A month ago we were asked "Would you pay for Hulu?", and this week we're being asked "Would you pay for MySpace Music?" It seems like the business model for premium web videos and music is changing, and the new name of the game is "freemium":
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. - Fred Wilson
The freemium business model can be seen in play at many successful web 2.0 companies such as Flickr, LinkedIn, Skype and Box.net. Offer basic services for free, then offer advanced services for a premium cost. Pretty simple.
For MySpace, the answer to the question "Would you pay for MySpace Music?" seems to be an overwhelming "NO". MySpace Music has fallen behind its rivals and doesn't really have anything advanced or enhanced to offer that consumers would be willing to pay for.
Hulu, on the other hand, has more options available to it. As the leader of streaming web video, Hulu is in a great position to turn its captive audience into a source of income. Meghan Kean at eConsultancy lists several of the approaches available to Hulu: ad-free access, offline viewing access, additional extensive programming, on demand video, pay-per-view video and early access to shows.
What would you pay for a Hulu subscription? eMusic charges from $11.99 a month for its service. Netflix subscriptions start at $8.99. Would Hulu start at $9.99 a month and tier up depending on the amount of premium videos you watched?
Or, would you prefer a pay-per-view video option for premium content? iTunes charges $0.99 a track and $9.99 an album. Would you pay $0.99 to view a premium video? $9.99 to access a whole back season of a certain show?
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