Can't monetize free users? Try threatening them with legal action

At SupportBee, we are big fans of charging for your product to avoid the Gowalla Situation. Unfortunately while doing our first startup Muziboo, we ended up using a (then) free Gigya Wildfire. Like every ambitious startup, Gigya raised over $20 million in funding over the last few years. Initially they wanted to grow by offering the service for free (who doesn't love virality?) and monetize by charging for branded widgets. However, as often is the case with "we'll sell data or advanced analytics and offer the product for free" startups, they probably could not monetize using these schemes. So suddenly, after using the product for over three years, I get an email from them

Hi,

Our monthly company reports show us that Gigya's wildfire implementation is currently generating a high amount of traffic on your site.

On 19.1.2012 you received notice from Gigya requesting that you provide us with a link back to our site in exchange for your usage of our wildfire product. Muziboo has failed to respond to our email. Gigya s implementation is no longer free and currently retails at a price of $6,000 a year; or as we have offered you as an original Gigya customer, in exchange for placing the following link to our site on your home page.

If you prefer not to pay the required subscription fee and would like to place a link on your site, please be in contact.

Alternatively please note: Continued usage of our product, along with failure to provide proper compensation for it will be followed by legal measures on our part.

Thank you,

xxxx yyyyy,

Senior Marketing Manager at Gigya

The emphasis above is mine. The notice email that they are referring to arrived with a subject line 'Your Gigya Permission'. A rather useless subject line that I had unforunately ignored. There are several interesting points here

  • The product pricing starts at $6000 a year. The pricing is not based on usage (in fact they don't even mention what our usage is, it just is high).
  • Instead of disabling the serving of the widget (which seems like the most sensible thing to do), they will go ahead and take legal action against me if I don't stop using it. Remember that this is a product that they themselves enthusaistically offered for free in the first place.
  • If I don't want to pay, I must put the exact link <a href="http://www.gigya.com/">Social Media for Business<a/> on my home page. Basically I can't nofollow it. This almost makes it a paid link that can help them rank up for 'Social Media for Business' (they specify this in their first email that I have linked to above).
Having seen other funded startups, I can understand the investor pressure that they must be going through. Raise a ton of capital for something inherently very simple and when your ambitious data mining/advertising plans fail, taking down with them your financial projections, just threaten your users for an arbitrary sum of money. Reminds me of the excellent advice I saw on the Pinboard blog urging people to not be a free user. We are going to remove the widget for now but we'll make sure we don't pick a free service the next time.

Good discussion on Hacker News.

Update1: I had a call with Victor from Gigya (read his comment on the post below) and Gigya is really sorry that the whole thing happened. Especially the bit about legal action.

Hana Mohan

Hana Mohan