LinkedIn, the popular professional social networking platform owned by Microsoft, has become increasingly aggressive in pushing its paid premium subscriptions and features. Many free users have noticed LinkedIn sending more prompts and limiting functionality to encourage upgrading to the premium tiers. Here are some key reasons why LinkedIn seems to be asking for premium more than ever before.
Driving Revenue Growth
The most straightforward reason LinkedIn pushes premium is to drive revenue growth. LinkedIn generates revenue primarily through its Talent Solutions for recruiters and companies as well as through its premium subscriptions. As a publicly traded company (before Microsoft acquired it in 2016), LinkedIn has to demonstrate continual growth in revenue, profits and other key metrics to impress shareholders.
LinkedIn’s premium subscriptions come in three tiers offered to individuals to unlock additional features beyond the free version: Premium Career for $29.99 per month, Premium Business for $49.99 per month and Premium Hiring for $99.95 per month. Premium subscribers get benefits like being able to view more profiles, send unlimited InMails, see full profiles of people who have viewed yours, professional learning courses and other assets to help advance their careers.
Here are LinkedIn’s revenue figures over the past 5 years demonstrating steady growth, especially in their premium subscription services:
Fiscal Year | Revenue | Premium Subscriptions Revenue |
---|---|---|
2018 | $5.3 billion | $1.1 billion |
2019 | $6.8 billion | $1.3 billion |
2020 | $8.2 billion | $1.7 billion |
2021 | $10.4 billion | $2.4 billion |
2022 | $13.3 billion | $3.5 billion |
With over 800 million members, even small conversion rate improvements in getting more users to upgrade to premium can result in tens of millions in additional subscription revenue. Pushing premium helps LinkedIn’s bottom line.
Offsetting Lower Ad Revenue
In addition to premium subscriptions, LinkedIn generates revenue through advertising. However, economic conditions have caused declines in the digital advertising market. Big tech companies like Meta and Alphabet reported weakened advertising revenue in 2022 amidst inflation and recession fears.
LinkedIn has similarly been impacted. Their ad revenue grew just 8% in 2022 compared to 56% in 2021 and 29% in 2020. With global economic headwinds straining their ad business, LinkedIn has greater incentive to maximize revenue from premium subscriptions.
Delivering “Value” to Free Users
LinkedIn likely doesn’t want to make the free experience too limited, or they risk losing engagement. So they allow core social networking and profile features to remain free while gatekeeping more “advanced” features behind paywalls.
This approach aligns with LinkedIn’s mission statement which emphasizes creating economic opportunity. By keeping foundational access free, anyone can benefit from social and career networking. But those willing and able to pay can unlock greater capabilities.
This “freemium to premium” tactic gives users a taste of value from the platform but incentivizes upgrading to fully capitalize on its benefits. LinkedIn can claim their nudges toward premium come from wanting users to gain maximum economic opportunity from their tools.
User Psychology
LinkedIn leverages different psychological tactics through their interface and prompts to encourage premium subscriptions. Here are some examples:
- Scarcity – Indicators that promote limited time offers or availability incite fear of missing out.
- Social Proof – Noting how X million other members have gone premium taps into social validation.
- Consistency – Regular reminders keep the idea of upgrading firmly planted.
- Reciprocity – Free trials allow people to experience premium before asking them to pay.
These subtle design decisions combine to make LinkedIn’s calls-to-action to upgrade feel natural and risk-free rather than pushy. Boosting conversions even slightly through psychology and persuasive messaging can have a measurable impact across their massive user base.
Monetizing Audience Size
LinkedIn has over 850 million members. While their ads business leverages this huge audience for marketers, their premium subscriptions allow monetizing all those members through direct payments. other social networks also utilize this freemium model successfully.
For example, Spotify has 456 million monthly active users but only 195 paying subscribers. Optimizing premium conversions among even a fraction of LinkedIn’s big audience can deliver substantial revenue. The platform’s broad professional user base gives them enormous monetization potential.
Increased Profit Margins
Premium subscriptions bring higher profit margins compared to ads. Display ads have become costly to manage across platforms due to targeting and privacy restrictions. And marketers demand lower rates as economic conditions force cuts in advertising budgets.
Meanwhile, premium subscriptions deliver recurrent revenue with minimal overhead expenses beyond initial product development costs. Focusing on growing premium subscribers boosts LinkedIn’s overall profitability.
Corporate Priorities Under Microsoft
Since Microsoft acquired LinkedIn in 2016, the platform’s priorities have shifted more toward commercial objectives. This has resulted in more aggressive monetization efforts like increasing premium subscription nudges.
Microsoft also likely wants to strengthen LinkedIn’s value as part of its software and cloud ecosystem. Bolstering revenue by converting free users into premium subscribers makes LinkedIn a more attractive asset under Microsoft’s ownership.
Premium Tier Comparisons
Weighing the trade-offs between LinkedIn’s premium offerings can help determine which delivers the most value if you do decide to upgrade from free. Here is a comparison of the key differences between the Career, Business and Hiring subscription tiers:
Feature | Career | Business | Hiring |
---|---|---|---|
Profile visibility | ✔ | ✔ | ✔ |
InMail messages | 15/month | 25/month | 50/month |
Search filters | ✔ | ✔ | ✔ |
Learning courses | ✔ | ||
Contact management | ✔ | ✔ | |
Talent recruiting | ✔ |
Conclusion
LinkedIn’s increased premium subscription prompts aim to boost revenue, offset slower ad growth, deliver value for members, leverage user psychology, maximize monetization, increase profitability, and align with Microsoft’s priorities. But the platform still offers a robust free experience for those not ready to upgrade. Weighing premium features versus cost can clarify if and when upgrading makes sense for individual needs.