Angie’s List Gets Rid of Its Paywall — Will It Work?
July 13, 2016 | Contributed by: Greg Sterling
Under pressure to grow usage and revenue, Angie’s List has been testing a “freemium” model for several months and this morning announced “free membership nationwide.” In the past several quarters, membership growth has been flat though retention is around 75%.
Opening the site up to free basic membership was an inevitable decision to boost usage and SEO visibility. The new system introduces a tiered model. The top level is $100 per year and offers a range of premium benefits. According to the company’s release this morning and its site there are now three benefits levels:
- Green: free-of-charge nationwide access to companies in more than 700 service categories; nationwide access to more than 10 million verified consumer ratings and reviews; and monthly digital form of the company’s magazine.
- Silver: includes all green features plus Angie’s Fair Price Guarantee and Angie’s Service Quality Guarantee, exclusive discounts, chat and email customer support, a bimonthly print version of the magazine for $24.99 a year.
- Gold: includes all green and silver features plus complaint resolution process and customer support via phone for $99.99 a year.
Angie’s List is adding additional tools and services (even “financing [through partnerships]”) over the coming months to further support the paid membership levels. The strategy is to get more people exposed to the site and upsell them into value added services.
In Q1 Angie’s List had revenue of $83.9 million, which was flat. Angie’s List has just over 3.3 million paid memberships, which the company estimates is 14% market penetration.
Angie’s List says it has “10-12 million visitors” monthly. By comparison Yelp has more than 100 million visitors in the US on a monthly basis. Again, free membership was a move of necessity.
In its Q1 earnings presentation the company said that it had “delivered positive results in freemium pilot markets, including in originations, member additions & engagement.” The market has responded positively to the announcement but that may be short lived if it doesn’t translate into measurable growth and revenue.
Angie’s List operates in a highly competitive segment with Yelp, Thumbtack, HomeAdvisor, Google (contractor lead-gen) and others. HomeAdvisor parent, IAC made a $500 million-plus takeover bid for Angie’s List last year, which was rejected by the latter’s board. There is speculation that the company would continue to pursue a takeover.