Freemium:

• A business model that offers basic services for free, or is ad supported, but charges a premium for advanced or special features.  The model is popular with Web 2.0 companies that acquire companies through referral networks, organic search marketing, and word of mouth.

The most obvious example of this is within the online pornography industry.  Many porn sites will give visitors a free trial or free gallery of abbreviated clips, enticing visitors to pay for the premium membership to gain access to all the content.

Less lascivious websites and services also use this model, of course.  Webmaster Radio is a good example, giving free access to the last 30 days of content with commercials.  If you sign up for membership, you get commercial free listening & access to their full archives.

The reason this model works is simple – get the audience or target market hooked with the free content and generate that desire to pay for the premium content.

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Glossary Definition From ABC’s of Online Marketing by Alexandra Wharton, Issue 22, Revenue Magazine

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