

Can’t monetize free users? Try threatening them with legal action - prateekdayal
http://teamblog.supportbee.com/2012/02/15/cant-monetize-free-users-try-threatening-them-with-legal-action/

======
rkalla
This reeks of a team floundering trying to figure out how to keep a ship from
sinking.

    
    
      1. Our "Free" product is now $6000/year ($500/mo)
      2. OR give us a link-back
      3. OR prepare for a lawyering
    

While the response is inflammatory and wonderful for up-vote fodder, I can't
imagine any calm, decent person ever taking this tact with a client.

There are 17 different emails they could have sent to SupportBee that would
have been more constructive than this.

I wonder if the Gigya team is too young to know better or if they have back-
breaking pressure on them from their investors to turn any sort of profit
before they are all taken out to sea and shot.

Obviously a stupid response, but really seems to be a response out of pure
desperation more than anything.

~~~
ChuckMcM
_"Obviously a stupid response, but really seems to be a response out of pure
desperation more than anything."_

Yes, that seems to be the simplest explanation. But from the original article
this was the _second_ communication as well. The first one, (which is linked),
was pretty clear that the choices were 'give us a link or pay us money, your
choice.' The author notes it had a useless subject line. And useless or not,
if a vendor I'm using sends me an email I read it, and if it truly is useless
I ask them to not send useless email.

So this was an escalation on the part of Gigya from "We've changed our
pricing, we don't offer a free version any more so you have to choose a new
option." To "You ignored our previous response, let's be perfectly clear about
what your choices are."

Now you can argue that the sequence might be: nice, nice, threat. But if the
company is looking at a shrinking runway they might cut out the middle 'nice'
version of the communication.

And the author comments _"This almost makes it a paid link that can help them
rank up for ‘Social Media for Business’"_ No, this is _exactly a paid link_
for helping Gigya rank higher on Google. Clearly they feel like the paid link
is 'equivalent value' to the $6,000 which they want to charge.

The only economic question here is what economic value does SupportBee put on
a paidlink on their site? If it were less than $6,000 then they win by giving
the link to Gigya, if its more then they should just pay the $6,000/yr. (or
use a different service).

I can't find a lot of fault on Gigya's part here. That it caught SupportBee by
surprise seems to be because the author didn't read their mail.

~~~
rkalla

      > So this was an escalation on the part of Gigya from "We've 
      > changed our pricing, we don't offer a free version any more 
      > so you have to choose a new option." To "You ignored our 
      > previous response, let's be perfectly clear about what your 
      > choices are."
    

Exactly right.

    
    
      > I can't find a lot of fault on Gigya's part here. That it 
      > caught SupportBee by surprise seems to be because the 
      > author didn't read their mail.
    

Again, no argument from me (or I think anyone else?) -- the hub-bub is just
over the tact Gigya took.

As you pointed out above and I mentioned in my comment, there are innumerable
better ways to _state_ what they were trying to get across and they chose one
of the poorer ones.

So no problem with what they did, just how they did it.

I also can't help but wonder why they didn't just disable the widget for that
client after the 1st or 2nd notice, let the client come to them and then start
a peaceful up-sell discussion where a well-informed decision could be made
(exactly the way you stated w.r.t. to the worth of the widget/vs first-page
linking for SupportBee).

Net-net, nothing to see here, just some people being more rude than expected.

Why so rude? My guess is financial pressure is causing them to act more
aggressively to secure income; as you put it, a shrinking runway.

------
yock
This is an easy problem - change your API. It creates a built-in way of
excluding previous users and, if a bit forcefully, opens lines of
communication for users to update their implementations.

Legal threats? Good riddance to you. I'd not touch your service if it sent me
free money.

------
joedev
I act with the belief that notice by email is not enforceable and I ignore any
emails with claims of legal action. I am under no obligation to read email. If
it were true that an email serves as legal notice, then process servers would
be out of work.

~~~
a3camero
But how would companies with lots of users provide notice otherwise? Apple is
not going to be sending out letters to all XYZ million users of iTunes when
they change the Terms of Service.

~~~
Nick_C
I would bet the original ToS have a clause stating "you agree to receive
notices by email" or similar.

Also, keep distinct the notion of general communication between a company and
client, and serving a legal notice.

