Avoid Two Common Pitfalls With The Freemium Business Model
The freemium business model uses free content to attract traffic. Also, the free content is used to market paid content. Paid content can also be called premium content. Hence, the term freemium (free + premium). This is an excellent model because it helps you avoid these two common pitfalls when building commercially-oriented sites.
1) The first pitfall is only relying on free content.
I see many new webmasters giving away all their content for free. They don’t have anything to sell other than ad space. Also, many of these webmasters are depending on AdSense for much of their revenue.
There’s nothing wrong with using free content. However, if you only have free content, you’re probably leaving a lot of money on the table.
Sure, you can rely on ads but you can keep the ads and earn more income by selling some of your content. You can sell an ebook, podcasts, videos, a paid membership section, or even a paid newsletter.
Also, by selling your content, you raise its perceived value. People value things more highly if they paid for it.
2) The second pitfall is not having enough free content.
Some online business start with the idea of just setting up a site and selling stuff. Many ecommerce sites are like this. However, the “build it and they will come” model doesn’t usually work online. There are too many competing sites. The internet is overcrowded and attention is scarce. You will need to spend much time and effort to get noticed and capture the attention of your intended audience.
One of the best ways to get traffic is through free content. Free content attract people to your site. It often takes a couple visits to a site before someone buys a product. A constant stream of free content can encourage visitors to keep coming back to your site. Eventually many of these visitors will pull their credit card from their wallet and buy something from your site.
Free content helps you site become a resource rather than a site that just sells products.
For example, a site that sells audiobooks can have articles about the best budget CD and mp3 players and interviews with the authors and narrators. The site can also have tutorials on how to use iTunes to organize your audiobook library.
The free content model especially works if you’re selling a service. For example, if you’re a wedding planner, you can have free articles and videos about principles for planning a great but low-stress wedding. This builds your credibility and helps prospective customers know you and trust you. This credibility and trust will lead to increased sales.
Sites That Use The Freemium Model
Let’s look at 3 examples of sites using the freemium model.
Performancing sells blog statistics software and marketing and blog management services. It attracts bloggers through its free blog posts that help bloggers succeed.
SEO Book sells an SEO ebook. Like Performancing, it attracts prospective customers through its blog.
ESPN sells subscription paid content called Insider. It has a ton of free content to draw readers. Also, non-paying visitors can see the first couple of paragraphs of the Insider articles. (Here’s an example.) These paragraphs entice people to subscribe.
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What kind of business model do you use for your site?
This post was inspired by this post, Freemium Publishing & Sustainable Business Models.