Fred Wilson had a post a couple of days ago, in which he described his favorite business model:
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.
After pointing out a few examples (Skype, Flickr, Trillian, Newsgator, Box.net and Webroot, and to which, I would add Craig’s List, LinkedIn, and The Ladders), he asked for help in naming this model.
One of the suggestions he got was Freemium.
I am a big fan of the model Fred describes. I also like the name freemium. I the interest of spreading the meme, I wanted to blog it, too.
UPDATE: After including The Ladders in the freemium category, I see that Marc Cenedella, its CEO, disagrees. 🙂