Freemium: What’s the cost? Part 2

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Welcome back to Ned’s Diary! This week we’re going to talk about freemium apps and if they are considered to be ethical business models for the consumer. Some of the main applications that you may be familiar with are Spotify, Pandora, Dropbox and LinkedIn.

These applications, although they are ‘freemium’, differ greatly from the gaming sector that we discussed last week. Freemium applications are completely functional; the downside is usually an influx of advertisements or perhaps certain limitations . However, as a user I rarely find the need to become a premium user on any of these applications, unlike gaming where I feel compelled to pay to continue to play. I feel there is less of a physiological influence being used to lure people to pay money, the money paid for freemium applications genuinely benefit the consumer and are not just a few extra gems to continue playing Candy Crush.

The disagreement in the ethics of this is apparent in the music industry. An article in the independent wrote about how artists believed it was unfair to deliver free music to consumers. Taylor Swift and Adele are among two that have withheld new releases from Spotify because they feel it should be provided to subscribers only (Sherwin, 2015).  The solution could possibly be the introduction of paid tier and free tier users, each of which would have access to different music. Such an introduction will enforce true freemium psychology –  consumers will want what they know they can’t have.

Spotify has agreed to stick with its established model, as stated by Spotify’s Global Head of Communications and Public Policy, “We are 100 percent committed to our model because we believe that a free, ad-supported tier combined with a more robust premium tier is the best way to deliver music to fans, create value for artists and songwriters, and grow the industry.”

Spotify’s free version offers almost everything that Spotify Premium offers with an additional few adds. I never feel like I’m missing out not having the premium version. Another interesting thing to note is that Spotify is not a profitable company, they are merely supplying music to users to increase support of artists. What is so unethical about that?

On the other hand, we must remember that there are still some freemium models that do carry out unethical behaviours, one of which being Dropbox. The fear of losing data and documents is a worrying thought and Dropbox certainly doesn’t help. Although they specify the storage limits when you sign up, the average user wouldn’t understand the actual capacity. This results in users putting their information on the cloud service and either paying to continue to use the service or deleting their information.

I’m still undecided on the ethics of this matter. Why should you get free music, free storage or free networking abilities on Linkedin? There is no such thing as a free lunch, so why should you get free services? Charging for premium use is a source of funding for these companies.

So if the extra payments are necessary to maintain the high standard of the application is it really unethical to charge for it? There is rarely an obligation or a threat of ending your subscription if you don’t pay to become a premium user. It simply allows them to improve services and enhance user experience.

I feel these freemium applications do differ from freemium gaming and are certainly not as physiologically impacting on users. The very fact that we no longer need to purchase expensive packages such as Microsoft Office makes the freemium a more ethical business model.Do you agree?

Until next time,

Ned.

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References

Sherwin, A. (2015) Adele and Taylor Swift prompt Spotify to rethink free music stance. Available at: http://www.independent.co.uk/arts-entertainment/music/news/adele-and-taylor-swift-prompt-spotify-to-rethink-free-music-stance-a6766401.html (Accessed: 3 March 2016).

Kumar, V. (2014) Making ‘Freemium’ work. Available at: https://hbr.org/2014/05/making-freemium-work (Accessed: 3 March 2016).

Times, T. (2016) Spotify seeks $500 Million in additional funding with potential IPO. Available at: http://www.techtimes.com/articles/128831/20160130/spotify-seeks-500-million-in-additional-funding.htm (Accessed: 3 March 2016).

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