------
cbs
Is there something I'm missing? They discontinued a service. They're not
asking for back compensation from when it was discontinued, only from this
point on. So "please stop using our service or start paying" seems like a
reasonable request.

I typically expect an "its their buisness, their prerogative" type of response
here on HN, how is this situation any different?

Because the notice came by email? I'm sure if the first suportbee heard from
them was a cease-and-deist letter in certified mail everyone would (rightfully
so) point out that it could have much more easily been solved with a few email
explaining the change.

Because the notice didn't come by enough (or good enough) email? I'll give you
that it might be worded a bit strong for a second notice, but this is
buisness, not a cuddle factory. Is it really worth getting your panties in
this big of a bunch?

~~~
slantyyz
It is their business and prerogative to charge for access to the widget.

Instead of saying "please stop using our service or start paying" (or face
legal consequences), they should have said "please start paying or your widget
won't work any more".

That they use legal threats instead of an on/off switch to block access says
something about their competence.

------
Jimmie
It's hard to see how this could _not_ work. /s

Do they really think this is a good tactic? It immediately creates tension
between them and the client. Even if you paid up or added their link to your
page would you trust them in the future? Absolutely not.

------
JS_startup
I personally can't wait until the freemium model finally dies. It is
extraordinarily difficult to pull off despite how popular it is and creates
desperate decisions like this.

~~~
rplnt
There are many examples where freemium model works though.

~~~
JS_startup
There might be a few, but I'd be willing to speculate that there are many MANY
more examples where it did not work and the company either went under or had
to perform a complete reversal like this one.

I'm not saying freemium will never work, but let's face it: it's ubiquity is
because it was at one time the flavor of the month startup model that VC money
was pouring into, not because it is a superior or effective business model.

~~~
pavel_lishin
> I'd be willing to speculate that there are many MANY more examples where it
> did not work and the company either went under or had to perform a complete
> reversal like this one.

So the freemium model is like any other small business?

~~~
andrewflnr
"There might be a few startups that work, but I'd be willing to speculate that
there are many more examples where they did not work and the company either
went under or had to perform a complete reversal."

Not perfect correspondence, but pretty close. :)

------
feralchimp
I have never seen a Terms of Service agreement that would make gigya's
behavior seem reasonable or justifiable in this case.

Even if their ToS reserved the right to start charging for the service at any
time, and explicitly wrote in crazy terms that disclaim them from notification
periods, methods of notification, etc., their odds of collecting actual
dollars by force are infinitesimal.

Sadly, their odds of collecting actual dollars by _threat of_ force might be
pretty good. How sticky is their solution?

------
corkill
Ok so hate to point out the obvious, but if you want people to pay for your
service ($6000 a year no less) or backlink you.

You might need to put in a bit more effort than a single email with a crappy
subject line and a follow up email threatening legal measures. Maybe something
nice and friendly even?

Someone said maybe they are a young team..sounds like the kind of crap
corporate dinosaurs would pull to me.

~~~
ericabiz
Or sheesh, perhaps a _phone call_.

I do not understand so many tech companies' reluctance to pick up the phone.
Often you can resolve whatever you need to resolve in 10-15 minutes, and you
don't come off looking like a jerk during the process.

------
tomelders
I don't think this is totally unreasonable. From their point of view, they
offered a perfectly reasonable alternative to paying, which was ignored.

By ignoring (accidentally) the original email, the message sent back could be
interpreted as: "We're not implementing your link back, and we're not paying
for your service, but we're still going to use it anyway".

I'm playing devils advocate here, but there are two ways to look at this.

~~~
palebluedot
_I don't think this is totally unreasonable. From their point of view, they
offered a perfectly reasonable alternative to paying, which was ignored.

By ignoring (accidentally) the original email, the message sent back could be
interpreted as: "We're not implementing your link back, and we're not paying
for your service, but we're still going to use it anyway"._

Wait, what? So - if I ignore an unsolicited email, that suddenly becomes
actionable if I don't do what the email says? I have a hard time seeing how
that is not totally unreasonable.

The only reasonable nuclear option for them that I see, would be to simply
terminate the user account or service, if they did not respond.

~~~
brudgers
Your argument hinges on the email being unsolicited.

One could argue that the email was not unsolicited, if the email address was
obtained during signup and acceptance of the Terms of Service.

Since it is not uncommon for free online services to have Terms of Service
which allow the provider to unilaterally change those terms, the argument that
an email notifying the user of the change is unsolicited is further weakened.

