Teesside Snog Monster (jiggery_pokery) wrote in lj_biz,
Teesside Snog Monster
jiggery_pokery
lj_biz

  • Mood:

The "paid time for invite codes" scheme

As you've doubtless seen in news,

We're just going to ditch invite codes altogether. Free users will be able to join without an invite code, and without a 30 day expiration. For the users who value their invite code collection, we'll let you redeem them for paid time, either for yourself or friends. [...] (the exact exchange rate hasn't yet been decided, but we'll try and be generous).

The obvious questions that arise are: what will the exchange rate be and how much will this promotion cost LiveJournal?

As for the exchange rate, I start the bidding at: first invite code = 1 month, second to fifth invite codes = 1 week each, sixth and subsequent invite codes = 1 day each. That's possibly a little complicated, but I think there has got to be a diminishing return involved otherwise people with scores of invite codes will unbalance the system. People are familiar with a chunk of paid time being two months, so getting about one chunk free is probably psychologically satisfactory (not too little, not too much).

I love LiveJournal and want it to make millions and millions, so anything which encourages people to pay for paid time is undoubtedly a good thing. Giving people effectively a free sample of paid time may inspire them to continue to pay for it in the future, if only for the extra icons. (Incidentally, sometimes expired paid accounts do not seem to revert to the lower icon limit immediately; perhaps this procedure needs to be considered again in the light of this development.)

People who are expecting three months per code are kidding themselves. Let's play with some numbers. Source: 75% the stats page, 25% my ass. Part of the reason I'm posting this to lj_biz is that the people who would know the figures more accurately might tell us them; I suspect the numbers are proprietary, but I'm sure some of you LJ veterans are likely to be able to make far more plausible guesses than I am.

* Free Account: 1327888 (93.9%)
I estimate that 30,000 of these (within half an order of magnitude) will be once-paid accounts. The rest are never-paid accounts.

Of those never-paid accounts, perhaps one third will have generated their free code; of those, perhaps one half will have used it. Thus there are around 200,000 never-paid free users with one code sloshing around, of whom perhaps 15% will find out about and about 10% will take up the offer. Result: 20,000 times "first code" free time.

Of the once-paid accounts, I would wildly guess that one third of them will be used again in the future - so there are about ten thousand people (again, within at least a factor of four) who have paid for LiveJournal in the past and continue to use it for free in the present. I would guess that half the active once-paid-but-no-longer LJ users have one or more invite codes left; of those who do, I would estimate the mean number at 2. Of those, perhaps 30% will find out about and about 25% will take up the offer. So we're looking at about 2,000 times "first code plus a few more codes" free time.

* Early Adopter: 14154 (1.0%)

I would guess that about 2,000 of these will be used again in the future and remain with this status rather than having moved to a paid account. I would guess that half the active LJ early adopters have one or more invite codes left; of those who do, I would estimate the mean number at 4. Of those, perhaps 90% will find out about and about 75% will take up the offer; you don't remain an early adopter to today without knowing about news. So here we're looking at about 750 times "first code plus a few more codes" free time.

* Paid Account: 69494 (4.9%)

I would guess that about 64,000 of these will be used again in the future. I would guess that 80% of active LJ paid account users have one or more invite codes left; of those who do, I would estimate the mean number at 4. Of those, perhaps 60% will find out about and about 50% will take up the offer. So here we're looking at about 25,000 times "first code plus a few more codes" free time.

* Permanent Account: 1600 (0.1%)

I would guess that about 1,500 of these will be used again in the future. It seems fair to assume that almost all of these will have invite codes left and I would, with very little confidence, estimate the mean number at 21. (20 yesterday, but 20% of permanent account holders will rush to generate this month's five extra codes based on this news.) Of those, perhaps 90% will find out about and about 70% will take up the offer - a low proportion because lots of permanent account owners will hear about this and actively decline the opportunity. So we're looking at about 1,000 times "first code plus lots and lots of codes" free time here.

Adding it up, I think we're looking at about 50,000 people taking up this offer. Perhaps half of the 50,000 would never have paid for paid time under any circumstances and half of the 50,000 will pay for paid time in the future after the free paid time has expired - so, we're looking at a financial loss to LiveJournal of 25,000 times the value of "first code plus a few codes". If the average value of free time awarded is, say, $4 (a shade under two months) then this represents a $100,000 revenue hit over the next year or so - hopefully, to be recouped by people who wouldn't have purchased a paid account in the past doing so in the future, as well as from the expansion attributable to the removal of invite codes.

All these estimates are within about a factor of five or so at best. Frankly I suspect that the amount of goodwill to be gained and lost by this exercise is probably pretty substantial in comparison and this is more a goodwill exercise than a financial one.
Subscribe
  • Post a new comment

    Error

    Anonymous comments are disabled in this journal

    default userpic

    Your reply will be screened

    Your IP address will be recorded 

  • 79 comments