“The easiest way to get one million people paying is to get one billion people using” (Phil Libin CEO Evernote). Freemium can only offer the hope that customers will fall in love with your product and be willing to pay for it later. This is a scattershot approach to monetization according to Rags Srinivasan. He argues that it’s time to take a deliberate and more targeted approach.
Freemium can work wonderfully for your business but its not a guarantee that it will work for the other person. Just because you have one million downloads, it does not mean that all those people who downloaded your app will be converted to paid users. Lets face it many people like free things and as long as you app is free they will use it. But developers will argue that giving an app for free in the initial stages will help drive adoption and build a larger customer base, and then find ways to monetize the app. The only challenge here is how do you persuade users from a product or service that they have been getting for free. You have to provide high quality experience to make the users want to pay for the product or service
Freemium is not a new model, musicians have been releasing free music videos as far back as we can remember. Once they built the fan interest, it crossed over into tour and album sales. Now it’s free remixes on bandcamp and soundcloud. Free chapters to preview of ebooks on Kindle, Free version of Hulu with only the latest episode v full seasons on Hulu Plus etc. It’s now synonymous with ‘building your audience’, and successful with the combination of large numbers and brand loyalty (this is according to Monica Obaga content editor, Buni Tv).
We had a very interesting discussion during wireless Wednesday on Entertainment on whether freemium model is taking over premium in entertainment . The meetup which was sponsored by m:lab East Africa attracted a rich crowd who made the discussion very lively, controversial and informative at the same time. The Key discussants included David Muriithi – Managing Director Creative Enterprise Center, Moses Kemibaro – Founder & Strategic Advisor at Dotsavvy, Jimmy Gitonga – iHub Manager, Community Lead at iHub, Waliaula Makokha – Founder and CEO Jooist, John Karanja – Founder Whive, Roger Gichuhi – Digital Business Developer Buni Tv, Jisas Lemasagarai – Former Associate Manager – Business Development, Africa at InMobi and Kahenya Kamunyu – Founder & CEO Able Wireless Company.
Key points noted during the discussion are;
Content – Content is key. Content is applicable to every app not just in the entertainment industry, because customers buy content. The reason why Kenyan music and games have not penetrated the global market is because of our content. We have great content and local stories that people out there would like to hear, we just have to package it in a way that it is appealing to the global market. With great content, people have no problem paying for games and music. “Be unique, discoverable and tell your story and we can create a new business model by telling our own stories” words of advice to developers from David Muriithi.
Piracy – “Piracy is good for business, you just have to know how to play it right“ says Kahenya. Piracy which was given decent names during the discussion like alternative distributors and informal distribution channels has actually played a big role in the distribution of content for many artist in the music industry. According to Kahenya Kamunyu, piracy has taught us two things; one, the current models of distribution that we are exploiting are not working and two, piracy has created opportunities. The only way to ensure that that your content reaches a wider mass is through partnering with the alternative distributors (pirates). This will ensure that the person in the village has your music, if you relay on itunes and the like, you will just sell your music to the chosen few who own iphones. The music industry needs to tap into the existing distribution models available and find a way of taking advantage of them.
Target the global market – For you to achieve the one million downloads that you are aiming at and the kind of traction that investors are looking for, you have to target the global market. Especially in the entertainment industry you cannot survive just focusing on the Kenyan market. When it comes to gaming apps like ma3racer, most of the people downloading the apps are from Indonesia and even Mongolia. Most Kenyans don’t play games on their phones and the few who play are not willing to pay for them, lets face it Kenyans like free things. People will pay for games if there is content that makes them spend time on the game and they are passionate about the game. According to waliaula, game is a universal language hence developers should create games with a universal appeal.
Market-led vs creative-led – Most creatives come up with products from their creative ideas without looking at the customers’ needs and the market. When it comes to creativity of the product, its 100 percent, then you want to roll out the product into the market and discover that’s not what your customers want after you have put in time and energy and probably resources into the product. When coming up with a product, developers should be market-led rather than creative-led but of course without losing your creative idea.
Some of the Challenges outlined include;
Bridging developers with the market – Founders and CEOs of startups (most of whom are developers) were encouraged to go out there and talk to the customers, get to know if their product is appealing to them and what are some of the changes that will make the product/service better or even attract more user rather than just sitting in the officing coding and delegate that duty to another person. There was an argument that most developers just like coding, thats what they are good at. One participant even said, we should not try to make developers marketers. As a founder/CEO, in the initial stages of rolling out your product, you should be able to know how your product/service is being embraced in the market, the best way to know is by doing market research, talk to people get to know what they think about your product.
Penetration into the market – Its really hard for developers especially small developers to penetrate into the market. Partnering with digital agencies can be one of the solution.
App discoverability – We have over 1.4 million apps across all app stores, how do you get your app discovered? Many app stores do not give visibility to the small app developers. On 30th July 2013 Facebook announced Facebook Mobile Games Publishing, an all-new pilot program aimed at helping small and medium-sized developers release their games across the world. The pilot program will see Facebook work with select game developers to promote their games across Facebook’s mobile apps.
Photos and video of the meetup are available on our social media.