Freemium

Freemium has been in the software industry since the 80s, but was only recently coined (mid-2000s). Back when it came out, trial and "lite" versions of software were distributed, on floppies and other media, to businesses. In the 90s, the model extended to personal software as well. Now, it's ubiquitous on every App store. Having said that, freemium has always been around in one way or the other; you wouldn't buy a car without a test drive and people buying new technologies have always had the need to see it in action. For instance, before trading a chunk of meat for a bow and arrow, a person had to know what it did and how well—that's why the telephone had such slow adoption from when it was introduced.

So, freemium has been around for ages, what's interesting is how much it's evolved in the past few years. Now, freemium usually has/does several of the following:

• enough content to become addictive (Angry Birds, a World of Warcraft trial, Farmville) 
• trusts that you will forget that you signed up for monthly payments (Netflix, Hulu, LinkedIn) 
• targets children (Angry Birds' Eagle Eye; solves a level and requires no password to buy) 
• generates buzz (games on social media)
• includes ads ("Lite" games on App stores)
• deprives users from a real sense of belonging/achieving things without paying to use (Second Life, freemium MMORPGs)
• pay what you think it's worth (Radiohead's "In Rainbows" album)

How much is an album that you haven't heard worth?
What if Rolling Stone gave it 4.5/5 and Metacritic averages 88/100?
Would you feel guilt for paying $0.01?
Would you feel honor for paying $100.00?

In the new freemium world, you don't just take a car for a test drive; it addicts you, charges you if you're careless, talks about itself to your friends (sometimes without your permission), entices you to buy more stuff, and makes you feel like a loser in a fake world (if you don't own it). How can you evolve freemium further? 

Easy, you find a better way for someone to pay for it. Many users ignore paid freemium content (as high as 95% of users) and most don't click on the ads (unless it's accidental). Maybe time will change people's reaction to the business model, but companies need to shape them with innovative marketing and better implementations of the model (i.e., not making the customer angry about paying for things that feel as if they should be free). Some freemium works (Farmville, Angry Birds). Many people, however, feel ripped off; almost as if the seller used bait and switch tactics.