WorldFriends to prove 'freemium' model works

World Friends is coming to London. WorldFriends is one of the world’s largest cross-culture online communities with 2m members from 230 countries. It offers people a high quality environment in which to enjoy ‘internationally minded’ socialising and meeting new friends with common interests, especially in the areas of travel, culture and language learning.

Ever since Disney acquired Club Penguin, a subscription-based children's social network for $700m in August 2007, the smart money has known that social networks would move towards paid-for memberships.

Well, not entirely. The "freemium" business model has been in vogue since Skype, which Ariadne Capital advised in 2003 and 2004, came on to the scene with "free calls on the web", and a paid-for upgrade for further services. One can register for free with WorldFriends, but if you want to send  or receive messages to and from other members, then you pay.

The internet allows an entrepreneur to enter a market with a free offering as the costs of doing so are low. Most entrepreneurs will maintain a  free offering of their basic service forever. But that doesn't mean that the entire user experience will be free. That's the whole point of 'freemium'. Free gets you to a place where you can ask to get paid. But if you don't start with free on the internet, most companies will never get paid. 

For the past several fiscal years, 10 per cent of WorldFriends' existing revenue has come from Europe (despite no direct marketing or European distribution partnership base). It also provides white label social internet services to an international network of 200 plus integrated distribution partnerships.

Techcrunch, a leading internet blog, recently recognised WorldFriends as a unique blend of Facebook.com (i.e. old friends) and Match.com (i.e. new friends) and compared WorldFriends’ business model with that of LinkedIn and Xing.com, valuable virally-growing subscription businesses.

The WorldFriends' per user economics are amongst the highest in the world. The average WorldFriends' member makes 17 "world friends" and for that they pay $100 and stay subscribed for 6.5 months.

Nick Paine, WorldFriends' Executive Chairman is based in London, and co-founded  leading internet dating business Lavalife.com which he sold to NASDAQ-listed Vertrue Corp for US$120m in 2004.

A first closing of €0.7m was completed on 5 June 2009 from the Succès Europe Investment Fund and existing shareholders. Watch for many more niche social networks (not fewer) where you will want to pay for highly targeted contacts in your interest areas.

Julie Meyer is CEO of Ariadne Capital. World Friends is a portfolio company of Ariadne Capital.

---

Add this page to your favorite Social Bookmarking websites