Foursquare, the leader in location-based mobile check-in services, now boasts over 10 million global users. For the past few years, it’s built its business on local advertising and charging big brands such as Starbucks and MTV fees to customize brand pages. Despite getting roughly 3,000 brands to sign up, Foursquare last week announced it was going out of the custom page biz, launching self-serve tools for brands to create their own pages.
Let’s be clear: Foursquare will no longer charge for this service, leaving us with the million (or so) dollar question: why would Foursquare drop a revenue stream?
Our guess is because Foursquare knows that the real value from its service comes from reach. The less barrier to entry the service provides to a larger pool of companies, the greater the touch points it will have across the globe, at local levels. Businesses who create their own page can, at no cost beyond agreeing to some terms of service, have more reasons to engage with customers and prospects, and generate an increasing amount of earned media by creating tips that foster discussions and reasons to engage with the brand.
Hats off to Foursquare for trading off some short-term revenue benefits for a longer-term vision to scale the value of earned media.