Change your business model and kill your business?

In the beginning was a great idea: let’s create a Web site that makes it easy for people with similar interests to find each other and coordinate face-to-face meetings. And so was born, and grew, and grew. Along the way it became part of the massive, amorphous “social networking” set of companies (which includes LinkedIn, Orkut, Ryze and most famously Friendster.
All of these companies now face the same challenge that hit thousands of dotcom experiments squarely between the eyes just a few years ago: how do you monetize your customer base without producing a mass exodus?
Today announced that their free service was going to a fee-based model. And they’re not going to survive the transition.

First off, let’s look at their marketing communications. I got the following email from “”:

Hi Meetup Member,
We have some important news to share with you about new features and a required monthly Group Fee paid by your Organizers on behalf of your Meetup Groups.
To learn more, visit:
– The team at

What’s missing from this message? Any reason why I would want to remain a member and any enthusiasm for the change. The “new features” are a lie: read the Web page and there’s no mention of anything new. This is basically a “hey, we need to get some income” and when you go to the Web site you can see that they forgot the basic 21st century communication imperative of make it personal.
Instead, I would have liked to see a message from Scott Heiferman, Co-founder, that said

“Thanks for being a part of the Meetup community. When I created the company X years ago, it quickly grew to fill a need I had to network and meet other people with similar interests here in New York. I’m delighted – in fact, all of us here at are thrilled – to see how popular the site has become. But growth has a cost, and I need to tell you that the Meetup service is being reinvented on 1 May, 2005, in a way that will have a direct impact on you.
First off, we’re adding a bunch of new features, including X, Y, and Z, we’ve forged an important new partnership with ABC, Inc., and we’re hiring additional programmers to ensure Meetup remains the best networking tool on the Web.
While we’d love to continue having Meetup be free for everyone, we’re going to be switching on 1 May to a different model, one that will require meeting organizers only to pay a small per-event or per-month fee for our system. Since you’re already a key part of our community, we’re going to extend a 60% discount through the end of the year – for only $9/month, you’ll be able to explore all our new tools and see how easy and fun it can be to organize events, from the most informal to the most complex. In 2006 our fee will be increased to $19/month, and we’ll have some other pricing models at that time too: if you have some ideas on how you’d like to see our service priced, please email me directly!
Finally, I realize that a small percentage of you will leave our service because of this new fee, and that saddens me. If you think about how valuable your time is, I’m sure you’ll realize that saving even 20 minutes/month is more than worth the minimal fee we’re requiring. And just wait… if you could see what’s on our drawing board, what’s queued for release in the next twelve months, well! You’d be as excited as I am.

Meetup hasn’t hired me as a copywriter, however, so instead they’re garnering the predictable strong negative reaction from the online community, ranging from bloggers (check out technorati for that) to Businessweek’s Tech Beat writer, Rob Hof, who quotes an email message he received about “There isn�t anything Meetup is doing these days that users can�t simply do on their own and more effectively, and there�s plenty of open source software out there to make use of and create your own website as I have done.”
That’s exactly right. When your business is a commodity service, how do you survive the transition from free to paid without sweetening the transaction? The answer: You don’t.
And that’s sad, because was a fascinating little company.

22 comments on “Change your business model and kill your business?

  1. thanks for the letter tips (some good thinking in there). thanks for some kind words about meetup, and thanks for the concern but gotta disgree with you on the commodity thing. with all respect, you probably aren’t one of the thousands of meetup organizers that have experienced the benefit of what the unique service that meetup provides. some people are bothering to complain because they know that is the best way to succeed at growing a local community group. as long as we continue to help people, enough good people will pay for that, and we and our customers will be just fine.
    but again, i wish i would have seen some of your letter ideas earlier!

  2. Dave,
    You are absolutely right. Once something is given out for free, you *CANNOT* charge for it later. You have to find the revenue from somewhere else. Like Google. They make their money in advertising.
    Wall Street Journal, Consumer Reports Online all got it right, right from Day 1. No pay, no see!
    To some extent, the discussion about GM cancelling its LA times ads is in the same league! If LA times can support itself from just subscriptions, they can write about anything they want. But as long as advertising supports your business, advertisers can take it elsewhere if they don’t like what you write.

