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freemium
noun

- a business model that works by offering a basic for free while charging a premium for special features

(Wikipedia)

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Freemium combines the words "free" and "premium" to come up with a brand-new expression. The freemium business model was articulated by venture capitalist Fred Wilson in March of 2006:

"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."

After describing the business model, Wilson asked for suggestions on what to name it. Within a matter of hours, blog readers submitted more than 30 ideas. One such suggestion was "freemium" and Wilson and his audience adopted it for the business model.

An early example of the freemium model working on the Internet was Musicmatch Jukebox, an all-in-one music management tool that was first marketed with a freemium model in 1999. Most users could use the basic/free version, but a $19.99 upgrade provided extra features.

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SMUGGLE OWAD into today's conversation

"With capital investment the freemium business model can be a huge economic success."