Ma.gnolia Comes Up With a Business Model – Introduces Paid Accounts

Last weekend we spoke here about a few services that have introduced various new revenue models and switched from ad-supported to some models where they can actually generate some predictable revenue based on the value they provide to users.

Now it looks like yet another service is following their steps with Ma.gnolia announcing in the recent newsletter their transition from a completely free and ad-supported model to freemium model where for a fee users get rid of advertising.

Ma.gnolia is a social bookmarking service that seems to be very much loved by the geeky crowd but still finds it difficult to compete with more mainstream services like Delicious. Back in August Ma.gnolia team have announced their attention of making the bookmarking service open-source for everyone to use and for the community of developers to contribute to its growth. This seemed to be quite a wise move to me as it opened incredible opportunities for the database of bookmarks saved into various Ma.gnolia versions to grow extensively.

Now we see yet another initiative that is also worth noting as doing something right in the current situation with Ma.gnolia introducing the paid accounts option. The service remains free and ad-supported for everyone but those users who choose to pay an annual fee will be able to avoid watching ads.

The background story is quite a long one here. Ma.gnolia was turned into an ad-free territory last summer. The reason given was “to lighten up the look for summer” but I also think that the ads either did not pay well or they wanted to let people experience the ad-free service to better motivate them into buying paid accounts once they are introduced. At the time the team also promised that the ads would only be introduced again once they are able to offer a way to turn the ads off (that was obviously a hint at a paid service, not at various ad blocking plugins for browsers).

Ma.gnolia remained both free and ad-free for over a year and now the ads are back – along with the paid accounts as promised. There are two options available with both turning ads off for the paying user:

For $8 a year the ads will also be removed for everyone viewing the bookmarks, profile or tags of the premium user.

For $25 a year the ads will be additionally removed from all the pages of the groups premium user creates on Ma.gnolia.

It is evident that both options mean that a user gives some financial support to the favorite social bookmarking website and also gives the pleasure of enjoying ad-free Ma.gnolia to both him or herself and to everyone enjoying what this user does on Ma.gnolia. This idea sounds quite reasonable to me and wile the notion of paying for a social bookmarking service may seem to be odd to some users, I do hope this will prove to be a success for Ma.gnolia and their geeky community as we badly need proof that free and ad-supported is not the only way web services are destined to be.