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The Freemium Model's Reciprocation Effect

2 pointsby MintChocoisEwover 5 years ago

1 comment

troydavisover 5 years ago
I don’t think industry-wide stats bear this out, and they may actually support the opposite conclusion: people mostly upgrade only when absolutely required to.<p>Dropbox’s conversion rate is 2-4% (depending on what minimum level of activity one uses for the denominator). The difference between theirs and Spotify’s is that with Spotify, all free users hear in-stream ads. With Dropbox, some % of users are satisfied-enough with the free product.<p>Dropbox is both more representative of typical consumer conversion rates (1-3%) and more representative of the knobs that a freemium business has. In both cases, the conclusion isn’t that people upgrade due to perceived goodwill, it’s that Spotify - and any business which people listen to constantly - has an unusually effective way to motivate users.