Umair Haque / Bubblegeneration
umair haque  


Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Friday, March 24, 2006

2.0 Business Models

Fred kicks off an interesting discussion about b-models; says his favorite recent model is free + premium services, which I call "enterprise subsidizes consumer" (to reflect the fact that it's often SMEs who are subsidizing the free half of these models).

An astute commenter calls this model "freemium", which is a name that is a work of art in itself - so freemium wins.

Now, I'm surprised to hear Fred say he likes this model the best. Is it a cool model? Yes. Does it make money? Sure.

But is freemium the model that's responsible for the largest amount of value capture across 2.0 spaces? Nope - not even close. You don't have to run numbers, this should be intutive - just think about how much money Flickr/Skype etc really make.

Finding your way through the maze of b-models is the focus of my next paper - here, I make it pretty clear that you should only shift to services if you haven't really figured out deep, direct value creation in the first place. That one's out next week...

-- umair // 9:13 PM // 2 comments


Oh yeah, Freemium is gonna show up in Biz 2.0 soon and go from a Google Whack to the newest entry in the OED. Catchy.
// Anonymous Anonymous // 4:16 AM

I don't think Freemium is the ultimate business model at all. The ultimate model captures value from every user and/or interaction. It also motivates others to create more value for you, leading to the rise of a mini-economy - Ebay, Adsense, Cafepress.
// Anonymous Anonymous // 5:45 PM

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