Would You Spend Your Lunch Money on a Web 2.0 Service? - I asked in October as part of a recession-related series. The key point was that software startups to turn towards business, offer value and charge for it.
The genius in the Freemium model is that it allows new services to gain traction, essentially using us, free users as the marketing vehicle, then is we get hooked, we’re likely upgrade to enhanced services for a fee. This is neither “free” nor “bait-and-switch” – a completely acceptable, normal business model. In fact I think – especially in bad times like now – a switch by a popular service after their beta period to a fully paid model is also reasonable, albeit not easy.
I argued that Josh Kopelman’s Penny Gap theory does not hold for “essential services:
If I am hooked enough on a good service that I really don’t want to lose, there must be a price point low enough to entice me, and another one where paying for it becomes a no-brainer. For mass appeal, it should not be a “business decision”. Do you think twice before grabbing a coffee at Starbucks, or grab a quick sandwich for lunch?
Would you spend lunch-money (or just the price of a coffee) on a service you “can’t live without”?
Well, here’s the chance to test the theory. Jott, the voice-to-text service will cease to offer a free version starting February. There will clearly be some dissent, see this user comment @ TechCrunch:
Confronted with this broken promise, I will just stop using it. Jott = Dead pool
But surprisingly (or not?) he is almost alone with this opinion. Most users seem to understand the need to get paid for. After all, that’s how we get food on the table, pay for our homes or get that latest iWantit Gadget – why would Web 2.0 services be different?
Of course users will have the final say, and they vote with their wallets. I think Jott’s prospects are pretty good: since the introduction of Premium levels in August about 30% percent of their user base converted to a paid level, even though a free version was still available. That means Jott meets two fundamentals tests:
- the service is a “must-have” for enough people to sustain a business
- the price level is right
But let’s forget Jott, think of your own “can’t live without” list:
If you are a user of Web 2.0 services (and who isn’t?), would you spend your coffee change to save your favorite ones?