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After nearly two years in business TeachStreet is making a drastic change to its platform. In an email from Dave Schappell, Founder and CEO of TeachStreet to all teachers on the platform he announced that there will be no free listings for teachers anymore. Teachers with a Basic account will have to pay $3 USD for 30 days/10 student leads.

Although this might be a shocker as the general mindset is still set on freemium on the internet today, I applaud this move. The TeachStreet blog explains the reasons very detailed and understandable but let me coin in my two cents on this.

First of all I think we have a general mindset problem on the internet. Most people take services like TeachStreet easily for granted and as soon as a company says “Look, we have to make some money to be able to offer you all that” people react as if the icecream seller dropped his mask and they stare in the face of a blood thirsty capitalist vampire who wants to suck out their lifes.

It is difficult to say what built this up. One part might be Google because we are used to that this company delivers great, useful services to us for free. But infact people are paying with their data, their privacy and by looking on advertisements. So these are simply hidden payments we do everytime we connect to the internet.

The second “evil” is the freemium idea were a handful of people pay a rather high price for the premium version of a product and therefore finance the free version which is used by the masses. Though it might work in some particular cases you cannot take this idea and implement it in any industry. And if there is too much choice for free, people tend to lose the feeling for what things are worth.

And what happens then? People start to “test” every free service available. They open an account, fill in some information or none, use the service for a couple of days and then are off to the next shiny, free thing. Imagine what would happen if Facebook would cost a monthly fee, or Twitter, or Google.

Coming back to TeachStreet. I wrote about their recent moves to opening the platform to non US teachers and brushing up the search. Opening a platform also means opening it to more non quality listings. As I said, if something is for free, people open an account, start with enthusiasm but then are gone very quickly. So you have an empty shell in your database a potentially interested student has to filter through in order to find an existing teacher. The more teachers have access to the platform, the more empty shells will fill up the database.

So in this case paying for a listing means setting a filter, a very effective one. It filters out the teachers who simply want to test the service or put it in their doggy bag from those who are actually interested to teach and get paying students. Hence it enhances the overall experience of the platform. Students will find teachers who really want to teach them and therefore deliver the necessary service to get them and teachers will have their listings on a platform that will be known as place where you can easily find great teachers.

It’s all about connecting serious people: students who are serious about learning and paying for that service and teachers who are serious about building a teaching business, small or big, and hence doing everything necessary to get a happy customer.

I know, there are shades of grey but as a company you have to make clear decisions to keep your business on the market and that will naturally effect some users of the platform more than others. As Dave writes in the comment of the TeachStreet blog, they did not make that decision without considering it in length. And to effectively execute the main mission of the site, to connect learners with teachers, clients to service providers, I think this is the right decision.

On the other hand all Basic members will have access to the marketing features like the Craiglist Builder. Payment processing fees will drop from 4.9% to 2.9% and the student fee of 2.5% for basic listings will be removed completely. All fees will still be waived for Pro members and they will receive 10 free listing per month and pay a lower fee of $1.50 USD from the eleventh listing on.

Bottom line: this decision will make TeachStreet better on the long run. Of course they will lose a ton of listings and maybe even some interesting teachers who simply cannot agree to the new terms but no one would profit if one day TeachStreet had to close its doors. I also think that more and more companies will change their business model back to this “old school” approach. The language learning community Babbel and now TeachStreet just realized it earlier and had the guts to leave the party before the hangover sets in.

Read the message of Dave Schappell on the TeachStreet blog and another one on his personal blog.