63 Comments

Summary:

Somebody had to do it: SugarSync says it’s ending free accounts. After a free trial period, it’s pay up or get off.

freemium-bag2

An enduring mystery of the booming cloud file management and storage world is exactly how many of the zillions of users claimed — by Box, by Dropbox, by insert-your-favorite-vendor here — actually pay for the services. All of those vendors offer free versions: The typical model is you get X amount of storage for free, then the meter starts running. Or you get base service for free but have to pay for advanced perks.

Free lunchSugarSync is putting a stake in the ground:  it’s ending its freemium version, so customers will have to pay after a 90-day or 30-day trial. Why? “The move will allow the company to further refine the service to better meet the evolving needs of its consumer and business subscribers,” according to the company’s press release.

“Free stuff” has been the go-to customer acquisition strategy for companies ranging from consumer-focused Dropbox to business-oriented Box. Egnyte relied heavily on free trial periods — not freemium per se — but then started offering free accounts to woo Box customers. Accellion, as far as I can tell, is an outlier, offering free trials but no freemium. But that is an exception to the rule — until now.

Freemium is a great way to get potential customers in the door, but it’s very hard to make them pay the rent. Conversion rates are well below 10 percent ) (I would guess 3 to 4 percent is more like it but would welcome input in comments below.)

As might be expected, SugarSync CEO Mike Grossman said that offering free storage indefinitely is “not a very sustainable model.” If you’re offering a real service, then it is worth something, he noted.

In SugarSync’s case much of that value lies in the ability of the customer — typically a “prosumer” or a small business — to use the folder structure of his or her choice and have that same folder structure available in the cloud, desktop and mobile device, with all folders updated continuously.

There is a subset of those customers who care very much about how their data is managed and stored across devices, and he is banking that there are enough of them there for SugarSync to flourish. SugarSync pricing starts at $7.49 per month (or $74.99 per year) for 60GB.

It will be extremely interesting to see if SugarSync’s move sparks other competitors to follow suit. In eras past, most rational beings realized that when it came to goods and services you got what you paid for. The problem now is that so many people have grown up with free accounts for their photos and documents, they see that as their birthright.

Good luck persuading them otherwise.

 Photo courtesy of  Flickr user KAZVorpal

  1. These folks have the same challenge as ISP did 20 years ago, where it was a buyers market and you could just about survive off the free trials without ever paying anyone because there were so many vendors vying for your business.

    This area needs some healthy consolidation to drive maturity and proper adoption.

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  2. Stephen Wigmore Tuesday, December 10, 2013

    What a total load of rubbish. They currently offer 5GB of free storage and the first paid option is 60GB for $75. I’ll happily pay $7.50 for 6GB but have no need to put my entire hard drive online. What the hell sugarsync?

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    1. Agree totally

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      1. u complaining they giving u too much? crazy, take the 60 and then put 6

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        1. What about the cost, moron? :)

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    2. That is totally the problem. We’re not just paying for what we need…we’re paying for years of their hope that they had a business model. Meanwhile at someplace like owncube.com you can get 25GB for $2/mo. I’m not shilling for them…it’s just an example of how wrongly companies are thinking about these problems. The MBA in me would tell them their challenge is to come up with some new value.

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  3. It’s not a birthright and it’s no big deal if one has to pay for a service. If they offer good service I’d rather see them earn money than go out of business.
    What I find strange, though, is the way they make the switch:
    Two months’ notice to clean out your stuff and an offer to get a rebate for the first year which is just a little better than the usual offers they gave out every now and then.

    Not that I think that anyone is entitled to get something for free but if there hadn’t been so many people with free accounts recommending and pushing that service they wouldn’t have gotten so much media coverage and I sorely doubt many people would know the company name.
    It’s easy to look down on “freeriders” but they’re the ones that testdrive new products and do the marketing for the startups. I have 40+ GBs of storage there because I got them three paid accounts (and was rewarded with 30GB of storage for that) which are still active (whether others who I referred later upgraded I don’t know, so it might be more). My storage is mostly empty as I have my own storage where I host my files so I’ll just close my account and won’t miss it. But in a way I still feel cheated for getting kicked out after gaining them customers and having cost them nothing, really.

