Ning's switch to paid model a success

Paid user base grows from 17,000 to 80,000

I got a chance to chat with Ning CEO Jason Rosenthal at the LeWeb’10 conference in Paris and asked him how business has been since Ning switched from a freemium model to an all-paid subscriber model.  According to Rosenthal, business is booming and the switch has proven to be a huge success.

For those who may be unfamiliar with Ning, the company is a platform for creating custom social networks around virtually any category or subject.  The primary Ning categories include music, education, small business, politics, religion, and non-profit organizations and issues.  Music is one of Ning’s biggest categories.  Clients, known as Ning Creators, include Linkin Park and 50 Cent, who have networks of 100,000+ people.  The site allows anyone to create a wholly unique, customized social network in less than 60 seconds using drag-and-drop tools.  The platform also provides turnkey monetization solutions.

Earlier this year, Ning ran into some turbulence.  Over the course of two months, the company laid off 40% of its employees, swapped out former CEO Gina Bianchini for then COO Jason Rosenthal, and buried its freemium model in favor of a paid subscription service.  According to Rosenthal, the switch has been a glowing success.  In the switch occurred over the summer and since then, the premium user base has grown from 17,000 to 80,000 and revenue has climbed enough so that the company is now profitable.

The move was not just about money, though, said Rosenthal.  The switch has allowed the company to focus more on features for premium customers, customization, and delivering a high-quality service.  It has also allowed Ning to release a new feature nearly every two weeks.  Recently the company released integration with email marketing solutions Constant Contact, and in October, Ning released its iPhone app.  In November, it integrated with Facebook Connect so that Web users who join the social networks on Ning’s platform can do so through their Facebook accounts (previously, each network had to create its own registration system).

Also in October, Ning announced the launch of Ning Everywhere, a new platform with fully opened APIs for Ning Creators and third party developers to create mobile apps, monetize and integrate with cloud services, and develop custom apps using Ning’s API.

So why has Ning been so successful when any business can leverage the social power of Facebook to get visibility?  According to Rosenthal, businesses should utilize Facebook, but in the end, “you need your own network and your own branded message.”  And Ning Creators are doing just that, reaching some 70 million Web users across the Ning platform.  “Social is doing the same thing for businesses as Google’s AdSense AdWords,” said Rosenthal.

Co-founded in 2005 by Marc Andreessen of Andreessen Horowitz, Ning has been around long enough to learn some lessons about social media and business.  According to Rosenthal, the combination of social and mobile is doing big things.  These days, any business who looks to social media to get visibility must invariably pair that with mobile features.

“When I was working with Netscape in 1995, we saw a whole movement of people from offline to online, and now the same thing is happening again with social and mobile.”  Rosenthal predicts that in 2011, more will be done with iPhone and Android as the dominant user interface.  

You can see Vator interviews with former Ning CEO Gina Bianchini here.