The big bike industry dust-up this week is centered on Strava's decision to reduce features for free users and push more power users on the platform toward paid. I won't recount all the arguments here as there are plenty of rabbit holes to go down in the comments sections of cycling sites, blogs and social media. God love you if you can get through more than the 8 opinions I read in order to have my fill. The argument about the business that Strava is making is that becoming profitable more quickly will allow it to invest more into the platform and continue to improve it. They are in a good position to make that argument, as they recently rolled out some 50+ upgrades in response to user feedback. But the other point of leverage they have now is scale. At 55 million users, they can afford to lose a big chunk of unpaid without (they believe) significantly compromising the vibrancy of the service.
Many users disagree, or at least claim to. You'll see folks claiming that the unpaid users are as vital a part of the ecosystem as the paid, and without them KOM competition will be thin, new segments will not be created and fly-bys will be less amusing. All of this may be true (or may not - time will tell) but the argument from unpaid users who object to a loss of features is not that they worry about Strava's future. It's that they want to continue receiving something valuable for free.
About a week ago we got a couple of emails in rapid succession. The first was from someone who had his mind set on some factory built wheels, but who was recommended to us by a friend. He wrote in telling us that he was not inclined to buy from us, but wanted our opinion on what wheel features he should be looking for. Dave obliged (as anyone on the receiving end of one of Dave's email responses can attest, he's not one to half-ass a reply). Nothing has come of it yet. Not long after we got an email on the other end of the feeling tone spectrum, this one from someone thanking us for all the detail and insight our blog provided on a rim he was interested in, which gave him a lot of confidence in purchasing a wheelset - from someone else. "Keep up the good work!" he said, clearly grateful for helping him choose.
It's easy to look at interactions like these as our model breaking down or a missed opportunity, as they are evidence of a lack of return on time invested. But I actually see any time someone turns to us for guidance or advice as evidence of brand success. When we launched 10 years ago we made the explicit decision to invest heavily in content (principally through the blog) as a marketing strategy. To this day, Dave and I talk daily (and gleefully) about how many people read a blog or viewed a video. Content consumption is as much of a KPI to us as product sales, because we know the role it plays in building the brand and pulling people through the sales cycle. Even when Dave gets pissed about investing a lot of one on one time with a prospect that doesn't bear fruit, I think (hope) he agrees with me that it's a brand victory disguised as a business defeat.
But, like Strava, we also know that energy devoted to non-paying customers hamstrings our ability to service those who actually keep this business a business. Our models are similar in that we want to provide value at no cost in order to introduce the brand and the service, and move people into profitable accounts over time. We call it content marketing. In subscription businesses it's been called a "freemium" model. And it can work great, though you have to have the appetite and operations to accommodate free riders, because that is exactly who you are inviting.
The steps Strava took this week were aimed at addressing their free riders in a new way. I don't know them intimately but I expect they realized that the journey from free to premium had splintered, and they were investing a disproportionate amount of resources to support users who were not contributing to profitability. They gave away too much good stuff for free, obviating the need for many users to pay. Shifting that cutoff between free and paid allows them to get paid better for the work they've done (they hope). I will say that the louder the voices of disapproval, the more evidence there is that people are very attached to their product, suggesting their gamble will pay off.
We talk constantly about how we do the same thing - essentially get paid more for what we're doing. Strava's approach won't work for us. Putting the blog behind a paywall might earn us a few hundred or even a few thousand bucks a month, but our total audience would shrink and we could lose more in prospective wheel sales than we get in Patreon fees. And as soon as something becomes a direct revenue source it too becomes another mouth to feed. We'd need to start marketing blog subscriptions as a product themselves.
Selling swag is not as profitable as charging you more for wheels, but we'll probably do it anyway.
We've talked also about service as a product, in a bunch of different ways. You know how you bring your car to the repair shop because it's making some weird ta-pocketa-pocketa-pocketa sound, and the guy at the service desk tells you the diagnostic fee is $189, which they will apply to any repairs if you have them done there? Dave in particular would LOVE to get paid to answer emails, but logistically it's really hard to execute and more importantly there is no precedent in our industry that leads customers to believe that expert advice is worth actual money.
That really leaves us with only three choices, none of which are mutually exclusive:
- Spend less time on things available for free
- Turn more free users into paid users
- Generate more revenue from paid users
This is an evergreen question for us but I can tell you that from experience we have little appetite for (1). Dave and I both naturally gravitate towards content-as-service, and we know also it's a big part of our brand and marketing operations (Google LOVES the blog). And (2) is something we are trying to do all the time every day anyway. As for (3), raising prices increases competitive pressure, but it sure would be nice to sell more stuff to each customer. That's why you've seen us add cassettes and tires and other accessories. We'd love to add more but wow are you all very particular about such things. I guess we'll make more bottles and it's long past time for us to start selling t-shirts and other swag.
Until then, we will do our best to keep up the good work, knowing that "good" is subjective based on who profits from it.