    Just a thought for all those people who think people who have free accounts are all just jerks who are too cheap to pay for services. Lots of early adopters make and shape those services and contribute a lot to the growth and publicity of those companies…

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    1. “It’s not a birthright and it’s no big deal if one has to pay for a service. If they offer good service I’d rather see them earn money than go out of business.” Agreed. The problem is, in some places (such as Lan Syncing, or having it work well on Linux), it isn’t a good service. A few years ago, we decided that my company, would start using SugarSync (I would even have characterized myself as a SugarSync evangelist), got one huge account, and started divvying out to people in the office using free accounts. In their forums, they were saying things like lan syncing and other features that didn’t exist yet were on the roadmap. Then, about a year later, we started to realize some of SugarSyncs short comings, got tired of waiting for promised features (that still haven’t materialized), and started to urge users elsewhere, even though we haven’t completely phased it out. This just means, that before Feburary, we will finish moving elsewhere, and have one less monthly bill. Again, I am all for paying for a good service, but in the case of sugarsync, we were already tired of waiting for it to become a good service. So long SugarSync.

      By the way, I know what you mean about feeling a little jilted about loosing the free space they gave you because of referrals. I referred many, many people. It isn’t a big problem that I am loosing my account, but I did help bring them business, and for a while at the beginning, I had a 500GB personal account before I moved on.

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  4. Cynthia & Bunny Tuesday, December 10, 2013

    Barb – I am the lead organizer of the Freemium Meetup which started in April 2012 and has had an event with 2-3 speakers nearly every month since then. It’s my belief that freemium conversion rates for SaaS are typically 1-2% ***at best*** and a few superstar posterchild SaaS freemium apps are doing 3-4%. Mobile only apps are typically < half a percent. Again, this is my impression after listening to all of our speakers and chatting with hundreds of Freemium Meetup attendees. Very few vendors will actually state their conversion rates, and even if they do it is often complicated to understand exactly what is in the numerator and denominator (e.g. is cohorts analysis after 2 years part of the equation?)

    http://www.meetup.com/freemium

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    1. thank you ! i was looking for numbers to reference here…. do you know of any researchers who track this?

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      1. Cynthia & Bunny Tuesday, December 10, 2013

        It’s hard to track because almost no vendors will reveal their conversion rates. If you email me at cynthia@kachingle.com I can send you the names of some consultants/industry analysts who have some actual data. And there are household name app vendors in the consumer space that have tens of millions users with less than a 1% conversion rate. You just can’t make it up in volume (unless your VCs patiently fund you till one of the Big 5 left standing buy you. Or not.)

        Even though I founded and run the Freemium Meetup, I am the atheist in church. It should be obvious to even the most casual observer the truth in what SugarSync’s CEO Mike Grossman says — offering free storage indefinitely is “not a very sustainable model.” Is this not obvious?

        What’s even more obvious is the cloud file management vendors that are hosting on Amazon are losing even more money! Amazon is the cloud storage Gold Rush’s Levi Strauss. BTW, we have had speakers at our meetup from both SugarSync and Amazon (AWS).

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  5. Benjamín Xolotl Torres Luna Tuesday, December 10, 2013

    Does anyone know of a free cloud app where I can do the same as sugarsync (sync any folder and not just one)?

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    1. If you are looking to share folders and are ok with none of the files living on the cloud, bittorrent sync is something that provides flexibility that is hard to find elsewhere (it works a little like Microsofts Live Mesh did before they killed it). On the cloud, Open Drive is one good option, however I haven’t played with sharing on it much. Or there is always things like Dropbox, or one of their many, many competitors. There are enough alternatives to sugarsync, it shouldn’t be a problem finding a replacement, but for many of them, the featureset will be just a little different. However sometimes just a little different, can be better for your individual situation.

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    2. Try Cubby, on Windows I just need to right click on any folder and select “Make this folder a cubby”.

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      1. That might work, I used Cubby for a bit when it was in the spotlight being lauded as a potential replacement for Windows Live Mesh in its earlier days, so this isn’t a criticism towards you, just my experience regarding it. As it came out of beta it (and Aero FS) started to be too restrictive for what I need. It is perfect for some people, but I like that with BT Sync, you can sync an unlimited amount for free from computer to computer, and since it uses the bittorrent protocol, you don’t rely on or strain a company. While it was made by someone, if the makers cease to exist or develop it tomorrow, it will continue to work (not that I am concerned about that with other companies usually, but it is nice to know that not only is it free, but that I am not hogging someone else’s resources using it). For me, the cloud component to most other services actually became a limiting factor. Most companies reasonable charged a fee if you wanted to sync to them and someone else, so if I had several hundred MB or GB I wanted to send to my friend in France, it would be a problem without upgrading or getting creative, sending a bit at a time because it is limited by their cloud component and the storage they are providing. With Bittorrent Sync, there is no cloud intermediary where the files go to, so I can just sync directly to him, or keep certain folders in sync across all my computers directly. Just a distinction, since everyone has different needs.

