The big news this week has been a major policy switch on the social networking site Ning. They have decided to jetison the free service which enabled you to set up your own social network free of charge as long as you accepted limited advertising on your site. Ning has rapidly become the choice social networking app for educators around the world and there must be an impressive number of educational Ning sites in operation. Those will now close unless they can afford to upgrade to a premium subscription and of course a large number of them will not be able to do that.
It's not really so surprising really that Ning want to concentrate on their paying customers. The free model attracted enormous interest but now that they've got a customer base it's time to monetize that. Ning claim they will offer attractive solutions to educators who want to stay with them but I suspect that many network will simply die or move elsewhere.
Is this the failure of he freemium model? I don't think so; it's simply the next stage. If you're a company you want to make money and the initial free offer is mostly to attract attention. Will Twitter or Facebook start charging if things get tough? Are people willing to pay for such services? They are in some cases as Second Life or World of Warcraft clearly show. People happily pay money for virtual products or for magic powers. Maybe the moral is not to assume that today's free services will always remain so. There's always a risk that either you will be forced to upgrade your account or the company will simply go bust.
If you want things free then you should look at open source solutions. They may not be so attractive or user-friendly but the driving force is global collaboration without the need to show a profit. A list of alternative social networking solutions to Ning is available in an article on Electronic Papyrus, Ning - where to go when the public square charges an entrance fee.
Read also a good summary of all this on Mashable, Ning: failures, lessons amdsix alternatives.