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Freemium vs. Ad Supported Subscription Models

August 18, 2010

The “Freemium Business Model” was first coined in 2006, and has continued to develop with the evolution of Web 2.0. We are starting to see more instances of it now more than ever before due to a simple fact: businesses need to make profits. Although valuable free content and technology has been running rampant, more and more companies have a need to find the balance between making profits and continuing to offer free content/services.

Therefore, the question is: Do your customers prefer the experience of freemium models or ad supported?

The weight to this answer could have a profound impact on how a business develops products. One way to go about understanding what your customers want is by simply asking them (similar to what Reddit did). Run a poll or survey to see which direction the masses are leaning. Alternatively, you can always rollout a test model as well.

Many companies are following suit with the freemium model: Hootsuite, Reddit and now Slideshare. My personal preference in the two models is – it depends. It depends on the actual product and/or offering.

Do you have a preference as a customer between the two models? Which model has worked better for your business? Please leave your comments below.

image credit: tonylwong