I remember being at some digital marketing conference a couple months ago. Well what felt like a couple months, but the way this year is going it could quite easily have been last week. Anyway this was the first place I ever heard the phrase Freemium, since then I have spotted it in Wired magazine and other blogs.
So what is Freemium?
Freemium is a business model which works by offering basic services for free, while charging a premium for advanced or special features. The word freemium is created by combining the two aspects of the business model: free and premium. The business model has gained popularity with Web 2.0 companies.
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.
This model in its various guises is being used everywhere from the music to airline industries.