Nothing good is free. Among technologists, there's a gathering consensus that the advertising-driven business model behind most social networking services is bad for users, who trade their time, attention, and privacy for a service that makes them angry, dumb, and sad.

In the months since Facebook acknowledged research suggesting that passively consuming content on Facebook was associated with a lower sense of well-being, the company has come under pressure to allow users pay a subscription fee to opt out of advertising and data collection. Facebook CEO Mark Zuckerberg was even asked about it during his grilling on Capitol Hill.

Strava is the rare social network that can claim to be good for its users' health. Its 32 million members employ the app to log their bike rides, runs, swims, and other workouts and follow their friends' activities. Perhaps not coincidentally, Strava has also, from its earliest days, made most of its money by charging members directly for premium features, such as the ability to set and track goals or analyze data from a heart-rate monitor.

While those features arguably keep Strava aligned with its users' welfare, the jump from free to the $7.99-per-month premium tier was an intimidating one, says Strava's CEO, James Quarles. To remedy that, the company is divvying up its paid offerings into three discrete packages that can be purchased separately for $2.99 a piece. "The big objective here is to make it simpler and more accessible," says Quarles. After joining the company 15 months ago from Instagram, where he was VP of business, Quarles took a hard look at how to get more Strava users to pay to play. "People who are active, you'd take a look at their usage and say, You should be a premium member. So why aren't you?" he says.

The answer that emerged from customer surveys: confusion about what premium is and whom it's for. By breaking out the features into separate packages, the company hopes both to clarify what Strava is selling and lower the bar for customers thinking of making the leap. The new packages are: Safety, which lets users send a live location tracking link to others, who can use it to monitor their whereabouts; Analysis, which lets users slice and dice their performances and compare them with others'; and Training, which lets them set goals and monitor their progress against them. The bundle of all three packages costs $7.99, and existing premium members will have their subscriptions automatically migrated there.

Strava doesn't say how many of its 32 million members currently pay for premium (which will be rebranded as Summit), but a 2015 analysis of its user base suggests that as many as 800,000 of them might be subscribers.

While it would be nice to get more paying customers, Quarles credits the freemium model for Strava's rapid growth: The app's user base has doubled over the past two years. "It's the best way to get to learn and build a community as big as ours," he says. He's also juicing acquisition through new partnerships with 25 boutique studio chains and other fitness providers. Customers who take a spinning class on a Peloton bike or a yoga class through the YogaGlo app can have their workouts automatically uploaded to Strava. The result: When Quarles joined Strava, it was adding a million new users every 45 days; now that many sign up every 30 days. 

The other product changes Strava has made since Quarles's arrival are more in keeping with what you'd expect from a CEO who spent six years at Instagram and Facebook. Users can now display multiple photos on their posts in the main Strava feed and create posts that aren't linked to activities. To promote more engagement, the feed has also gone from reverse-chronological to algorithmic.

More engagement means more opportunity to monetize Strava's user base through sponsorship, a second leg of its revenue stool. The current level of advertising on Strava is relatively unobtrusive, but it's easy to see how there could be considerably more of it without disrupting the experience: Cyclists need bikes, runners need shoes, everyone needs energy gels and protein bars.

The prospect of unlocking some of that monetization potential factored into the $13.7 million Series E venture capital round Strava raised in 2017. But Quarles says it's important users see inspiration to stay fit, not product pitches, when they open the app. "The decisions we make there stem from how do we make sure businesses add value to the community," he says.  

Why Every Company Can Benefit From a Subscription Model
Published on: Aug 1, 2018