I’ve argued that this is NOT the correct way to build a business. People will do anything for free… getting them to pay money is much harder. Typically about 1% or less of your user base will convert. So for Skype that would be about 60,000 of their 6 million users.
Flickr now has 10 million members… so using this number we can expect about 100,000 to convert.
Well Russell Buckley over at MobHappy blog has the scoop. So far, of the 10 million users they have 80 who order prints. What they don’t disclose is the number of pro accounts which run $24.95 (a pittance). Lets say it’s a 100K that would be about $2.5 million in revenue.
Oops – not quite what the VC’s had in mind.
Remember the Prime Directives…
1) A known customer with an identifiable problem
&2)Measurable, sustainable, profitable, revenue from volume
1 is easy, everyone has a problem – 2 is much harder. It’s not about the number of users you have, it’s about the number that pays you something. I predict that Freemium model will come under closer scrutiny from now on.