While I am not suggesting that the alternatives offered are or are not fair or
reasonable, the follow up email did its job in getting the service consumer's
attention and more importantly action in regards to the matter.

~~~
nirvdrum
Email deliverability isn't a guaranteed thing though. Usually that's fine, but
if the argument is we're going to charge you because you didn't take action,
wouldn't you need to prove it was either sent or received? Maybe I'm just
really old school, but I'd think registered mail or something would be
required in that case.

~~~
Aqua_Geek
IANAL, but when I served on a jury most (if not all) of the emails relating to
the case were not admissible as evidence because there was no way to prove
authenticity, delivery, etc.

------
jmilloy
I expected to come here and see comments lambasting supportbee for being
whiny; I am surprised by the tone here. I think a lot (certainly not all) of
the problems with the freemium model stem from the users. Just because it's
free doesn't mean that it's always going to be free and that you don't have to
read and comply with the terms of service.

In this case, for one it's not clear to me that we've gotten the whole story.
In particular, what were the original terms of service, and how did they
change? Did supportbee read and comply with them? The current ToS says
explicitly:

>"Any notice or other communication to be given hereunder will be in writing
and given (x) by Gigya via email (in each case to the address that you
provide), (y) a posting on the Gigya Site or (z) by you via email ..."

And really, did they have to send any notice at all? If supporbee was failing
to comply with the ToS, couldn't Gigya cut off service or take legal action,
sans warning?

Meanwhile, supportbee doesn't want to put a _link_ on the webpage for a
service that they use and benefit from for free, and they throw a small public
temper tantrum about it, and we are sympathetic? I'm just surprised. Aren't we
overreacting about "legal threats"? Isn't this pretty standard and run of the
mill? It could make more of an effort to make you feel good inside, but that's
not really enough to make it wrong.

~~~
simonbrown
I think warning them that Wildfire would be disabled for them on a certain
date if they didn't pay/add a link would be more reasonable, but they just
threatened legal action. They didn't even suggest stopping use of it, almost
implying that having used it in the past indebted them.

------
ErikRogneby
One of the best freemium products I use is github. This discussion made me
wonder if they are profitable... (the answer is yes) I dug up this old HN
thread: <http://news.ycombinator.com/item?id=3593980>

Other than the "powered by rackspace" in the footer, it's blessedly ad free.

------
narad
$6000 a year for a widget - without proper data & explanation is - extortion.

~~~
corin_
It really isn't anything like extortion.

~~~
narad
I have gone too harsh by using that word. I stand corrected.

------
jdietrich
Repeat after me: If I do not pay for a service, I am the product, not the
customer.

------
droithomme
I don't really see a problem with what they are asking. They want to be paid
either in ad links or in subscription fees. The user of the service who wrote
the article doesn't wish to do either. He also (in their view) ignored their
previous email about it, so the second email is slightly less polite about it
and brings up the possibility of legal action.

I see how it came to this: he says he didn't notice the previous email. Given
that perhaps he should have more sympathy for their position believing their
request has gone ignored.

I do agree that legal action claims are premature. It's also not very clear if
they could prevail in a theft of services case against someone using their
service after being asked not to (obviously consent to use the free version
has been withdrawn).

Clearly it would be a lot simpler to shut down the former client's access than
it would be to drive something through the legal system. It could be argued
that without properly notifying customers a service is about to be shut down,
the customer might have cause to bring legal action against the company, this
may be why they are doing notifications and requests rather than just
unexpectedly disconnecting.

Either party taking legal action at all in such a case is probably a foolish
move. Not because it's a reaction to "not monetizing", but because it is
unlikely there would be a positive outcome for any of the parties in such an
action.

Blogging one's (I think) unjustified rage seems as premature as the legal
threats.

Now looking at another angle. I don't think ad links are worth $6000, but the
company says they would be happy with that. It sounds like the $6000 figure
might actually be a fake number that they believe will motivate users to
choose ad links instead, which is the real goal. The way they have approached
this goal is poor. In this case, the user obviously doesn't want to use an ad
link. Perhaps he would be willing to pay $100 a month instead of $500? We'll
never know because of the way it was handled.

Both sides should have given the other side more of a benefit of the doubt
until determining the real intentions of the other party.

edit: this being vigorously downvoted is pretty amusing.

