{"id":643822,"date":"2013-02-25T13:00:37","date_gmt":"2013-02-25T18:00:37","guid":{"rendered":"http:\/\/gigaom.com\/?p=613376"},"modified":"2013-02-25T13:00:37","modified_gmt":"2013-02-25T18:00:37","slug":"dalton-caldwells-experiment-with-a-paid-social-network-is-going-free-sort-of","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/643822","title":{"rendered":"Dalton Caldwell\u2019s experiment with a paid social network is going free (sort of)"},"content":{"rendered":"

Since he hit his fundraising target and launched App.net back in August<\/a>, there have been few more vocal advocates for paid social networks and products than entrepreneur Dalton Caldwell.\u00a0You and your data are not the product we’re selling to advertisers<\/a>, he promised his backers and audience, as part of an experiment to see if users will pay<\/a> for quality and ownership.<\/p>\n

But when Caldwell’s “audacious proposal” of a paid social network opens its doors on Monday at no cost to users who receive invites from existing members for a freemium membership, it will no doubt raise questions as to whether Caldwell’s notion has failed. Critics will surely point to low membership numbers<\/a>\u00a0as evidence that Caldwell simply had to open his doors to stay relevant, and might say that providing the service for free totally invalidates Caldwell’s central premise.<\/p>\n

However, Caldwell argues that companies like Dropbox and Github have proven that you can grow a successful financial model based on a freemium membership tier, and adding those free users won’t ruin his central premise that users want pay for quality (users will still need to upgrade when they hit storage limits on free accounts). His primary reasoning behind the decision to introduce a free tier is that he’s built a decent-sized network of developers and apps so far, and now it’s time to introduce users to those apps and grow the scale of the entire thing.<\/p>\n

“In terms of the grand\u00a0experiment\u00a0there was a huge chicken and egg problem. The question is,\u00a0do you get users first or do you get apps first? So\u00a0I think the apps\u00a0ecosystem\u00a0is really nice and really healthy,” he said. “What\u2019s exciting is that that part of the experiment has worked nicely. So\u00a0now, let\u2019s start seeing what happens when we\u00a0ramp\u00a0up distribution.”<\/p>\n

Central to the App.net premise was that developers of the most popular apps would then make money by taking a cut of the membership fees based on the popularity of their products. But\u00a0the problem is that there aren’t enough paying\u00a0members so far to support the developers in any meaningful way. As developer David Smith pointed out in a prescient blog post on App.net pricing<\/a>, it’s not that realistic that an App.net developer would make money off the system — a fact that Caldwell said he understands at the moment.<\/p>\n

“The current size that we are at is not enough to sustain the developers building for it. We are aware of that. But we are working on it, and we have been working on it,” he said. “I\u2019m not sure a one hundred percent paid thing would ever get monstrously large. And the paid services that work tend to either do lots of advertising to promote it like Netflix or they have a free tier and they don\u2019t do advertising.”<\/p>\n

So on Monday, existing users of App.net will be able to send invitations to potential new users, who will be able to check it out without paying. (The full details of the changes and new plan<\/a> are explained on the company’s blog.) And as for Caldwell? He’s excited to see how it’s\u00a0received.<\/p>\n

“I\u2019m excited because, look, this is still a grand expeiremnt. We don\u2019t know if the grand experiemtn will work. But what\u2019s exciting is that in startups it\u2019s all about making it to the next stage. You always have to look one step ahead. And to me this is one step ahead.”<\/p>\n

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