  3. For Dave:
    Thank you for writing this. My friends and I have recently all stepped down as organizers and members from One of our groups is stable enough to survive, many of the others are not. But none of us were willing to pay $19 a month for what amounted to reminder emails.
    Also, I thought you’d be interested to note, the organizer of our meetup group said that when she stepped down the communication she received from requested that she just leave the site entirely. Not being an organizer, I can’t verify that. But again points to an organization that does not instill confidence in its customers.
    For Scott:
    Sorry, but Dave is right. I have no problem putting forth money for a good service. I’ve been slapping down $25 a year for Livejournal for four years now. But Livejournal is constantly adding new services, making good when their services are not provided and were they to go to a pay only service, they might even survive–but it would be a stretch.
    Because the web is not a place people like to throw money around. We’re cautious and we want to know exactly what we’re paying for. Meetup has never been an easy site to use but it was a great way for us to help new people feel less intimidated about joining the group. It served its purpose as we now meet once a week. However, we do not feel that Meetup provides services equal to the amount requested. And as myself and the rest of the Oklahoma Meetup clan have determined, we’re not paying for reminder emails. Sorry.
    Maybe Brad will hire ya’ll once has fizzled into oblivion. I hear he’s a really nice guy.

  4. this is for SCOTT:
    how on earth could anyone find the so rudely demanding and threatening wording of the member and organizer e-mails appropriate to send out? were they written by disgruntled unemployed collection agents?
    btw, thanks for defining what “good people” are! and you’ve obviously not been listening — we, your customers, are not going to be just fine. no matter how many followup e-mails you send about the ‘softened’ announcement revisions.
    those abrupt, shockingly without warning, letters should be reserved for ex-lovers, not innocent, loyal patrons.
    Scott Heiferman : as long as we continue to help people,
    enough good people will pay for that,
    and we and our customers will be just fine.

  5. My friends rave about Buddyup. I’ve just joined a group. I have no problem paying a nominal fee to Buddyup for the services that they provide. But I never had the privilege of getting it for free.
    I think Buddyup made two mistakes — not charging members to begin with (even if the charge was $1)and saddling the group organizers with the task of collecting the fee.
    Collecting money from group organizers sounds like a logistical nightmare. Better members be charged a recurring annual fee through the website.
    I would have been one of those people that would sign up to lead a group. The thought of having to pester people for money, however, completely turns me off from wanting to lead a group.
    I run a small social networking website and It’ll probably always be small because I charge a fee for the service. I believe that people pay for what they value.
    My theory is that people who pay are more responsible when it comes to showing up at networking events, and I worry less about kids setting up prank Profiles and events because they won’t pay to join.

  6. =================================
    More Broken Promises from
    Every time a group organizer steps down the members of that group get a nice email message that says:
    ((“You can be the new Organizer and make this (whatever the group is) Meetup happen. We’ll help you out each step of the way and if it’s not right for you, we’ll give you a *FULL REFUND*, no questions asked.”))
    So I did just that…for two groups in fact..just a few days between.
    Tried to rally the troops, couldn’t do it, so I stepped down as organizer and asked for my *FULL REFUND* with no questions asked.
    And true to their word I didn’t get any questions asked…or the refund because they pointed me in the direction of their terms and agreement…section 2.7 to be precise.
    It seems that the 30 day refund only applies once…during the first 30 days of the signup.
    ((2.7 Risk Free Trial. If for any reason you are dissatisfied during the first 30 days of your initial Basic Group Fee Subscription, you may request a refund of your initial Basic Group Fee Subscription payment and/or Meetup Group Activation Fees. You may not receive a refund more than once. We reserve the right to refuse service to a Meetup Group that in our determination is abusing this policy or otherwise acting in bad faith.))
    Ok, fair enough…but wait!…why didn’t they include that critical little tidbit in the emails that they send out to thousands of group members when organizers step down?
    So I asked them…twice…the answer?…here it is in whole…note the “we’re sorry you feel they are misleading.”
    Date: Sun, 14 Jan 2007 14:49:34 -0800
    Hello Randy,
    Thanks for your response. These are form emails and we’re sorry you feel they are misleading.
    I’ll pass your comments along to the product team for consideration.
    We appreciate your patience.
    Thanks again –
    Andrea Murphy
    Customer Service Associate, Inc.

