Paywalls, as used from the New York Timesīesides a lower barrier to entry, freemium products push data network effects.Free products are easier to market and provide a lower barrier to entry. Freemium is not a pricing strategyĪgainst intuition, Freemium is not a monetization model but an acquisition strategy. Whereas Microsoft needs to charge for Office, Google can allow itself to offer Docs for free. That point of leverage allows them to develop other products better and faster than competitors. Google was able to offer unlimited storage for five years (and longer for other products) because they have a lot of cash. Leverage comes from models with significant upfront user value while delaying monetization as much as possible. " your margin is my opportunity" (Bezos). Google has always been great at holding their breath longer than other companies to build leverage. Look at publishers or some of the most successful companies in the world like Spotify, Pinterest, Zoom, and Atlassian. The overall tide in the world is shifting from ads to subscription, though. So are Gmail, Android, Chrome, and other Google products. When it comes to revenue engines, Google's were always driven by a Freemium strategy. The problem is that they still just make up 0.8% and 13% of total revenue. In contrast to the slowdown of Google Ad revenue over the recent years and the drop in Q3 2020, Cloud's and Youtube's revenue are growing. As I mentioned in The most successful Startup in History, Google is under increasing pressure to diversify revenue streams beyond ads. The move comes amid increased pressure on Google to monetize its products more. A 5% conversion rate from free to paid would yield at least $7.2B ARR. Not just photos.Ĭonsidering that Google Drive has about 2 billion users ( ZDNet), even a 1% conversion rate would yield in $1.4B ARR - and that's only considering users upgrading from free to basic ($6 per seat). Note that Google will also count files from Sheets, Docs, Slides, and other services toward those 15GB. Google is also introducing a new policy of deleting data from inactive accounts that haven’t been logged in to for at least two years." The change will happen on June 1st, 2021, and it comes with other Google Drive policy changes like counting Google Workspace documents and spreadsheets against the same cap. Google starts charging for Photos in June 2021 and narrow the Freemium offering down to 15gb after 5 years.įrom The Verge: " After five years of offering unlimited free photo backups at “high quality,” Google Photos will start charging for storage once more than 15 gigs on the account have been used.
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