The concept of using a free version of your service as advertising for a paid one has been around for a while, but TechCrunch's MG Siegler just profiled the technique along with a list of apps he thinks should adopt this model.

MG notes some of the benefits that the freemium model offers consumers (above and beyond keeping their favorite startups fed).  One of his favorite is differentiation - offering the users of free services the ability to pay for the same service to weed out the riff-raff who wouldn't put their money where their mouths were.

The guys over at Peanut Labs put together a really interesting panel this week about strategies people are using to make money online (specifically in the social games space).

Some interesting anecdotes:

• TV-style programming works on the Web.
  If you're a Heroes fan, you know what's going on every Monday night - as a matter of fact, you look forward to it every week and plan accordingly. Websites can benefit from this same psychology. Pogo games sees a healthy jump in traffic every Tuesday morning. They program for it.
  
• Create strong emotions in your users and make it really easy to transact, unless you're chicken.
  Virtual world games are very popular in Asia. One particular game became a hangout for swingers. Frequently, a disappointed member would spend ten real dollars to buy advertising warning away fellow members from less than desirable mates.
  
• Collect a little bit of money from everybody, all day long.
  When I was a kid, we'd spend $20-30 on a video game cartridge - now they seem to start at $50. The pay-as-you-go model many gaming sites now use, where power-ups are bought as-needed during gameplay, enables serious gamers to spend serious money. The panelists expect the average user to spend at least a few hundred dollars per game, with passionate players sometimes spending hundreds of thousands.
  
• Even nerds appreciate a little affection.
  It's generally easier to automate the tedious work than to do it by hand every time, but humans have a special place in our hearts for the handcrafted. IGG was able to triple its revenue in six short months by hiring humans to organize group games, rather than letting the bots do it.

This blog seems to be a collection of really clever and unclever marketing. File this under clever:
 
Free professional photo with baby outfit.
 
Because I'm sure Mom is going to get her kid's picture taken and only get one copy. . .

The SmarteCarte people will rent you power to charge your phone/ notebook for $3.

One of the major creators of the software that converted mortgages into securities just published an article about it.

On sale at Jamba Juice. . .

Kick everyone out of your mall early.

Even if his games only break even, Jeff Vogel would rather be building his own stuff than working for someone else:

What was my reward for the year spent writing Geneforge 4? It wasn't just the cash. I also own the game! That means, in ten years or so, I can return to it, give it better graphics and interface, add a bonus 2-3 dungeons, and release it to a new generation of gamers. . . immensely profitable.

Don't underestimate the value of owning your own intellectual property.

from his blog