|Ning's new chief executive has announced that the site is going to shed staff, stop its free service and concentrate on its premium users. But it isn't the first to fail at the freemium approach, and it won't be the last Ning, which is the provider of this social network site and which lets anyone set up their own social network service, is slashing staff numbers from 167 to 98 and changing its strategy.
Recently-appointed chief executive Jason Rosenthal sent staff a memo that said: "we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity" -- that being the premium service, not the one supported by advertising.
"We will phase out our free service. Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning," added Rosenthal.
Over its life, the service has received about $120m in venture capital backing, but does not appear to have made a profit.
Ning ("peace" in Chinese) has been well regarded partly because of its chairman, Marc Andreessen, who led the development of the Mosaic browser and co-founded Netscape to replace it (hence Mozilla, a Mosaic-killer). His co-founder and former CEO at Ning, Gina Bianchini, also made a name for herself.
In a video interview published at Vator.tv last month, Bianchini said the next-generation Ning would be launched this year, and that the company was hiring. She was also happy to talk about revenue streams. She said about 13% of the user base paid for some premium services, and Ning also made money from "virtual gifts". As an example, she mentioned "bloody chain saws" being sold on the Lost Zombies network.
But the day before that enthusiastic interview was published online, Andreessen announced that Bianchini had "decided to step down after five and a half years of hard and terrific work".
Ning had banked on its user base expanding virally, and in his announcement about Bianchini, Andreessen claimed that ""Ning today is one of the world's top social networking properties, with more than 2.3 million user-created Ning Networks and more than 45 million registered users, and is far and away the market leading social platform for interests and passions."
However, in Eyeballs still don't pay the bills, a blog post at 37Signals (the company behind Basecamp, Backpack, Campfire, Writeboard etc), David Hansson
said: "Ning's problem is not a lack of eyeballs but its inability to turn them into cash money to pay the bills. Getting more of something that's a net-negative is not going to make up for it."
On Andreessen's numbers, millions of users could now be faced with paying for Ning's service or abandoning the networks that have taken them so much time and effort to build.
This is a useful reminder that no free online service is guaranteed to remain free, or even to survive. Indeed, it's a fair bet that at least 90% will, in the long term,
Article written by Jack Schofield - Source: www.guardian.co.uk/