Freemium-ization of Society

I expect free tiers for every new service. I didn’t know I had this expectation until I was outraged when met with “pay to play” services. Outrageous isn’t it? How dare they charge me for something without even giving me a taste! It’s made me wonder if the freemium-ization of everything has increased skepticism and delayed trust amongst our fellow humans. 

I don’t think I’m alone in feeling this way. Looking around, freemium models are becoming the norm for many services—not just software.

It’s not just free cloud storage for X many gigabytes or three free articles before I get to read more news. Like the free first sessions for massage therapists or personal trainers, I could see a world where I would expect to trial a dentist, therapist, or designer before engaging a paid service with them.  

Employment has been moving this way too. I’ve had job interviews where my interview assignment was used as a product for the prospective employer. Some assignments are even disguised as challenges when they’re another method of obtaining free brainstorming sessions. 

There isn’t anything wrong with job interviews being literal trials of the actual job. I think it’s smart. I’ve answered a ton of brain teaser questions like how many golf balls I can fit in a Boeing 747 and I never used that kind of knowledge—or even method of thinking—once I got those jobs. But it’s not just job interviews.

Entry-level job postings for no-name venture-funded startups that might pay ~$50k ask for a “ninja of operations”, someone who already founded a company, will find problems to figure out autonomously and have 10 years of deep-level expertise after getting a Ph.D. in the topic. I could add the ability to make a perfect pour-over coffee and micro brewing kombucha and it still wouldn’t be a joke today. This is all required to work at a company that plans to change the world by making people click ads faster. 

It’s ridiculous companies with nothing but empty promises expect the world. Yet, is that any different from wanting to be “treated well because I’m worth it” when you’re on a date? From dating to paying for software and getting hired, the widespread implementation of freemium has raised the barrier to earning trust. 

The cynical stance is to say it has made us more skeptical. Instead of trusting the service—or person—to work, we want to try it out and see how it works to our needs before bestowing the service with our trust (i.e. money). But maybe this is normal when we have near infinite information in our palms. People have more options than to go on someone’s word. 

This shows up in my behaviour every day. A dozen bright people could’ve spent thousands of hours building a software product. But I wouldn’t trust it based on their landing page. I would expect a free trial to see if I think it’s good or if a friend I trust—and knows me well—recommends it. If a free version is available, I will use it to the absolute limit.

It’s not that the company’s subscription plans are predatory. Most are affordable and easy to unsubscribe from. But once subscribed, many—myself included—stay on long-term for the service. It’s no wonder investors are in love with subscription businesses. I barely notice the expenses going out every month and year!

Because of the increased lifetime value of a customer once they become a paying subscriber, maybe the upfront skepticism is warranted. I haven’t done the math but I’m inclined to say the long-term net benefit is greater for the freemium service compared to the old pay-to-play models. After all, once the company has earned the trust, there might be true stickiness given the high hurdle of trust deployed in the beginning. 

It’s no wonder that employers will look at other parts of their life with the same skepticism they view the software providers they use to operate their business. That is, why wouldn’t they look at a potential employee with the same skepticism of “prove to me you are actually worth the $60k, $80k, or $100k salary you are demanding.” 

The world has continuously been moving this way. A few generations ago, a college degree wasn’t required to get a decent job. Now, a master’s degree is looking like the norm. Yes, there are bootcamps, certificates, and other means to build an assembly line of coders. But inherent to these hurdles is the need to produce an amount of work before getting hired. It’s just that latter comes in the form of a portfolio of projects instead of brand names with high financial and academic hurdles.

It’s not just the existence of proof but the quality of the proof. With more information, we’ve had to find ways to earn trust and that has made people expect more and more upfront for their trust. 

The transfer of money is often the result of trust. Gone are the days of “Here, I made this one time, pay for it” and it’s replaced by the days of “Here, I’ve made this and look at the hundreds of others that came before. I’m serious and I’ve been consistent. Here are all the other people saying this is great too. So, will you give me $5?” 

People will still rely on communal signals like a school’s name, higher degree, or brand name employer to denote someone’s ability. But they are indirect signals uncorrelated to one’s ability to apply knowledge.

Looking at our attitude to products and commerce, we’ll learn to demand more proof, better proof, and ones that matter to our individual needs. We will set higher hurdles and demand more trials in an attempt to eliminate any possible risk. In this manner, it’s a crusade for greater certainty and death to surprises. That is, in the manner of services.