San Francisco based TrialPay will announce a $12.7 million second round of financing tomorrow, which brings them to $15.8 million raised in total. They tapped European money for the round, bringing in London based Atomico, as well as previous investors Index Ventures, Baseline Ventures and Battery Ventures.
The service provides users with an alternative payment method at 3,000 or so participating merchants. Instead of directly, users are offered something for free (such as free calling minutes on Skype) in return for buying a magazine subscription. Another example - “If a customer isn’t quite sold on a software title, he or she could get that software for free by sending flowers from FTD.com, signing up for Blockbuster Total Access or buying $50 worth of clothes at Gap.com. TrialPay pays for the software using revenue (CPA) from the advertiser, and the customer gets a free license.”
We first covered them at launch in October 2007. Buyers are presented with the alternative options at the time of checkout, so they can choose to just pay as normal or take one of the offers. It’s an easy option for merchants to accept, since they get paid anyway. The question is, will consumers use it enough to make a real business out of it? I’m doubtful, but that’s mostly because we’ve seen a trail of dead bodies who’ve tried to create alternative payment schemes. People seem to like their credit cards just fine, and can smell a marketing gimmick a mile away.
TrialPay says they’re adding 15,000 new registered users per day, though, with 5.2 million total. Maybe people aren’t so good at smelling those gimmicks after all.
Sadly for businesses but great for consumers, software is now a zero-sum game. Customers expect things for free now, whether it’s Openoffice.org, firewalls, anti-spyware… even video games. Using advertising to subsidize or even pay on behalf of the customer is great for small companies with not a lot of overhead but I have yet to see it becoming profitable for larger organizations with offices, staff etc. to cover. I believe it was Zone Alarm or the anti-virus program I installed this morning that happen to have this feature available… having the word “pay” when people expect “free” isn’t a good name for this type of system - should be something without the expectation of “payment” in it if it’s got any hope of success.
Jon
http://woodmarvels.com - Create Unique Memories
I agree with jon.
for example iRemotePC uses Trialpay to provide their premium version of remote access for free
http://www.iremotepc.com/howtrailpayworks.html
and many more I have seen like winzip.com, lavasoft, etc…’
not sure if they make any really money through this program though.
Add in a nice pyramid scheme of recruitment and they’ll have remade the whole free ipod epidemic. Still, not bad if you were going to buy from one of those other merchants anyway.
Disclaimer: I got a free ipod in 2004.
Would anybody know TrialPay revenue, profits, etc..?
Alex, if they are seeking rounds of financing, it means they are NOT making a profit. It’s simply a matter of time before they start a social networking site of other like minded “trial pay” members, 15K new users a day isn’t anything to laugh about… time to monetize!
Jon
http://buzvia.com - Where’s your traffic going?
If you’ve only got to complete one deal, Lisa, it’s not really one of those free iPod sites, is it? I don’t know, seems like a decent deal if it’s something you’re going to buy anyway. NY Times had a big piece on them on Monday.
We signed up for TrialPay a few months back where customers could get free software by purchasing items at 80sTees.com. So far the response has been underwhelming.
Payment via alternative (related or unrelated) purchases are not necessarily all gimmick. Commonly used in countries where direct purchase of some services are either not allowed or not encouraged.
Eg., as commonly done via China content providers a few years back, even to date, that users subscribe to over-the-web sms services by buying an “email subscription”, to circumvent questionable charging for some particular service of high demand but can’t-quite-charge-directly-for-it.
And lastly, this is not a comment of criticism… so Mike need not be too sensitive!
I’m not really a fan of gimmicks but I think something like this could work.
However, what would be better for software companies is if an affinity points company would let people spend their points to buy your software. Are there any big affinity companies that have easy signup for companies that want to accept points as payment? (I’m thinking popular affinity programs like airlines etc.)
@9
Google Apps for the enterprise should be quite willing to… based on the significant fees they pay out to giants like Capgemini et al per install.
I used trialpay couple of time … I just wish they had it on amazon.com, could use some free books!
I would not trust their CEO, who has a long history of spyware development.
Hi Mike,
I am the CEO of TrialPay and just wanted to address some of your comments, which I think do not appreciate what we’re trying to do.
We are not trying to compete with companies like Visa, PayPal, Google Checkout, etc, nor do I think we’re a marketing gimmick, and I’ll explain why. If you sell something online, you probably notice that 99% of visitors to your site never purchase. We’re not trying to change consumer behavior; we’re trying to embrace it. You’re right that people like their credit cards just fine, but they don’t USE them too often and bail out of dozens of potential purchases a year, especially for digital goods and content.
