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The Decline of Freemium: Ning Ditches Free In Favor of Premium
 
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By: Spacelab Research Staff
April 20, 2010
 

Cash is king, baby. In tough times and the ever-looming tough times that are ahead for the entertainment and music industries, paid services are being cued up to take the place of, or sit next to free services. The party might be over for freemium.

The people who fund online businesses are making a move to clamp down on profit margins into more of a real-time scenario instead of a maybe-profits-sometime scenario.

Ning appears to be the latest casualty of the decline of Freemium, as stated in a post (that has since been removed) in the Ning Creators Forum by John McDonald. It was an email from Ning CEO Jason Rosenthal.

"So, we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity.  We will phase out our free service.  Existing  free  networks  will  have  the opportunity  to either  convert  to paying  for premium  services, or transition  off of Ning.  We will  judge ourselves by our ability to enable and power Premium Ning Networks at huge scale.  And all of our product development capability will be devoted to making paying  Network Creators extremely happy.

As a consequence of this change, I have also made the very tough decision to reduce the size of our team from 167 people to 98 people.  As hard as this is to do, I am confident that this is the right decision for our company, our business, and our customers.  Marc and I will work diligently with everyone affected by this to help them find great opportunities at other companies."

It turns out that the premium side of Ning's Freemium drives 75% of their traffic, and thus most of their profit. The free side of Freemium for Ning then becomes the pariah that gets something for nothing, and gets their service cut in down times like the current economic cycle.

 

Tags: Freemium, Ning

 
 
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