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Pocket Premium: Read it Later or Read Forever?

Popular bookmarking app Pocket launched a premium offering in 2014, hoping to convert a chunk of its 12 million free users into fee-paying subscribers. Although its massive user base indicates that many web users found its free version valuable, Pocket is struggling to capture value and innovate in order to increase its premium conversion rates.

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From Read It Later to Pocket
‘Read It Later’ (RIL) was released in August 2007 by solo entrepreneur Nate Weiner as a bookmarking browser extension that permitted its users to save online content and read it later on or offline in a clutter-free ‘reading mode.’ After quickly outpacing its competitors and obtaining more than $7.5 million in venture capital investments between 2011 and 2012, RIL was given a revamp and relaunched as Pocket: a free and advertisement-free update of RIL that also allowed users to sync saved content across PC and mobile devices.

With many wondering how Pocket would capture value from its 12 million users, in May 2014 Weiner announced the launch of Pocket Premium: an enhanced version that he and his investors hoped would transform a hefty chunk of Pocket's everincreasing number of free users into fee-paying subscribers at $4.99 a month. With low marginal costs per user, Pocket's freemium gamble may pay off in the long term - but it will need to ensure that it is able to create enough value for Premium users to make good on its investments in growing its user base over the past eight years. 

Creating Value 
It is easy to see the appeal of Pocket’s free offering. In response to shifting consumer demands at a time when digital reading patterns were being transformed by innovations in advertising, the rise of the tablet and mobile news apps, Pocket offered its free users three major value propositions: (1) a sleek, ad-free reading experience, (2) the ability to access saved content across all devices, (3) the ability to add tags to articles for organizational purposes. Like its rival Evernote, Pocket's basic offering was intended to save users time and make consuming online content more efficient. 

After May 2014, Pocket Premium users were offered an extra set of features at a cost of $4.99 per month: a permanent library of all their saved URLs that would allow them to visit sites that had been taken down, powerful full-text search that looks up content by topics and tags, and automatically suggested tags.

Of all the Premium features available, Weiner is most convinced of the value of the 'permanent library' feature. In 2014, Weiner expressed his belief that committed users valued Pocket as an 'archive', and that the ability to store copies of online content forever would set it apart from the rest as rates of 'link-rot' (where websites are taken down or domains are cancelled) increased. 

One potential dent in Pocket Premium’s value proposition is that its war against link-rot may be poorly conceived. As an article published on Medium.com noted shortly after Pocket Premium's release noted: ‘quality content doesn’t just disappear overnight’: ‘I don’t think NYTimes is going to die soon, neither is Kalzumeus or the Nieman Journalism Lab. These sites are going to live forever, it’s not like they are going to fail to renew their domains.' 

The remaining Premium features - autotagging and power-search - have not been well-received by users, with some feeling that power-search should be included in the free version. 

However, the real problem with Pocket Premium may be that, by placing on permanence and the library, it jars with Pocket's basic value proposition: efficiency and ease. By choosing to differentiate Pocket Premium from the free version by encouraging voracious readers to become archivists, Weiner seems to have entered into the trap of opening a gap between strategy espoused and strategy in practice (Chris Argyris, 1990). 

Capturing Value
Pocket remains the market leader in its category in terms of overall users, but it will need to enhance the value of its Premium offering if it wants to capture some of the value surplus it has created for its committed users.

As Gupta et all have noted, companies hoping to pursue a successful freemium strategy need to strike a balance between their service plans that allows them to build their free user base (the primary goal) while also persuading a critical mass of users to convert to premium. There seems to be a risk that, by offering so many core features up front, Pocket's strategy has made it difficult to develop premium features that significantly improve the user experience. 

Gupta et al have also stressed the importance of innovating for the success of freemium business models. With competitor Instapaper now offering extra features including unlimited highlights and text-to-speech playlists in addition to full-text search at $2 less per month, Pocket will need to invest in new features in order to increase its Premium conversion rates and prevent its one advantage - its huge user base - from following innovators and late-entrants. 

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