A lesson about free and freemium

Why was Make/Grow Local founded as a nonprofit? Because “free” doesn’t stay free in a market economy (aka capitalism).

Unless a platform is owned by the participants and communities, the funding forces that created the commercial platform will one day expect large returns on their investments. They do this by “monetizing” their captive audience, once it gains marketshare/traction and possible dominance. The loss leader (the free service) wins participants, and then when they are dependent and can’t easily leave, the fees begin (or increase).

As an example of how this monetization is inevitable, an essay on no-longer free online learning courses studies the trend:

Massive Open Online Courses used to be 100% free. But they didn’t stay that way. As MOOC providers focussed on finding a business model, they started putting certain aspects of the experience behind a paywall, hoping to get more people to pay. MOOCs went from “free” to “free to audit.” This shift to a freemium model — with more and more chances to up-sell — seems to be working for the providers. The top three services earned more than $100 million combined last year.

So in the race between various solutions in the marketplace now, Makers and Growers (and Buyers) should carefully consider in what basket they place all their eggs.

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