‘Freemium’

In the world of direct mail, the word freemium (in use since at least 1988) refers to a sample of the company's product that is sent along with a marketing piece (think: tiny boxes of cereal, "personalized" pens, detergent samples, etc.).

freemium adj. Relating to a business model that offers basic services free, but charges a premium for advanced or special features.


Skype gives some of their services for free. And then charges premium for extra services. They same we have seen with Musicovery on our last class. Another example Winamp

Free + premium = freemium

Attract users with free services, then charge them a premium for special features.
Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc, then offer premium priced value added services or an enhanced version of your service to your customer base.

Freemium 2.0. Or, the business model known as Google.

Here is the site I used to get the information.
+ reduced costs of communication
+ Freemium 2.0 by giving the services for free you can become an intermediary that is a platform between businesses and the users whose attention you have and whose intentions you understand.

- Word of Mouth maybe not enough go get all the customers as you would have gotten with marketing advertising as the mainstream buyers need to be pushed to buy the products anyways
- Works only if the product is REALLY good and worth recommending