App.net welcomes non-paying users in a fresh twist on freemium

February 25, 2013
Obsession
Startups
February 25, 2013

App.net, the social network that launched last year as a subscription-only and ad-free alternative to Twitter, will start accepting members who haven’t paid a dime. It’s an admission that, for internet startups seeking growth, nothing beats free.

Starting today, annual members of App.net, who pay $36 a year, can invite some free users, whose accounts will have limits on file storage (500 MB) and on how many people they can follow (40). It’s a freemium business model similar to Dropbox and Evernote, which are useful free services that attempt to extract payment out of regular users. Most freemium services only convert 1% or 2% of their users into paying customers.

But the choice to allow free users is different for App.net because its goals are different. While Twitter is trying to provide the social-media equivalent of a fully fitted bathroom, App.net’s could best be described as just the plumbing. It was built as an open platform, on top of which third-party developers can create applications like messaging services, photo-sharing programs, or social-networking websites. App.net isn’t interested in building its own services, though it has, so much as providing the pipes for others. Twitter allowed a good deal of this open access at first, but has since increasingly locked other developers out, so that any apps you use to access Twitter are now increasingly likely to be made by Twitter.

“The point of App.net is to enable third-party developers to build better products faster—that people want to use—because we’re an open platform,” Dalton Caldwell, the company’s founder and chief executive, said in an interview ahead of today’s announcement. Being open to such development is one part, but developers also need a critical mass of users to make building apps worth it. Though more than 100 apps have been built so far for App.net, user growth has been modest. About 30,000 people are paying for the service; between 2,000 and 3,000 of them post to the service each day.

In addition to the push for new users, App.net has recently expanded the services available to developers building apps on its platform. It released APIs, which enable such development, for file sharing (paying users get 10 GB of storage) and private messaging. A person close to the company says it may later offer an API for conducting payments, which would help developers build apps that make money and put App.net in competition with startups like Canada’s Stripe. The company also rewards applications that its users rate highly.

Twitter’s early growth was arguably thanks to its open APIs, which allowed third-party developers to build apps faster and better than the company could—until it started restricting access to them. “I believe an API-centric Twitter could have enabled an ecosystem far more powerful than what Facebook is today,” Caldwell wrote last year in a post that laid out principles for the company. But Twitter now has more than 500 million active users and Facebook more than a billion. Going freemium is App.net’s attempt to reach that kind of scale.

By the way, Quartz is on App.net. Paid users and freeloaders alike should follow us there.

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