The freemium concept

The word Freemium was proposed by Jarid Lukin from Alacra.

It relates to a business model which offers basic services for free while charging a premium for advanced or special features.
This method makes it possible to draw the attention of the consumers and by the way makes more profit due to the growing of the business.
The goal is to become an intermediary between businesses and users.

The two online businesses utilizing freemium business model are :
flickr
box.net

The advantages of this business is that people are more attracted by it than other business because it's free and later they can make the business growing by buying more, consumers always like free services and it's the best way to keep them.

Another advantage is the word of mouth because more it's free more it's known so it generates more customers.

Whereas the disadvantages coud be an uncertainly on the volume of the purchases and the risk that people would only take profit by the free nature of the services and noting else.