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http://www.shoutmix.com/v3/openletter.php

Free service has to stop

Thanks for using ShoutMix for all these year. I have been providing free
shoutboxes on the World Wide Web for over 7 years now. It wasn't long before
I realized being 100% free is not sustainable. Just before ShoutMix's first
birthday, it almost had to be closed.

ShoutMix has tried to work with the freemium business model ever since.
Conversion rates were low with the first version. With the second version,
things improved and I have had more paying customers. Fortunately people
liked the service and started paying for more features.

With that in mind, the new third version was developed to make things better
for free and paid users alike. It was developed with lots of feedback from
users over the course of several years. Meanwhile my biggest goal remained:
to improve conversion rate to keep things sustainable and profitable, all
while making ShoutMix a really high quality product for everyone.

One of the most mentioned feedback was that the old free version was too
restrictive. Others are less trivial, just make it better, more premium
features, more powerful stuff, avatar support, real time push update, really
good spam protection, support for really high traffic situations, etc.

Finally, in November 2011, the new version 3 was completed. It was launched
successfully and very smoothly. It was a great moment.

During the first month since launch, the reception went really well. New sign
ups are in the thousands daily. Just within a month, almost 50,000 users have
signed up! Hundreds of thousands of messages posted. Over 10,000 users from
Facebook. Generally, users loved the new version. The growth are massive.

So, what went bad?

The conversion rate did not go up. In fact it fell lower. Our stats show
99.93% of users either have no intention to upgrade or are just happy with
our free service. Worst of all, some customers have actually stopped paying
and switched to our free service! It may seems to be good news for everyone
right now, but it is really bad news for all of us.

By offering too much with our free plan, we cannibalized our paid plans.
Happy users did not make more paying customers. The projections are bad. Only
0.07% users are customers. These are the people who keep ShoutMix sustainable
as a business. Business is the part making ShoutMix exists for everyone. If
it keeps on going this way, ShoutMix will not be sustainable any more and
will need to close down in the near future.

The freemium model is broken for us.

Some argued that ShoutMix can easily monetize its free service with ads. It
has been tried, but the rates were terrible. Beautiful, unobstructive ads do
not pay well for ShoutMix. We can probably do better with flashy popup ads,
but no thank you. Our competitors do it with popup ads. But there is no way
ShoutMix is going to commit such ugly sin.

ShoutMix is becoming more of a premium product. In fact it already has.
ShoutMix is designed to be the best in the industry. With passion plus
personal investments of time, money and labor of over 7 years, ShoutMix has
outgrown the freemium model.

So where do we go from here?

I have two choices. One, allow ShoutMix to become unsustainable. This is bad
news for everyone. The other choice is to stop our free service. It is
becoming obvious that this is where ShoutMix should go. And so, ShoutMix is
not going to be free any more.

Existing users will be able to continue using their accounts at no cost right
now. The transition will begin within a few weeks. Eventually, users with
free accounts will need to switch to a paying plan or stop using the service.
The date is set at January 1, 2012. After this date, free accounts will stop
working unless upgraded to a paid plan.

The good news is that ShoutMix will be available for only $0.99/month and
will be available effective immediately. For our old version (the Classic) it
will only be available in Premium package which costs approximately
$1.67/month.

Existing customers are unaffected by all these changes. In fact, ShoutMix is
going to be really awesome for our current and future customers. Our focus
will be to make paying customers extremely happy and they will get 100% of
our resources. If you are one of our customers, things are just going to get
a lot better for you.

ShoutMix has always been a product with great passion. It is just unfortunate
that it did not work out as a free product. We all have to move on. And
ShoutMix will continue to be the most affordable, high quality and premium
live chat software that everyone can use and love.

Snecx Tan
December 2011

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