Thursday, July 2, 2009

Struggling with 'freemium'

Courtesy of iTunes, Google, Twitter et al, I've become accustomed to having access to wonderful internet based services at low/no cash cost. As an investor in technology companies, I've also been exposed to the constant struggle between creating, and maintaining, a wonderful community experience, while garnering sufficient revenue to support ongoing investments and reward stakeholders for their efforts/capital. Sometimes companies deliciously achieve a balance between low barriers for customer acquisition, and building a service that members will happily pay to use.

Unfortunately, it does not always work so smoothly. Let me share a recent example with you.

Over the past year, I have built a family tree on The Company offers an easy to use free service that crosses into paid land when the members on your tree or the storage used for photos and documents crosses a proscribed threshold. Till recently the service has been a nice usher down memory lane.

I was recently exposed to the system's ability to automatically discover 'smart' matches of relatives who are displayed on other MyHeritage family trees. With permission, you can link trees and expand your family's horizon. Recently, a distant relative, by marriage, requested a link to me. When accepted, my little family bush became an oak tree and I blew through the 500 person (more on this later) free ceiling and into 'freemium' territory.

Now for the struggle.

Crossing the threshold had the side effect of denying me access to any family profile or data. Instead, here's the message that now heads the home page:

Your family tree has 549 people. This exceeds the Basic subscription plan of your family site. In order for your family tree to display all people, you need to upgrade the site plan. We have a special offer: 35% discount on our Premium plan! But hurry up, this offer expires very soon.

Click here to upgrade now Need help? Chat with us live (English)

The message is a bit misleading as ANY site access is now denied, without the premium subscription. Here's what I see now. Too bad, I can't delink the distant cousin, or selectively delink 'non-blood' relatives, as the data on the site is hostage to a paid subscription. Thinking about what has gotten my ire is that, rather than having the patience for me to 'grow' into being a premium member, an innocent link, causing a site black-out with no remediation, coupled with a policy change (see below), makes me feel like I've been drafted, rather than volunteered to be a paid member of this community.

Too bad that my struggle will now be shared by many others as the Company just announced a retroactive change in their pricing plan:

As of August 1 2009, Basic family sites will have a higher storage quota of 250 MB (instead of 100MB today) and a lower family tree capacity of 250 people (instead of 500 today).

I know investors and some management in this Company and have always been impressed with their passion and sensitivity towards their community. They also have an obligation to shareholders to build a proper business. It will be interesting to see if the implementation of the premium service in such a heavy handed manner affects the community's trust in them. Looking at their site, I can't find any mention of them communicating this change for existing, or potential members to evaluate.

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