Plaxo Means Business, Sort Of
It seems that Plaxo has finally taken the wraps off its fairly elusive business model. For some time now, many have pondered exactly which avenue they would pursue as they chased the carrot of profitability.
According to a News.com article, revenue will come from one of two main outlets, pay-for-use enhanced services and API partnerships:
The basic service is free, but the company plans to charge for more elaborate versions, said co-founder Todd Masonis, who started the company after graduating from Stanford University. A VIP version that costs $19.95 a year offers better customer support, for instance. Future paid-for versions might include automatic synchronization for cell phones and handhelds, he added.
Third-party partnerships will also bring in revenue, the company said. Plaxo version 2.0 incorporates a Yahoo search bar into the Outlook interface. Ideally, subscribers will instigate searches from the Outlook bar. Yahoo and Plaxo share revenue generated from these searches.
In the future, more partnerships could be added by linking to the company's application programming interfaces (APIs). By using Plaxo's APIs, an e-commerce site could, hypothetically, automatically retrieve an address for the intended recipient of a gift, Masonis said.
Source: News.com, "Start-up Plaxo sketches out business plan"
Additionally, the article notes that the release of this information was at least partially made to defuse detractors, who have often complained about the secretiveness of the company and the potential for abuse of the personal information.
Plaxo currently has 2 millions users. If we assumed that 1% were to convert to the VIP version, that's $400K annually, $2M at 5%, and $4M at 10% conversion. However, looking at the feature list, things seems sort of thin:
- Unlimited priority e-mail support
- Direct phone support
- Turnaround in one business day
- A Plaxo 2.0 commercial license
- A new and enhanced interface
Why is it that the majority of these features surround support? Wasn't Plaxo an automated process that, generally speaking, should require little direct interaction on my part? Is this really a support contract? If so, that tends to indicate that the operation of this service has hard costs underlying it. 400K doesn't sound so good, even if the support center is overseas.
Perhaps the advertising will generate more revenue for them. Let's hope so.
It would have been very interesting to see a play for SNS come out of this, or perhaps some real-time integration that truly enhanced the use and benefit of the system overall.