LinkedIn is a social networking service that mainly targets business-oriented users. It was co-founded in 2002 and launched in 2003 by Reid Hoffman and other founding members of PayPal. Today, LinkedIn is traded publicly on the New York Stock Exchange under the symbol LNKD. Since its launch, the site has enjoyed an estimated two new users per second resulting in their network of over 300 million users worldwide.
What They Offer
LinkedIn offers people the opportunity to create their own professional profile and create connections to people that they may have worked with via a social network much like Facebook. Users can post photos of themselves, see who has been viewing their page, save job postings that they would like to apply for, and follow companies or professionals that they are interested in. As of 2013, LinkedIn has more than 300 million users that are located in over 200 countries and territories. Due to the growing popularity of the site internationally, LinkedIn has adapted and is now offered in twenty different languages including: English, French, Spanish, German, Tagalog, and Malay.
Anderson's Taxonomy Model
Chris Anderson explains in the article, Free! Why $0.00 Is the Future of Business, that the definition of freemium which was coined by Fred Wilson is, "What's free: Web software and services, some content. Free to whom: users of the basic version." Businesses who decide to use the freemium pricing strategy usually implement it using a tiered system. These tiers usually range from the lowest, free, to some form of, "pro" account or executive level account. One thing that is common amongst websites that utilize this pricing strategy is that the ratio of paying users to users using the free version of the website is low; as low as 1% in most cases. LinkedIn offers four different tiers to their customers, with the majority of its users opting for the free package.
If you're anything like me, then you didn't actually know there were paid accounts for LinkedIn. Which led me to believe that maybe there are other sites that are doing a better job at creating a professional network with more features, but that also costs money. What I soon found out was that LinkedIn is actually leagues ahead of the competition in terms of number of users. Viadeo, which is like LinkedIn but French, only has 50 million users. The only other competitor is XING, which is a German version of LinkedIn has roughly 10 million users. Even though the vast majority of LinkedIn users are only using the free version, it doesn't seem to matter because their user base is so much larger than their competition. This undoubtedly attracts bigger businesses to the site to look at the larger pool of potential candidates.
That's all well and good, but does it mean that they're actually making more money than their competitors XING and Viadeo? LinkedIn in 2013 reported $1.52 billion in revenue compared to XING which reported $70.1 million in revenue and Viadeo which in 2009 reported $40 million (I wasn't able to find more current data for Viadeo on their current revenue). LinkedIn is clearly doing well for themselves based on their number of users and their financial strength. Just to pour on some more data here; LinkedIn is the 10th most visited website in the world according to the Alexa rankings of the top 500 global websites.
If you're anything like me, then you didn't actually know there were paid accounts for LinkedIn. Which led me to believe that maybe there are other sites that are doing a better job at creating a professional network with more features, but that also costs money. What I soon found out was that LinkedIn is actually leagues ahead of the competition in terms of number of users. Viadeo, which is like LinkedIn but French, only has 50 million users. The only other competitor is XING, which is a German version of LinkedIn has roughly 10 million users. Even though the vast majority of LinkedIn users are only using the free version, it doesn't seem to matter because their user base is so much larger than their competition. This undoubtedly attracts bigger businesses to the site to look at the larger pool of potential candidates.
That's all well and good, but does it mean that they're actually making more money than their competitors XING and Viadeo? LinkedIn in 2013 reported $1.52 billion in revenue compared to XING which reported $70.1 million in revenue and Viadeo which in 2009 reported $40 million (I wasn't able to find more current data for Viadeo on their current revenue). LinkedIn is clearly doing well for themselves based on their number of users and their financial strength. Just to pour on some more data here; LinkedIn is the 10th most visited website in the world according to the Alexa rankings of the top 500 global websites.
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