Cloud computing development drives free value-added model to prosperity

Introduction: Foreign media wrote today that with the development of cloud computing technology, the cost of computing and storage resources is also decreasing, thus creating an opportunity for the prosperity of the "free Value Added" (freemium) model.　　The following is the full text of the article: re-attention as the cost of computing and storage resources declines, startups that use the "free value-added" model, such as Dropbox, SurveyMonkey, Animoto and Eventbrite, are booming. Startups with a lot of venture capital funding will offer products and services free of charge, and then attract users to upgrade to better quality versions. This is the so-called free value-added model.　　Driven by Fred Wilson, partner of Ventures, the Union Square, the word became popular since 2006.　　Although it has been born for many years, this model has received more attention recently because it helped some companies achieve profitable growth. LinkedIn may be the most watched free value-added enterprise. The professional social network was listed earlier this year, with a current market capitalisation of about $8 billion trillion.　　The company achieved quarterly earnings for the first time this month, doubling revenue. Users can join LinkedIn for free, but they will need to pay a certain fee to use the advanced service.　　The company's revenue from paid subscribers grew by 60% in the second quarter to $23.9 million. Price reductions are the same as LinkedIn, and SurveyMonkey, a web-research firm, has been profitable and growing fast.　　The company has 8.5 million users, much higher than 2.6 million of the company's CEO, David Gudeberg David Goldberg, when he took office in 2009. Goldberg that this success partly benefits from the free value-added model. "It fundamentally changes your view of the business," he said. We have no salesmen, our free users can help us to promote.　　"The company has conducted about 280,000 online surveys a month and handled more than 3.3 million questionnaires, with 166,000 and 2.06 million figures for 2009 respectively." Ten years ago, the price of servers and storage was so high that such businesses were struggling to provide free services. In 2000, a user running a basic network application through cloud computing technology cost about 150,000 dollars a month, according to Andreessen Horowitz, co-founder of the US venture capital company Anderson-Horowitz Foundation.　　Now, using Amazon Web Services ("AWS") to run the same apps, it only costs 1500 dollars a month. SurveyMonkey's free service allows users to conduct surveys within 10 questions, and the number of responses to the questionnaire is limited to 100. If you spend 200 dollars a month,Can enjoy the problem and the number of responses to the questionnaire are unlimited services. A few years ago, SurveyMonkey A survey of more than 1000 responses to the questionnaire. But the company then lifted the rule because the extra cost of handling a large number of questionnaires was significantly reduced. "The extra cost is much less than the 1999 (when the company was founded)," Goldberg said.　　He also said the change attracted a lot of users who were more used, which meant more people were involved in the investigation through the SurveyMonkey, thus "launching viral marketing for us".　　Profitability key However, Goldberg also said that SurveyMonkey does not reflect the advantages of the free value-added model in part because its services do not use too much computing and storage resources. In his view, file storage and sharing services Dropbox more to reflect the characteristics of this model. The service was created in 2007 with 25 million users, but only 4 million in early 2010.　　Dropbox provides 2GB of free storage space for users, 50GB requires a monthly fee of 9.99 U.S. dollars, 100GB monthly charge of 19.99 U.S. dollars. "To provide cloud storage services, you have to earn the storage costs and achieve a certain profit margin," said Jeremy Levine, an analyst Jeremy Levin Bessemer Venture, a venture capital company. The cost of providing 1GB of storage space in the past is high, and consumer demand is likely to change. Today's cost is so low that it can offer more attractive pricing. Levin added that free users are likely to be upgraded to paid subscribers if free value-added services are priced at a lower price.　　Attracting free users to spend is the key to making profits from the free value-added model. "Approximately 1 to 5 per 100 free users will eventually become paid subscribers." If a company's conversion rate can reach 10%, I will seize the opportunity to invest.　　"said Levin. Paid users online video editing service Animoto has 3 million registered users, up from 2 million a year ago. Brad Jefferson, the company's CEO, said there were about 100,000 Brad Jefferson.　　He also disclosed that the company's new users of the conversion rate of the paid users is about 10%. But Animoto needs a lot of servers and storage to create video slides and store files. "Before the cloud was born, we needed to buy servers according to forecast requirements and to pray that our predictions were correct," Jefferson said.　　He said the cost of deploying such a set of servers in 2006 was high and beyond the company's financing capacity. Animoito is a big customer in AWS.　　When the company launched its Facebook app in 2008, its users soared and their leased AWS Server grew from 100 to 5000 in 4 days. Jefferson SupplementWay: "If it weren't for cloud computing, we might have gone bankrupt."　　"But the extra computing power has increased the cost of Animoto, so Amazon has invested in the company to help it grow." The ticketing website Eventbrite a free value-added model because of some unexpected incidents. In addition to the basic costs, the company also charges a 2.5% commission on tickets sold through its website.　　But if the tickets sold are free, Eventbrite earns little or no money at all.　　Eventbrite initially worried, but because the sale of some of the activities of the ticket does not cost too much computing resources, the company has actively adapted to the change. The more people who use Eventbrite, the faster the spread of new users.　　The expansion of ticket types also helped, as users knew they could find many different activities from Eventbrite. Failure cases but the free value-added model adopted by the online photo and video storage site Phanfare has not been successful. The company started offering 1GB free space in 2007, as well as unlimited charge space.　　While registered users have increased significantly, profitability has been suppressed. Andrew Erlichson, Phanfare co-founder Andrew Er Rickson, said in a 2009 blog: "Users who use less than 1GB but buy paid services are the biggest contributors to our profits." But those who use free services will significantly depress profitability. "If the cost of providing services to free users is too high, free value-added is not an excellent business model." "he concluded.　　Phanfare was bought by the cloud backup service provider Carbonite $2 million this June. However, Rickson's aversion to free value-added services has eased recently. "If we are going to take advantage of the free value-added service, we may be able to reduce the cost significantly by compressing the file," he said in a media interview this week. "" Phanfare only provided original quality documents, which is one of the reasons why we support the free value-added model when the cost is too high. "said Ernie Rickson. (Ding Macro)