Advertising provokes Premium Users

In December 2007 Xing, a German social network, announced to show display advertising to add another revenue stream to their premium user fees. With the beginning of January 2008 the ads have been displayed. For all users, free accounts as well as premium accounts.

Many (2500?) premium users seem to be in a rage and have begun to express their anger in forums and blogs, as well as in Xing groups.

So – where is the problem? Premium users already pay (in this case 6 Euro per month) for using an application and they do not want to be bothered with advertising. Until today there is no reaction from the Xing mangement. Since all internet users know that in the long run all major sites need advertising as revenue stream they have to either accept that or pay a premium fee. The premium fee in social networks has to be significantly higher than the ‘5-Dollar-premium-fee-standard’ because premium user are heavy users, often returning on a daily basis. So the site owner has to compensate the lost advertising revenues by premium fees.

What about this possible solution? Just let premium users participate in advertising revenues. The rationale: users are not pissed by ads in general, but they are pissed when not take part in the business someone else makes at their expense. And participating in the whole deal they will start to respect advertising.

What do you think?

UPDATE: Xing eliminates advertising on premium accounts – without asking for higher fees, so far. More…

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