, links to friends and blogs.

As an internet business, considers itself to be an entirely new breed. Chris DeWolfe, its co-founder, says he wanted the company to take inspiration from sociology as well as from technology, and for that reason he based it in Los Angeles rather than Silicon Valley. The community has grown virally, with no advertising. Some of the photographs verge on the pornographic, and has about ten people in a room at its headquarters in Santa Monica, Los Angeles, weeding out explicit photographs. With its young members, its 24-hour discussion groups on everything from graffiti to independent film-making, and its thousands of undiscovered bands, has the ambition not just to be useful, like Google, MSN or Yahoo!, but cool.

Jeremy Wright wrote about the impact and influence of MySpace in February:

MySpace is Bigger Than Blogging: There are more nearly as many MySpace accounts as blogs (about 30M vs about 100M. More of them are started every day than blogs (about 250,000 vs about 100,000). There are more posts per day being made on MySpace than on all blogs combined (about 1.5M vs about 1.4M).

MySpace is Accelerating Faster Than Blogging: Considering it is much newer than blogging, this should be obvious. While it is currently smaller than blogs, at the current rate of growth and acceleration, it will be larger than blogging by this summer. That is ALL of blogging.

MySpaceers Network. Fast: It isnt that unusual to find MySpace accounts with thousands of connections. While many (outside of MySpace) might think that these connections are useless, the truth is that they represent the ability for networks to form quickly, and when graphed they do show that certain people are more likely to connect nodes and groups of nodes than others.

Fred Wilson wrote about MySpace and captured the broader trend: We are at the dawn of the age of personalized media. The web has given the world a place where the audience is the publisher and what we are witnessing (and hopefully participating in) is the personalization of media. It will manifest itself in many strange and wonderful ways.

Danah Boyd also compared Friendster and MySpace:

When Friendster launched, it was quickly inhabited by populations who had good reasons to connect with each other. By and large, the early adopters were living in a region different from their hometown (or living in their hometown post-college and cranky about it). Finding “lost” friends was a fun game – people wanted to connect. Of course, connecting is not enough and it was bound not to last, but it was fun.

Connecting is also the initial activity of newcomers on MySpace, but they move beyond that quickly. Of course, it never completely goes away, especially since MySpace acknowledges that not all “friends” are friends and no one bats an eye if someone collects hundreds of people. It’s more like a process of namaste – i acknowledge your soul and you acknowledge mine. MySpace did not try to force people’s connecting practices into pre-existing ideas of what should be. They let the practice evolve as users saw fit, without criticism, without restriction. As it evolved, people did new things with it. They used it to flirt, to advertise bands and activities, to offer cultural kudos.

The key message: Social technologies succeed when they fit into the social lives and practices of those who engage with the technology.

Tomorrow: The Acquisition