Words-Worth: Freemium

You may not know the word 'freemium', but if you've tried Skype, LinkedIn or Spotify you are already familiar with the concept.

by MT Staff
Last Updated: 09 Oct 2013

'Freemium' is a portmanteau word that combines 'free' with 'premium'. It refers to a marketing strategy that allows consumers to use a basic version of a product or service for nothing, in the hope that they will go on to pay a premium for the whole thing. In the case of Spotify, for instance, users can select tunes and play them on their computers, but they have to put up with advertising and nagging messages reminding them of the benefits of upgrading to the premium version. They also have to upgrade if they want to use the service offline or on their mobiles. The freemium business model is said to have been first identified in 2006 by a New York venture capitalist and blogger called Fred Wilson. He asked his readers to name it, and a man called Jarid Lukin, of business information company Alacra, stepped in with 'freemium'. It's worth noting, though, that Alacra is not giving anything away.

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