  7. I just discovered
    I found that people in my area were interested in having get togethers, and thought, hey-this would be great. So I started the process of signing up to be the organizer. After the first page, I found out that there was a monthly fee….STOP.
    Nice idea. I’m sure that the left side of the page would accomodate pay per click advertising or some other related service. But to have an new organizer pay up front….

  8. I paid my money to be an organizer for a group at I never got a reminder email when my subscription was due. I had 7 successful meetups with 30 members… a week later I got on the Meetup site and there was another organizer ?? Someone who had never been to the groups. The new organizer wrote nasty things about me as the previous organizer, I rebuttled and he started sending me nasty emails ! I reported him and have yet gotten a response from he even got my full name, which is supposed to be private ? I basically got harrassed for $72.00 hard earned dollars…never again.

  9. Awesome information here. I’m definitely coming back for more.
    I have to agree that it’s sad that many of the programs that were once free are moving into paid and a lot of people are being left in the dust because they either aren’t willing to pay or can’t.
    A lot of the best social networks we have today are doing both, offering a choice for those who want more and still keeping the free membership option open for those who want to use the profile set up but don’t want or need the additional tools.
    I hope that more of this catches on for all of us who are using these wonderful tools to build relationships and not just touting our wares.
    Becky Beasley
    Team Leader at
    Community Marketing University

  10. Your reference to is all I can get. For some reason the meetup site – none of them – will open on my computer. Do you know why? I have been using meetup for two years and now all of a sudden I can’t get it to work.

  11. 1. The internet can’t survive on advertising alone. Someone, somewhere needs to charge money for something
    2. It’s their site, they can do whatever they want. I don’t know what right you have to be critical. If you don’t like it go to another site, don’t try to demonize them so as to take away their business, you jerk
    3. You’re wrong, because meetup has survived for over 2 or 3 years longer than they predicted
    4. Just because they once were free doesn’t mean they should continue to be free. They deserve to make money

  12. Karen, I’m not sure the basis of your sarcastic and caustic comment, but the answer is that I stand by my original words and analysis. Meetup also seems to have backed off on many of its charges too: I use the site to help organize events and have never paid a dime as an organizer. So…

  13. karenl10, I’m with you. It’s been four years since this article was written. I joined almost three years ago and it’s grown so much in that time. Seems to me like they “survived[d] the transition”.

  14. I agree with Dave … even four years later. (The investors in Meetup may be a bit more tenacious than others.) 😉 And I’ve felt that way since they started the fees.
    There seem to be new features at Meetup, but again, noting you can’t find as a “commodity” elsewhere. I’ve never run a group — I won’t pay the fee! — but as a free member, I don’t perceive any added value over a simple e-mail list.
    I found Dave’s post searching on the query, “Is making money?” If the answer to this question is now “yes” then I’ll change my opinion.
    Anyone know?

  15. Thanks for the insight. I’m actually building a site that, if successful, could potentially compete with ( Of course, my site is free. I’d never be able to build traffic if it wasn’t.
    But now you have me thinking what would happen if it was successful: My hosting costs would rise, the amount of time to maintain the site would go up. And all this is in addition to my original development time. If that’s not enough, it’s hard to get a site like this started and I’m actually paying for advertising now for a site that is free!
    It’s easy to understand how someone in this position my need to one day implement a modest fee structure.

  16. It’s 2014, they’re still in business. They actually have a remarkably good system for recruiting members or finding groups with similar interests. That said, I really miss the first few months of a new group being free, to see if a new idea is going to pan out and if you can get members to pay for membership or meetings.

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