Freemium in user generated content/social service?


Could freemium be a good model of earning profit from user generated content services?

Let's take same hard example - It's a mobile phone application for exchanging information about events on the roads. In this case the service is free, but are you able to come out with an idea to implement some business model into it?

Take into account that:

  • this service needs an enormous concentration of users in the same region and at the same time to be useful for all of them (even though they have more than 5 mln users, the service is useless in vast majority of places, as those users are spread across the whole World)
  • the user, who several times pass the police radar patrol without being alerted is quickly discouraged, so you have to get a lot of people to use the product in a short time or you will end up with high amount of inactive and disappointed "users"
  • the more users use the service and the more each single user uses the service, the more valuable the service is to the entire community - so you cannot just get rid of 95% or 99% users who would never paid you as you need them for the service to work
  • the 1% of users, who need and/or like the service so much that they would pay you, are at the same time the most valuable data suppliers

What do you think about it? Do you know any examples of freemium model implementation in services based on user generated content? The cases of both successful and failed implementations would be helpful.

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asked Apr 26 '10 at 19:05
Pawel A
191 points
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1 Answer


Depending on the business model, there's lots of examples.

Essentially all of the geo-coded mobile apps fall into this category. People participate ("play") for free; the value comes on the flip side offering deals and in market research.

The abstract business model is:

  1. Users on the front end use the system because it's fun, valuable, or both.
  2. That activity generates useful information which can either be sold directly or used to market back to those users in an acceptable manner.

I wouldn't say this is an easy business model, because it's hard to get critical mass of users for anything (even if free) and because it's harder than you might think to "sell data" or otherwise value the behavior of the users.

answered Apr 26 '10 at 23:53
16,231 points

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