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You can't just use a freemium model and expect it to work; there are a lot of considerations. Paying users will see your product almost as an investment, regardless of the amount they actually pay - that's why these people are so much easier to deal with. They feel like they have a stake in your product. The problem is, in order to find these people, you need to let everyone (for freemium) test it.

Free customers are higher maintenance than paying customers.

They can be at times. Yet, if what you're describing is true, then it's probably your own fault. Do you really expect people to click a FAQ link when it's so much easier just to hit reply? Do YOU even read FAQ links other companies send you? I consider myself decently competent, and sometimes I tremble at the thought of plowing through an unorganized FAQ page. A better solution? Have the contact form auto-suggest answers with a double submit, filtering by keywords in their help request. "Does this answer your question? ..."

Many free customers flagged the email as spam!

I'm sorry. If you sent me one of these for a seasonal product, I'd probably mark it as spam as well, if I couldn't find an unsubscribe link. Did you have a link in there? Was it easy to find? Did I need to log in just to unsubscribe? Did you think that just because it's a seasonal "thank you", that you wouldn't need an unsubscribe link? I used to get like 20 "thank you" emails or "happy holiday"/"happy birthday" emails every couple of months, and it's dead annoying. When I couldn't find an unsubscribe link, or it was too difficult to unsubscribe, I just marked it as spam. I feel bad doing it, but it solves my problem.

Honestly, you can get people to agree to just about anything. My last legal disclaimer said something to the effect of "if you press accept, we own your soul." Do I really own the souls (pending existence) of tens of thousands of people? No. Just because people agree to an elongated privacy statement, doesn't mean it's okay for you to take advantage of what they agreed to (-> south park Human Centipad).

So, how do you make a freemium model work? Segment your free users from your paying users. You NEED to interact with both differently. There's a lot of money to be made in freemium, but you can't approach it so recklessly.

Agreed, the real lessons learned here are:

1) Users don't read directions. They don't read the directions right on the form, never mind a separate FAQ.

2) Any unsolicited email is spam. Don't care what your terms of use are. Just don't do it. If you're going to send a "Thank you," do it in an acknowledgement email at the time of the transaction. Days later, the customer sees the email as something new, and flags it.

He didn't send unsolicited email, he sent email that they had agreed to as part of receiving a service for free.

Similarly, Facebook sends email automatically related to the use of their services.

Is it really fair to say the user "agreed" to receiving these? At best I think we can say that they were tricked into receiving them. After completing the cards they were forced to either 1) Throw away their work or 2) "Agree" to receive some unwanted emails about freemium services the author creates.

Doesn't that sound a little sneaky and dishonest to you? If the cost of the product is not cash money, but something else, shouldn't you tell the user up-front instead of giving them an ultimatum after they've already spent some time in your service?

Some might consider it so, but for the most part it's standard practice in the industry to put the benefits to the user on the page, and let them find out about the negatives later after they've invested time and energy into it and are less likely to say no.

I just checked out Facebook: "Your Facebook Timeline: Tell your life story with a new kind of profile. Learn More"

I read the learn more page, there's nothing about violating privacy laws, switching to the timeline so that ads are more compelling, etc. Only after you've signed up to Facebook do they tell you that they've created this "free" service as a way to get your personal information so they can sell it to advertisers, or use your likes to sell stuff to your friends.

I've still never been told by Facebook that they violate PIPEDA and European data laws.

Went to Google, no mention of using your click stream and browsing habits to sell you unwanted ads, and worse, no way to turn them off.

Seems like it's industry standard practice to offer a "free" service so that you spend your time giving data to a company so they can sell it to advertisers. Apparently these companies have employees to pay and servers to buy so can't offer you a completely free service with out getting something from you.

Do I care? Not really, Facebook, Google, get my data, I get a service.

The more relevant point is that the users do not perceive the receipt of future email as something to which they willingly agreed.

In my opinion, the OP brought the spam complaints upon himself by failing to use an opt-in communication model. Following up with an unwanted email shortly after the user used the service would tend to trigger an adverse reaction - it's the sort of thing that constantly spamming sites tend to do.

"I have an opt-out link on that policy page, and I included one in the email I sent right at the top, at the bottom and in the body of the email."

I count four at that point, 3 being in the mail. While I'm with you on the first part of your response and like the final paragraph, the comment on unsubscribing was the result of bad skimming and is - unnecessary.

I was just trying to evoke some thought. If people are opting to flag spam, rather than opt out, then something is wrong. Sometimes there's a disconnect between what makes sense to us, and what makes sense to our market.

Something is wrong if you have to opt out of something you never asked for.

Just as those dreadful browser toolbars you get with a lot of installation packages (even java updates, how pathetic). If I have to actively uncheck that box you are an ass.

There should be a way to punish such behavior, marking mail as spam seems to have some effect.

"There's a lot of money to be made in freemium"

I haven't heard this before. In fact, I've read about just the opposite (http://www.softwarebyrob.com/2010/08/18/why-free-plans-dont-...)

Do you have any links? (Not talking free here, like Facebook, but freemium.)

It depends on the market. No, I don't have any case studies or anything saying freemium can make money, but I do have anecdotal experience, where freemium completely dissolved the paid market. If you're absolutely curious, fire me an email and I'll get into more depth.

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