The Freemium model is a business model that’s been popularized by the rise of internet companies and startups offering services online and through mobile apps for example.
One of the main goals of freemium services is to attract a large number of new users and gather their commercial data in exchange for the services that the company provides. Then, the premium subscribers, who will be a small share of the total users, will be those that pay for additional services with which the company will cover the costs of the rest of the freemium users.
A perfect example of this is Spotify. The biggest streaming service for music allows every user to have full access to their library of music, even for free. But the freemium accounts cannot choose freely what song they would like to hear and must settle with a shuffle selection when they listen to an artist. The premium users can on the other hand choose whatever song they want to hear, and this is the main added value for paying subscribers, among other benefits such as better audio quality.
The gaming and betting industry has also largely benefited from the freemium business model. Platforms like Asiabet.org thrive in the betting industry thanks to their compendium of bookmakers offering promotions like free bets to attract as many customers as possible so they can try betting on a range of sports that covers from the top leagues in Europe and the USA to minor leagues on the other side of the world in Thailand.
Most online betting sites accept a large selection of payment methods such as credit cards or other services such as PayPal or Skrill. It has become very natural today to use our credit cards for shopping online or subscribing to internet services, but at the start of the internet era in the 1990s, it was a different thing.
Before the era of Freemium, everything was just free on the internet. You’ll surely remember the rise of Hotmail and their 2MB of storage for an email account. Then Google appeared with Gmail and their 1GB of space offer.
The main source of funding for these platforms came from online ads. But today the CPM of online ads has fallen to the ground and the needed audiences for a profitable return are way higher than years before.
Now, tech startups are worrying more about their profits and their financial health which is making free content each time scarcer.
Even big companies such as Google or Dropbox have begun to charge their users for the use of services (in the case of Google, their photos app Google Photos) and the customers are almost left with no choice. It’s almost a no-brainer when you must choose between paying a few dollars a month or reconstructing your whole library of pictures or documents on another platform that could later do the same thing and charge for their services.
This phenomenon is rapidly spreading in media outlets as well. It gets harder every time to find online journals that offer their content for free. One of the most renowned sports news platforms in the world is The Athletic and they don’t even have free content, they’ve been recently acquired by The New York Times, another mass media outlet that charges their readers for their content online.
The market is making familiarizing us with the feeling of having plenty of online subscriptions at the same time. Just picture any standard household: the kids’ content is streamed on Disney +, the teenagers want to watch series and films from Netflix, and surely one of the adults likes the content streamed on HBO Max. That’s 3 different subscriptions to take into account and we’re only talking about series and films.
It seems as if the free-to-pay content is going to be extinguished. Consumer behaviors change over time and what we can conclude by analyzing the current demands of the market is that not only companies are replacing any freemium content for premium-only subscriptions, but the clients are falling for this.
The premium model will always be more profitable for any company or startup wanting to raise funding. In the end, it’s way more interesting for any investor to see actual turnover and sales instead of just a forecast of goals. The balance between freemium and premium content seems to have been disrupted. It remains to be seen until what point this will be applicable for future ventures. The consumer will only have room for as many subscriptions as his monthly income allows.