Fred Wilson, a managing partner at two VC firms in New York, had a highly touted post on his favorite business model that a lot of SEOs and Internet marketers will be able to identify with:
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.
It’s nothing new to the search marketing community that this is one of the most effective ways to build an online business, but what is new is the name Fred’s given it – the Freemium Business Model. This is one of those terms (unlike Sandbox or Web 2.0 or SEM) that actually does a good job of describing the service.
