sam stearns dot com

In this interview,  Andrew Mason shares an interesting bit of web trivia: Groupon originally launched as a subdomain of The Point: groupon.thepoint.com.

After unsuccessfully attempting to buy groupon.com from an entrepreneur in England, they were finally able to get the owner to sell by enforcing their trademark rights.

It is interesting to think how many major web properties originally launched with a sub-optimal domain name: thefacebook.com, twttr.com, and playfoursquare.com come to mind. And both Google and Yahoo were both originally launched on the stanford network.

Any others to add to the list?

Like many people, I was a bit shocked and saddened to hear the announcement that yahoo was going to “sunset” delicious last week. Amidst all the talk of a new bubble, it was sobering to hear that one of the signature web 2.0 sites  might shut down.

Given the response to the announcement, it seems likely that delicious will be sold, if the site can be decoupled from yahoo’s login system. If it does, that creates a new question for the new owners: how to turn delicious into a business.

At the current level of traffic, delicious probably doesn’t have the scale to make an advertising model work. And one of the initial concepts for a business model, using tags to improve search results, isn’t well-suited to running delicious as a stand-alone properly. So the future of delicious probably depends on how well its future owners apply DHH’s secret to making money online: charging for the product.

This raises what I think is one of the most interesting questions for a web service: how to craft the right package of features and usage limits into a premium version that people will pay for. Embedded in this question is how to define the right “unit” for a web service — that is, the best metric to enable variable pricing based on usage.

Web services that foster communication or collaboration often have natural “units”. For example, the primary unit for 37signals Basecamp is the number of projects. You can create one project for free, but adding additional projects requires a paid plan. The unit for MailChimp is the number of subscribers — the first thousand are free, and the cost of a subscription grows after that.

Interestingly, both of these services have other potential “units” that they chose not to charge for. While other business software, like Salesforce.com, is frequently priced based on the number of “seats,” Basecamp allows you to add an unlimited number of users, which drives growth of the service. Paid plans on MailChimp allow you to send an unlimited number of messages, which encourages active usage.

Services that target towards individual users are more challenging to price. I think flickr’s model is  pretty effective. First, uploads on flickr’s free account is capped to 300MB and 2 videos per month, which provides a reason for active users to shell out $25 for the pro version. The interesting part of flickr’s model is how it encourages retention: if you let your pro account expire, it only displays the last 200 images in your photostream. This provides an effective hook to drive retention. (At least it did for me, anyway.)

So what is the right “unit” for delicious? I’ve used delicious to bookmark almost 1,500 pages over the last five years. I can’t say I visit my archives regularly, but I do find value in knowing that they are there. I haven’t got much out of the social features on the site, since I primarily interact with delicious through bookmarklets. So for a user like myself, I think I would pay for storage / access to my bookmarks and want unlimited tagging for free.

It will be interesting to see how delicious’s fate plays out over the next few months. Let’s hope the new owners can find a viable model to keep the site around for the long-haul…