Freemium – Options and Potential

Free of charge or paid. Before we continue discussing Freemium, it is important to note that we have numerous options to configure our system to fit our needs. We have variety of schools/associations, countries, user groups, sponsors, courses, donors. For each of them we – as a community or as individual authors - can customize what will be free and what will be premium value-added service. In addition to that, revenue sources like grants, donations and sponsorships can be an important part of the business plan. Benefits of being free of charge. Having content and online activities for free brings benefits:
 * Promotion of premium services. For example, Open University (The Open University Council, 2010) whose free online content influenced at least 11,000 students to register for premium courses.
 * Value generated by users: content, tags, reviews, promotion.
 * Viral and traditional advertising.

How can it be free? Through history, prices of books or other educational materials were based on three elements:
 * Production costs
 * Scarcity
 * Conditions of access to content or service

Nowadays, information can be reproduced and distributed at nearly no cost; scarcity has become abundance. The only important cost factor left is production cost. However, in the environment where thousands or millions of users can simultaneously use the same product, proportion of production cost compared with market share is very low. Furthermore, thousands of users are eager to collaborate on product development. Wikipedia, TeacherTube and WikiVet.Net are just a few examples.

Freemium revenue models? Chris Anderson talks (and illustrates) about 4 ways we can generate revenue by Freemium – four different kinds of free (Anderson, 2008).

Figure 7. Four different kinds of free. Source: Freemium.org

Which of those 4 Freemium modes is the best for a veterinary learning consortium?

It seems that we can use all four of them:

Free 1. Get one thing free and pay for another is a model well-tested in MIT’s example. Everybody can get courseware for free. Tuition fees, however, are required for additional features. In our example, we can have access to part or whole course materials and activities for free, but courses with mentors and peers can require a fee. www.Freemium.org explains it: When the supply of a product increases, the demand for its complimentary products increases (Freemium.org, 2008). Therefore, if we increase the supply of educational materials and activities, the demand for products such as mentored educational activities, credits, additional materials and privacy will increase.

Free 2. Ad-supported. Online learning communities represent well-educated, specialized groups of people who are spending a significant amount of time collaborating (improving their skills and habits) online. This is an excellent opportunity to do market research or to promote products.

Free 3. A few people subsidize everyone else. Revenue generated from premium services or donations can cover costs. Premium services may include: additional support in mentoring, additional materials, statistical data about users preferences. In the example of the OpenCourseWare Consortium, nonprofit foundations, as main donors, were paying costs for everyone else.

Free 4. People giving away things for non-monetary rewards can be a significant source, starting with content experts (and course developers, practitioners, students . . .) who would be willing to donate their courses and expertise through philanthropic associations to corporate and government grants.

Can Freemium in e-education make an improvement?

Potential! In aforementioned examples, we saw that the Freemium business model can combine the best characteristics from commercial and free-content sharing models and online groups. It can:
 * Drastically increase users’ population
 * Provide significant revenue
 * Develop a strong community that will support further development, quality control and marketing (viral marketing–word of mouth)
 * Maximize exponential advertising potential

Conclusion.The Freemium business model is used by the world’s leading universities (members of OpenCourseWare Consortium) and has generated some of the most successful economics and social phenomena such as Google, Facebook and Flickr. There are numerous positive examples of Freemium in the educational environment and the recent Web 2.0 and eLearning 2.0 booms have helped successful Freemium startups. Therefore, the question is not if we can use the Freemium model to develop and market online courses. The question is when will we do it? Will we be at the forefront or will we be laggards? Will we have a well-done plan or will we wait for change to happen?


 * [1] MIT OpenCourseWare: http://ocw.mit.edu
 * [2] Harvard Open courseware Initiative: http://mycourses.med.harvard.edu/public/
 * [3] Open Yale courses: http://oyc.yale.edu/