The World Doesn’t Need Another Digital Free Service

by Ted Leonard | Aug 06th, 2019

The World Doesn’t Need Another Digital Free Service

There’s still no shortage of free stuff online, from apps to services. But increasingly, the old adage “you get what you pay for” is catching up with the Internet. Take a look across the digital landscape — image hosting, music and movie streaming, gaming, news — and you see the top companies offering more and more services on a subscription basis. 

The fact is, there really is no such thing as free. You always end up paying something — either financially or in some other form, such as privacy. A “free trial” may quietly morph into a paid subscription within days, while in-app purchases to speed a game along can quickly add up. Even if your use is subsidized by ad revenue, you’re still giving up something of value: your privacy. As Facebook’s record $5 billion penalty for mishandling user information shows, you never know how your data is being used. If you’re not paying for the product, you just might be the product.

While you can still find plenty of free services online, digitally savvy consumers understand that they need to pay for things like quality, innovation, security and privacy. After all, I think everyone understands the fact that it costs companies money to offer a higher level of service, and to continue to innovate to meet evolving customer needs. As Photobucket learned, that’s just as true in the photo sharing, hosting and storage business as it is for other digital services. 

Having revolutionized third-party image hosting when we first emerged on the scene in 2003, Photobucket eventually had to transition away from offering most of its services for free in order to remain relevant, innovative and an industry leader in the fast-changing Internet economy. And we are far from alone. Gone are the days when advertising revenue could sustain high-quality digital services, especially with growing use of ad-blocking software. 

Perhaps nowhere is that challenge greater than in the media business, but The New York Times has shown a way forward with the digital subscription plan it launched in 2011. The Times now has more than 3.5 million paid digital subscribers and is targeting 10 million by 2025. Netflix, another digital subscription pioneer, has more than 150 million paying customers worldwide. While subscriber growth has slowed, the company insists it will not turn to ads for extra revenue, saying it believes it will pay off in the long run to focus on customer satisfaction. That’s a sentiment we understand well at Photobucket, given the negative feedback we received about on-screen ads before we made the switch to a subscription model.

Still, it’s not always possible to find the right balance between customer value and sustainable revenue on the first try. Admittedly, Photobucket has made mistakes in the past. In fact, my predecessors in running the company made the short-sighted decision in 2017 to restrict customers’ access to their own photos unless they paid an unrealistic annual fee of $400. Needless to say, my first action after taking over as CEO of a little more than a year ago was to remove the unpopular restrictions on customer photos. Instead of charging a flat fee, we are now allowing customers to choose which monthly or annual payment options makes the most sense based on their actual needs.  There is no one-size-fits-all scenario at Photobucket. We also restored a free option, with a vow to always keep that available for those who need it. That’s a pledge we put in writing, in our industry-first Bill of Rights for members. 

Having struck a good balance of value and sustainability, we have been able to turn our focus to returning Photobucket to its innovative roots. Our customers are already seeing the benefits, from faster and improved functionality to stronger security and privacy measures. And we continue to look for ways to improve the customer experience, including rolling out a new mobile app later this year. 

Our customers have responded positively to the changes, as we’ve heard through feedback and seen through their actions. Ten months after we put in place the new subscription options and our paid subscriber base jumped over 50 percent. What’s most gratifying for us is that nine out of 10 new subscribers are legacy Photobucket members who had been on the free plan for over eight years on average. That shows that among our most loyal customers, there’s a willingness to pay if we offer a better overall experience and deliver value. 

Photobucket’s success over the past 16 years hasn’t come from giving out our services for free. We take great pride in being the most trusted place to safely store and host images. Tens of millions of customers have trusted us to take care of their most precious memories over that time, and we take that responsibility very seriously. Free apps come and go, but Photobucket has staying power. Now more than ever.