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Saturday, 5 May 2007

How to make money in web2.0

In answer to Aljosa Japundzic’s post about how to monetize a web2.0 service, here my small reply. Of course you can go for the old school ad-model, or even try to sell your data for marketing use. But there is also a third option: the pro account. I translated a post I made a while ago about how Google could make money with YouTube by creating ProTube.

I was originally inspired by the book “Information Rules” from 1999 that explains how you could give away free software and still make a buck by creating a pro version. I shall write down six strategies that can easily be blended or broken in smaller pieces, and end with an example for the ProTube case.

More Options
This one can be found, for example, by Flickr or LinkedIn. Those who pay have an easier way of browsing and working with the site than those who don’t.

Quantity / Quality
Also a Flickr option (but also found on Live Mail and Gmail), those who pay have more storage, or can use a higher quality version of your product.

Sometimes the case, pro users can download and upload files at a higher speed. Or if it's still the case, can access the version of your site that is hosted on a faster server.

Users who pay can first use your lab and beta features, and can get a higher degree in involvement.

Although it sounds a bit rude, this is what a lot of sites use - annoy the non paying visitors with advertisements, and let the pro-users work ad free.

And the last example, one from the old world, gives support to you users; gives them the possibility to be in contact with a real human. Make them feel you still care.

The ProTube case
Although it seems now that Google is going for the add revenue model for YouTube, it isn’t that hard to imagine how they could make money by selling pro-accounts.

  • Pro users can edit their videos, and can upload several videos a day.
  • Pro users can watch all videos in high quality and can download them in several formats.
  • Features from the lab are first given to the pro users.
  • Pro users don’t have to watch advertisements.
  • Questions of pro users will be answered by humans in a reasonable time.

I have a strong feeling that the people behind Flickr knew all those ideas, and combined them to build a great photo site. Which is still the only web service where I bought a pro-account. So next time you try to finance your project with Google ads, think about the alternative.

This is the first post of Sjors Timmer, who recently graduated as a Master in European Media and is working for an exciting web start-up and blogs for several websites.


Aljosa Japundzic said...

Yes, this is certanly a model that could be aplied to those Web2.0 services that are based on file storage, allthough some of the strategies might be interpreted as descriminating.
The base of Web2.0 is the juser, therefore, all jusers should be treated equaly, or as equal as possible.
Anyway, most of the advanced options are reserved for more advanced/active jusers, the ones that contribute the most to the service. One should not forget that in most Web2.0 services it's the users that enriches the service, and they do it for free.

Sjors Timmer said...

I do agree with you, for each web2.0 model a solid free user base in unbearable. But I think when the service is good, people shall be willing to pay a little extra to have a better quality of service.

On the other hand, people are so used to free services now, that they will rather suffer free, than pay a little for a good service.

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