Livedrive CEO says paying for Google Drive or SkyDrive is like paying tax

June 14, 2012 - PRLog -- The CEO of Livedrive, one of the leading cloud storage services for consumers and small business, today posted a blog post explaining why he is not worried by competition from Google Drive and Microsoft's SkyDrive.  Both services offer cloud storage under a 'freemium' model - meaning that users can use a certain amount for free, and then have to pay if they want extra space.  Livedrive has always offered services as a paid for product, with no free tier.

In the blog post, Andrew explains that "paid-for services like Livedrive can offer far better deals to paying users because we don’t have the cost of servicing millions of free users. When you have a freemium model you have to set the usage bar for paying quite low to make the numbers work... and the price has to be high because only small percentage of users will chose to pay."

Freemium is a popular marketing technique among web companies - allowing companies to take advantage of the viral and social nature of their large free users bases, with the expectation that some of their free users will become paying customers.  Andrew argues that the paying customers of these services are paying far more than they need: "Paying for Dropbox, SkyDrive or Google Drive is like paying tax. Our message is simple – by all means enjoy a free service if it meets your needs, but if you’re going to pay, then come to a paid for service like Livedrive."

Andrew - who previously founded the UK's largest hosting provider, Fasthosts - explains how a similar pattern has been seen in both the internet services and hosting industries.  In both of these segments free players dominated the early market, but then as the market matured customers grew used to paying for them.  Andrew wrote:

"When I started Fasthosts in 1998 most people thought web hosting would be a free service – the likes of AOL and Geocities were offering free hosting and it wasn’t unusual to find professionals and small businesses alike using them. Then, as the market matured the word on the street was that ‘only prosumers will pay for web hosting’. What actually happened is that as the Internet grew people’s needs grew and users had all sorts of preferences – in the case of web hosting that meant things like support, speed, domain names, server features etc. Now, even a home user who just wants a website to rent out his holiday home will most likely be using a decent, good value, paid for service as opposed to a one size fits all freebie."

Livedrive are an award winning UK-based provider of online backup and cloud storage services, providing solutions for consumers, small business and resellers.

Andrew Michael's full blog post is available here:

http://blog.livedrive.com/2012/06/freemium-vs-paid-a-diff...