Ning reneges on its core promise, shatters customer trust2010-04-15
I did not publish this post as soon as I wrote it. I went to dinner with some old friends. Had a couple glasses of wine. Waited to see if my reaction to the news had mellowed. It has not. I’m as pissed off as I was when I first got word. Hence, the following post, just as I wrote it earlier today:
Ning launched with a simple premise: Build your own social network for free. The company, founded by web browser pioneer Marc Andreesen, would make money through advertising, fee-based enhancements to free networks and premium networks.
The allure of a dedicated social network was undeniable. The features of a Facebook group were just too limiting; Ning let you create multiple groups within your network, in addition to a host of other features.
The kinds of groups that took root on Ning are as diverse as the interests that occupy the thoughts of the world’s population. High school faculties set up private communities. Churches and synagogues established social networks, some for staff and clergy, others for congregants. Auburn PR professor Robert French created PR Open Mic for PR students and faculty. Chris Boyer opened a network to discuss social media marketing for hospitals. GovLoop is a network for government employees interested in pursuing social media as a channel. A colleague of mine, a volunteer high school football coach, has been using Ning as a place for team members, coaching staff and parents to interact. Just last week I joined a Ning network dedicated to employee engagement.
Soon, only those networks that choose to pay up will exist. That so much effort was put into building them and that so many people have come to rely on them as a source of community interaction, is no longer of any concern to the powers that be at Ning. The business decision has been made to end the free service and focus the company’s efforts entirely on the premium sites used by the likes of T. Boone Pickens (to promote his energy plan) and the musical act Linkin Park.
In a memo sent to employees, new CEO Jason Rosenthal wrote:
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.
Rosenthal’s rationale is based on the fact that 75 percent of Ning’s traffic goes to those premium sites. The “freemium” model helped build that traffic, though. People started with free sites, then moved up to premium after they were already sold on Ning and could see the additional value of the paid offering. Now, nobody will be able to follow that path.
Rosenthal also announced a staff reduction of 69 of the current 167 Ning employees.
Having spent the better part of 35 years in the business world, I understand the need to focus a business on profitable activities. I also understand the risks inherent in casting your lot with a single service: You run the risk of losing your data should the company go under. Just ask anybody who maintained a site at GeoCities.
Ning is not going under and there’s more to this move than a simple business decision. Those who established Ning sites did so because the ability to set up a free network was the company’s core proposition. Ning’s home page, back in October 2007, displayed these words:
Get Your Own Social Network!
Ning is the only online service where you can create, customize, and share your own Social Network for free in seconds.
There’s nothing ambiguous about that statement. There are no caveats, no exceptions, no hints that this is a short-term offer. You can see for yourself, thanks to Archive.org’s Wayback machine.
All those schools, all those churches, all those non-profit organizations and local clubs and youth groups now find themselves with the rug pulled out from under them. “Pay up or get out” is the short version of Rosenthal’s message. “We got you here by telling you we were a free service but we’ve changed our mind. Don’t like it? Tough shit. Business is business.” It has the sour taste of extortion. Want to keep that community and all the assets you’ve been building these last few years? It’s gonna cost you.
But the word that keeps repeating in my mind is “betrayal.”
Deciding to stick with Ning and pay the fee requires more consideration than just the cost. The first question I’d ask is, “Can I ever trust anything Ning says, ever again?” My answer: Not a chance. I’m not sure there’s anything Ning could ever do to regain my trust.
After all, I recommended Ning to a group where I volunteer my time, a nonprofit that doesn’t have the budget to pay. With no viable alternative, all the effort put into that group will amount to nothing and the community so many people have come to depend on will simply vanish. My personal credibility with this group will undoubtedly suffer.
I wrote not too long ago about a similar situation with Sprout. The difference, however, is that Sprout never suggested its service would always be free; there was always the expectation that they’d start to charge for it sooner or later.
Dan York speaks and writes frequently about the risks inherent in a “single point of failure,” techspeak for putting all your eggs in one basket. Twitter and Facebook could, someday, go out of business or be bought by another company that opts later to dump it. Look at AOL’s decision to shut down Bebo, Google’s indifference to Jaiku after acquiring it, or the sudden drop in usage of Friendfeed after it was bought by Facebook.
Ning’s action, though, is a purely voluntary decision to renege on its promise to the community that helped it rise to prominence. The long-term fallout of this decision will be heightened levels of mistrust and skepticism aimed at any service provider that offers a free level of service.
Sure. We’ve heard that one before.
UPDATE: Posterous has announced its intent to provide Ning customers with a new home. Posterous is a terrific tool, but doesn’t offer many of Ning’s features. It’ll be interesting to see how they handle the construction of a Ning importer. Posterous is asking Ning users to subscribe to the Posterous blog for updates. If it works well, maintaining groups and other Ning features, I expect to see a massive migration to Posterous rather than payments made to Ning.