The same person that won’t pay $19.99 for a computer game — regardless of whether payment is via Visa, MC, Amex, PayPal, gold ingots, etc — will likely buy clothes, books, DVDs, pay for auto insurance, etc. What if the game company told the 99% of consumers who don’t pay: “we’ll give you the game for free if you make another purchase from a blue chip advertiser?”
It works. Every day last week, thousands of people who wouldn’t ordinarily pay for items from thousands of merchants (with credit card, PayPal, etc) actually transacted through TrialPay. They bought flowers from FTD (an act they needed to do anyway) in order to get Skype Credits, WinZip, McAfee software, etc etc.
This idea grew out of a real business. I ran a software company, and 95-99% of people didn’t pay for our trial software (which is about the industry average). We experimented with this idea, and it literally doubled our revenue. Consumers liked it, advertisers liked us (for sending them new customers), and other merchants started asking how they could do this too. That’s where TrialPay came from.
I think our success — we have substantial revenue, merchants, advertisers, and customers — speaks for itself in terms of the efficacy of the model and the business. The New York Times just did a piece on us this Monday which gives better background:
http://www.nytimes.com/2008/02.....ref=slogin
Thanks,
Alex
Hi Alex, the concept is nice but the problem is that, as you stated, most people out there are simply being conditioned that anything available online or electronically simply no longer holds any value. Though I do agree, if you are going to buy flowers anyways, then your proposition totally makes sense but if they don’t have a need for alternative services or products at time of “purchase”, then I fail to see any “added” incentive to using TrialPay (or any other similar services).
I guess the fact that you are becoming successful simply leads credence that each word you wrote is totally true… the vast majority of people out there simply will not pay (or upgrade) for software if they can find the alternative with a quick Google search at 0 cost.
I actually wouldn’t mind using your service for one of my businesses but my e-com system doesn’t support TrialPay, have you ever considered a partnership with paypal - that would make implementation of this program an absolute breeze!
Best of luck with your business!
Jon
http://woodmarvels.com - Create Unique Memories
It works. Every day last week, thousands of people who wouldn’t ordinarily pay for items from thousands of merchants (with credit card, PayPal, etc) actually transacted through TrialPay. They bought flowers from FTD (an act they needed to do anyway) in order to get Skype Credits, WinZip, McAfee software, etc etc.
My company has actually used TrialPay for one of our software titles. The results were OK, but not anywhere remotely close to doubling revenue (for the product). More like an increase of 3% of sales from before TrialPay, I believe. The big down side is that when we first offered it as an alternate form of payment, it caused our normal sales to decline, more than wiping out any gains from TrialPay. After we moved it to a less prominent place on our site, regular sales returned to normal levels, and of course TrialPay sales dropped even further, but at least now it’s purely a bonus.
It’s an interesting concept and perhaps it’ll work better when they have more advertisers signed up. As it stands now, we have a couple of issues with it. The big one is that you don’t get any money you made through TrialPay until the 15th of the next month. If you have any serious revenue, that’s a deal killer. And I think there’s no reason for them to keep your money for so long. A week’s delay should be more than adequate for them to cover any potential fraud losses since their risk is distributed across many merchants. The second problem is the effect TrialPay has of reducing existing sales. We’ve looked at a few other software companies that offer the TrialPay option, and most of them have it tucked away in a corner somewhere. Which seems to indicate to me that they had similar experiences as we did. TrialPay has got to do a better job of not cannibalizing existing sales. But that’s a tough nut to crack for sure. The last thing is not really a problem, but just the nature of the concept. TrialPay will always work best if your average sale is under $10. Anything more than that and it just doesn’t do as well. There aren’t enough offers that will pay $25 to $40 and users become very hesitant to commit to those big offers without doing some shopping around because it is a much bigger financial transaction for them.
Anyway, it’s a pretty good service and I hope it’ll get better. But I think your business model has to be a very good fit for TrialPay’s model if you want to see any significant revenue increases from using it.
Really interesting. To buy through TrialPay has advantages that at the moment nobody offers us. Practically, buying a product you can choose another one free.
I found a list of trial many triapay supported sites here: http://maggiewang.com/2007/06/.....re-offers/ but its only updated as of June 2007.