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      2. Nope, LogMeIn is not trustworthy. They have a crappy history of dealing with existing customers, they often change their minds about costs, business model, service offerings, and so on. Any LogMeIn service should be dumped immediately.

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    3. Copy.com allows you to sync any folder. To get 20gb of free copy.com space, click on my referral link:

      https://copy.com?r=l4892G

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      1. No it doesn’t.

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        1. Actually, yes it does

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      2. I hate copy.com referral whores, go away

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  6. No big deal for me. I started out with the 60GB and upgraded to the 100GB because they are they only ones who provided what I needed.
    Free is always great but I would never stake my business on it.

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  7. Shameless plug:

    We welcome any former free Sugarsync members to check out MediaFire. Up to 50 gigs of free storage, plus now we support automatic file-syncing through our new desktop app: https://www.mediafire.com/software/desktop/

    With 34 Million Users and Growing, we have no plans to eliminate our freemium model :)

    -Best,
    Brent Bucci

    Vice President, MediaFIre

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    1. While I am not a mediafire user, since other solutions fit my needs, I do see some humor in SugarSyncs twitter account pointing to this site, and if people read far enough below the fold, to your comment. It reminds me of when Mozy stopped having unlimited accounts, and sugarsync put up a blog post that basically said “see people, free accounts could never work” and about the same time Crashplan said they were “doubling down” on unlimited storage because it was sustainable. Good luck to you.

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      1. And by free accounts could never work, I meant, unlimited accounts could never work. It has been a long day.

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    2. Stefano Giovannini Tuesday, December 10, 2013

      It seems that mediafire syncs only one folder and its subfolders. Sugarsync can sync any folder.

      what was really great was that folders could reside on the cloud only after deleting them from my computer and be available (for instance JPG photos to be sent to a client that i did not need as I keep the original RAW files). SS could also sync to either my desktop or laptop or both. With Dropbox all files are automatically synced to both computers. If I am traveling somewhere where there is a slow connection I may not want to download the dropbox stuff to my laptop. Sugarsync was great for this, but 75 $ is too much and I do not need 60 GB. But I want a service with syncing flexibility. Otherwise I could just use Google drive or Dropbox.

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      1. check out tresorit.com

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        1. Thanks Million Dots. Tresorit is a wonderful replacement. Full automatic sync by folder just like Sugarsync. Desktop and Android apps are pretty good, if not better than SC. I really like the simplicity of Tresorit. tresorit.com

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      2. Interestingly, I’m setting up my new Dropbox this very day and leaving SugarSync after six years because I need just the scenario you describe, and SugarSync won’t do it.

        To explain: I don’t want to sync the same fileset to all three computers, and SugarSync can’t do that (confirmed by two techs yesterday). Dropbox’s Selective Sync absolutely does, as I’ve tested it this afternoon. 100GB price is identical ($99).

        One hard drive is simply too small to hold the same folders as the other two computers’, so “you can sync your entire Documents folder!” isn’t a selling point, even though SugarSync did their best to convince me it is.

        SugarSync is pricing out converting its free users, and alienating business users like me with inflexibility. Add their clunky v. 2.0 and they’re not long for the cloud-storage world.

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        1. Guest Comment Monday, March 10, 2014

          Actually, that is a core feature set of SugarSync and I’m doing that right now. Across three computers, I have some folders that shared across all three and some folders that are only shared across two. Moreover, because SugarSync allows you to exclude subfolders, I have subfolders that are not synced, even though the parent folder is.

          I’m not sure what techs you were talking to — but they need to find a new job!

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  8. They’re offering a 75% discount to current holders of the 5GB free accounts, but the first paid option is to upgrade to a 60GB account with an annual $75 fee ($18.75 the first year). That’s a steep fee, and I don’t really need to synchronize 60 GB. I might be willing to pay $7.50 annually for 5 GB but I don’t really need to put my entire hard drive online. No way I’m going to pay $75 annually for that. I’m not getting suckered into the $18.75 for first year) Looks like I’ll be dropping SugarSync and switching to MediaFire.

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  9. MoveOnDowntheRoad Tuesday, December 10, 2013

    Goodbye SugarSync!

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  10. Just switched to a free dropbox account i already had and dumped sugarsync.

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