This article by Dries Buytaert (founder of Drupal and Acquia) discusses the economics of the freemium business model. He quotes Fred Wilson’s definition of “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.”
He discusses how his two companies, Acquia and Mollom, use the freemium business model profitably.
