Last month, Ning CEO Gina Bianchini was replaced by Jason Rosenthal – which made me wonder if some big changes were afoot. I guess I was right as it turns out Ning is changing their business model. Let’s look at what happened and what that means to you.
This letter was posted over on TechCrunch:
Team,
When I became CEO 30 days ago, I told you I would take a hard look at our business. This process has brought real clarity to what’s working, what’s not, and what we need to do now to make Ning a big success.
My main conclusion is that we need to double down on our premium services business. Our Premium Ning Networks like Friends or Enemies, Linkin Park, Shred or Die, Pickens Plan, and tens of thousands of others both drive 75% of our monthly US traffic, and those Network Creators need and will pay for many more services and features from us.
So, we are going to change our strategy to devote 100% of our resources to building the winning product to capture this big opportunity. We will phase out our free service. Existing free networks will have the opportunity to either convert to paying for premium services, or transition off of Ning. We will judge ourselves by our ability to enable and power Premium Ning Networks at huge scale. And all of our product development capability will be devoted to making paying Network Creators extremely happy.
As a consequence of this change, I have also made the very tough decision to reduce the size of our team from 167 people to 98 people. As hard as this is to do, I am confident that this is the right decision for our company, our business, and our customers. Marc and I will work diligently with everyone affected by this to help them find great opportunities at other companies.
I’ve never seen a more talented and devoted team, and it has been my privilege to get to know and work with each and every one of you over the last 18 months.
We’ll use today to say goodbye to our friends and teammates who will be leaving the company. Tomorrow, I will take you through, in detail, our plans for the next three months and our new focus.
Thanks,
Jason Rosenthal
Workforce Cuts:
In a nutshell, Jason came in and took 30 days to evaluate the company, now he is cutting the fat. 70 people – 40% of the staff has been laid off. That is a big number when you have a company that houses over 1 million total networks. So now 98 employees will have to continue on.
No More Free Ride:
When I first was introduced to Ning, I had to wonder if this free model was going to work. Now I know the answer – no, it didn’t. They are cutting their free service to focus on the paid services. And looking at the A-la cart prices on Ning, I would guess that is all going to change in the next couple weeks.
For example, extra storage to your account costs $9.95 / month. Add your own domain, Support, Run your ads and your bill is $45 / Month. Pretty pricey there.
I am not sure what is going to happen to popular social networks already on there. David Hasselhoff site is hosted there. Chris Pirillo has Geeks.pirillo.com on there. I would guess they are already paying the premium prices due to higher bandwidth.
But what about the sites I use that are not that high profile? Several Geek and computer pages I visit, a local non-profit hosts their site on Ning, too. I would guess that they have to pay or go seperate ways.
What We Learned from this:
Free is nice, but not trustworthy. I know that whatever I have out there on a free model might be gone tomorrow. Bandwidth and other overhead are big factors in giving something away. Sometimes it works, other times; Well, you make a lot of people unhappy.
I am not sure how many sites will decide to move over, but I would guess the 1 million mark might have to be reached again. On the other hand, Ning has really built up an easy to use interface for anyone that wants to build a social site without having to do much coding. It’s really about the cost of ownership.
Do you have a Ning website? Are you going to stay on Ning, or move to another hosting provider?
I’m not sure yet if our Mixed Media Workshops artist group will be leaving Ning or not. We have already been paying for Premium Services for nearly a year. I’m more concerned that there must be some financial messes to deal with. Laying off 40% of your staff signifies something pretty serious.
Customer Service has always been very slow there (usually a week to get help) and you had the option to buy faster service for a fee. What?
So if free is bad, how then has YouTube made it work? Ning has ads all over the place. I’m just sayin’.
You make some good points here. I’m working with a couple of colleagues regarding developing community related online businesses and have steered both of them toward paid services and tools. Free services are fine to use as long as it’s understood “you get what you pay for.”
i heard about ning shutting down their free accounts.. i saw on webs.com that they offer the same things as ning, and have even more cool options.. i have a webs.com account, and you can build a free social network website in a few minutes and the interface is very easy to use..
i mean it’s definitely worth checking out: