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I don't think this is totally unreasonable. From their point of view, they offered a perfectly reasonable alternative to paying, which was ignored. By ignoring

gcp 15y ago
Threatening legal action was completely unnecessary and makes them look like an ass. Simply pointing out you will stop the service from working for non-paying users would have been enough.
JS_startup 15y ago
The correct way to transition from a freemium to paid service is to grandfather previous users in, not classlessly pull the rug out from under them and demand money or a backlink (seriously? $20M in venture capital and you're begging users for backlinks?) Moreover, that e-mail was just really ham-fisted. Why not say "your service will be discontinued if you don't respond" instead of going thermonuclear with legal threats? It reeks of desperation and disregard for their existing clients.
- mattmanser 15y ago
  Grandfathering is as stupid an idea as freemium. Ever heard of inflation? It's a totally and utterly stupid idea and I'll have zero sympathy when any startup doing it suddenly find themselves in a world where the dollar isn't worth anywhere near what it was. Prices change. I don't expect to buy a Mars Bar for 15p from my local corner shop as they sold it to me that price 20 years ago. It is fine to say 'we're discontinuing your current plan, sorry'. Maybe be nice and offer them 3 months more free to transition if you can afford to. NEVER grandfather. What you don't do though is threaten legal action because you changed your T&Cs, that's just stupid and regardless of you CYA 'subject to change' clause you're not going to win in court and you just made a bunch of pissed off ex-customers telling everyone you suck because you threatened them.
  - jasonkester 15y ago
    Have you ever looked at the account lifetimes of users who have been grandfathered into a cheap plan versus the lifetime of a regular user on a regular plan? It's quite a thing to see. Grandfathered users will hold onto their subscription like it was made of gold. Even if they don't need the product anymore, you'll find them still hanging around for years because they know what a great deal they're getting. In mildly-innumerate-user-psychology, they're making money every month by keeping that old grandfathered plan. So even though those guys are making you less money, they're going to continue making you that money pretty much forever. Way more over their lifetime than they would have had you forced them onto a more expensive plan, pissed off half of them into leaving immediately, then watched the rest trickle away through attrition.
    - danshapiro 15y ago
      Furthermore, a user with low churn is worth much more than a normal user. In the phone industry, telcos pay over $300/head for a new subscriber, who will leave after ~30 months. That means they have to allocate $10/month during your subscription to find your replacement. It's worth giving an existing customer a $10/month discount by way of a grandfathered plan if it means they'll stay around.
eftpotrm 15y ago
No, the reasonable thing to do (and the good business practice) would have been to in some ways limit or revoke their access to the API if they didn't pay. That way, if they miss the mail and / or choose not to pay, they lose service but no more. Keeping up the service but demanding money with force would make me incredibly wary to do business with them. It's destroying trust and goodwill, and pretty much guarantees that, were I in that position, I'd be looking for alternatives with whom I could have a more healthy business relationship. Need to make money off what used to be free? Fine, but be polite about it. A business operates on the good will of its customers, who they've just annoyed.
palebluedot 15y ago
I don't think this is totally unreasonable. From their point of view, they offered a perfectly reasonable alternative to paying, which was ignored. By ignoring (accidentally) the original email, the message sent back could be interpreted as: "We're not implementing your link back, and we're not paying for your service, but we're still going to use it anyway". Wait, what? So - if I ignore an unsolicited email, that suddenly becomes actionable if I don't do what the email says? I have a hard time seeing how that is not totally unreasonable. The only reasonable nuclear option for them that I see, would be to simply terminate the user account or service, if they did not respond.
- brudgers 15y ago
  Your argument hinges on the email being unsolicited. One could argue that the email was not unsolicited, if the email address was obtained during signup and acceptance of the Terms of Service. Since it is not uncommon for free online services to have Terms of Service which allow the provider to unilaterally change those terms, the argument that an email notifying the user of the change is unsolicited is further weakened. While I am not suggesting that the alternatives offered are or are not fair or reasonable, the follow up email did its job in getting the service consumer's attention and more importantly action in regards to the matter.
  - skrish 15y ago
    Legally what you are saying could be right. But what if even this email was ignored as an unsolicited email? Is it right thing to sue them because they have sent 2 emails for a service that was offered free? Definitely not. The right thing to do would be to terminate the service for such a free user & get their attention.
    - dedward 15y ago
      It would seem to me that if the service was free, no money exchanged hands, therefore no contract exists that would make any sense in court. The only recourse they would have is to shut off access..... they'd have nothing to sue over.
mikeash 15y ago
Why couldn't they just shut the service off if these guys didn't pay? Going straight from "please pay or link" to "we will sue you" is unreasonable to an unbelievable degree. The issue is not with them wanting to charge money or get links or whatever. The issue is that they escalated way too hard and way too fast when much kinder effective measures were available.
elliottcarlson 15y ago
I completely agree that it's not an unreasonable approach; though Gigya should have made the subject line of the initial email clearer; and probably should not have mentioned the legal route in a second email. If still left ignored I am sure they could have sent a certified letter if still no action was taken. The articles mention of the link back being a paid for link is exactly what it is - in exchange for not paying $6000/year you have the option of placing a link on your site. It's a fair option.
- dedward 15y ago
  Even still there would be no cause for legal action... what would the damages be? They could simply shut off the service for the customer like every other service provider in the world would do...
  - elliottcarlson 15y ago
    Not every service provider works that way - I've seen plenty of hosting companies who just start charging overage charges - it would be stipulated somewhere in their TOS which most likely would also have the wording that it can be changed at any time. I'm not justifying the action - just saying that it does happen.
damoncali 15y ago
They could, you know, turn off the widget so that people that don't pay won't have access. Shockingly high tech, but that's why they get paid the big bucks.

gcp 15y ago

Threatening legal action was completely unnecessary and makes them look like an ass. Simply pointing out you will stop the service from working for non-paying users would have been enough.

JS_startup 15y ago

The correct way to transition from a freemium to paid service is to grandfather previous users in, not classlessly pull the rug out from under them and demand money or a backlink (seriously? $20M in venture capital and you're begging users for backlinks?) Moreover, that e-mail was just really ham-fisted. Why not say "your service will be discontinued if you don't respond" instead of going thermonuclear with legal threats? It reeks of desperation and disregard for their existing clients.

mattmanser 15y ago
Grandfathering is as stupid an idea as freemium. Ever heard of inflation? It's a totally and utterly stupid idea and I'll have zero sympathy when any startup doing it suddenly find themselves in a world where the dollar isn't worth anywhere near what it was. Prices change. I don't expect to buy a Mars Bar for 15p from my local corner shop as they sold it to me that price 20 years ago. It is fine to say 'we're discontinuing your current plan, sorry'. Maybe be nice and offer them 3 months more free to transition if you can afford to. NEVER grandfather. What you don't do though is threaten legal action because you changed your T&Cs, that's just stupid and regardless of you CYA 'subject to change' clause you're not going to win in court and you just made a bunch of pissed off ex-customers telling everyone you suck because you threatened them.
- jasonkester 15y ago
  Have you ever looked at the account lifetimes of users who have been grandfathered into a cheap plan versus the lifetime of a regular user on a regular plan? It's quite a thing to see. Grandfathered users will hold onto their subscription like it was made of gold. Even if they don't need the product anymore, you'll find them still hanging around for years because they know what a great deal they're getting. In mildly-innumerate-user-psychology, they're making money every month by keeping that old grandfathered plan. So even though those guys are making you less money, they're going to continue making you that money pretty much forever. Way more over their lifetime than they would have had you forced them onto a more expensive plan, pissed off half of them into leaving immediately, then watched the rest trickle away through attrition.
  - danshapiro 15y ago
    Furthermore, a user with low churn is worth much more than a normal user. In the phone industry, telcos pay over $300/head for a new subscriber, who will leave after ~30 months. That means they have to allocate $10/month during your subscription to find your replacement. It's worth giving an existing customer a $10/month discount by way of a grandfathered plan if it means they'll stay around.

eftpotrm 15y ago

No, the reasonable thing to do (and the good business practice) would have been to in some ways limit or revoke their access to the API if they didn't pay. That way, if they miss the mail and / or choose not to pay, they lose service but no more. Keeping up the service but demanding money with force would make me incredibly wary to do business with them. It's destroying trust and goodwill, and pretty much guarantees that, were I in that position, I'd be looking for alternatives with whom I could have a more healthy business relationship. Need to make money off what used to be free? Fine, but be polite about it. A business operates on the good will of its customers, who they've just annoyed.

palebluedot 15y ago

I don't think this is totally unreasonable. From their point of view, they offered a perfectly reasonable alternative to paying, which was ignored. By ignoring (accidentally) the original email, the message sent back could be interpreted as: "We're not implementing your link back, and we're not paying for your service, but we're still going to use it anyway". Wait, what? So - if I ignore an unsolicited email, that suddenly becomes actionable if I don't do what the email says? I have a hard time seeing how that is not totally unreasonable. The only reasonable nuclear option for them that I see, would be to simply terminate the user account or service, if they did not respond.

brudgers 15y ago
Your argument hinges on the email being unsolicited. One could argue that the email was not unsolicited, if the email address was obtained during signup and acceptance of the Terms of Service. Since it is not uncommon for free online services to have Terms of Service which allow the provider to unilaterally change those terms, the argument that an email notifying the user of the change is unsolicited is further weakened. While I am not suggesting that the alternatives offered are or are not fair or reasonable, the follow up email did its job in getting the service consumer's attention and more importantly action in regards to the matter.
- skrish 15y ago
  Legally what you are saying could be right. But what if even this email was ignored as an unsolicited email? Is it right thing to sue them because they have sent 2 emails for a service that was offered free? Definitely not. The right thing to do would be to terminate the service for such a free user & get their attention.
  - dedward 15y ago
    It would seem to me that if the service was free, no money exchanged hands, therefore no contract exists that would make any sense in court. The only recourse they would have is to shut off access..... they'd have nothing to sue over.

mikeash 15y ago

Why couldn't they just shut the service off if these guys didn't pay? Going straight from "please pay or link" to "we will sue you" is unreasonable to an unbelievable degree. The issue is not with them wanting to charge money or get links or whatever. The issue is that they escalated way too hard and way too fast when much kinder effective measures were available.

elliottcarlson 15y ago

I completely agree that it's not an unreasonable approach; though Gigya should have made the subject line of the initial email clearer; and probably should not have mentioned the legal route in a second email. If still left ignored I am sure they could have sent a certified letter if still no action was taken. The articles mention of the link back being a paid for link is exactly what it is - in exchange for not paying $6000/year you have the option of placing a link on your site. It's a fair option.

dedward 15y ago
Even still there would be no cause for legal action... what would the damages be? They could simply shut off the service for the customer like every other service provider in the world would do...
- elliottcarlson 15y ago
  Not every service provider works that way - I've seen plenty of hosting companies who just start charging overage charges - it would be stipulated somewhere in their TOS which most likely would also have the wording that it can be changed at any time. I'm not justifying the action - just saying that it does happen.

damoncali 15y ago

They could, you know, turn off the widget so that people that don't pay won't have access. Shockingly high tech, but that's why they get paid the big bucks.