App.net combined two big ideas: 1. Social networks are important enough that a subscription model is viable 2. Social networks should be built on a platform for social network applications Obviously neither idea could save app.net. Which idea caused most of the problems?
#1, but not inherently as much as for the effect it had on the consequences of other decisions: they launched with a hard pay-wall for the first couple years and that made the identity crisis fatal. They got a good deal of initial publicity but the first thing anyone curious got was a requirement that they pay to use it. That's always going to be a hard sell but it was especially bad when the messaging was so confuse…
But freemium is hard: Either you make a market for ads, and have intrusive data collection and analytics, and you have to compete with the most intrusive ad-supported products that already dominate the ad market and you become as bad as them, OR you have pure freemium and you have the question of how to make the up-sell compelling enough while keeping the free level of service interesting enough. The only good example of success at freemium is LinkedIn where they segmented their user population and only made the recruiters pay a very high premium price.