Level up for features instead of freemium?

I've been an avid fan of incorporating game mechanics into web applications. One very interesting thing that happens in games is that oftentimes, "features" are withheld from the user until they do certain actions to unlock them.
The best example is Zelda, where you originally start out as a boy without anything to do other than run around. Soon enough you get a quest, which involves navigating the cavesw. Do it successfully, and you pick up a wooden sword. Then you take another quest where you use the sword to defeat a small monster, and they give you a small shield. Do another quest, and you get a big sword, and then a big shield, then a boomerang, and so on.
There are multiple advantages to having a system like this:
- The interface starts simple, then gets more complex as you progress
- It gives the player direction and goals, which builds engagements
- It makes you feel good as you play, since you get rewards along the way!
So here's a question - why don't web products incorporate this functionality. Everyone is familiar with freemium models - that is, make it free for most people, but in exchange for the advanced features, make people pay for the package.
Here's a twist: Unlock the features everytime the user engages with your site more. If they comment, upload pictures/videos, or do whatever you want to do with the site, reward them with more functionality.
This way, you're trading engagement/pageviews for functionality, and particularly in the UGC world where you're trying to get people more active, this is a big win/win.
Any great examples of this idea in action? Would love to hear some.

As low-tech as it is, many forums already incorporate this model by giving publicly displayed titles dependent on the number of posts you make.
Some forums even restrict signatures or links in your post until you've made at least 10 or 25 posts, as a sign that you are willing to participate in the community.
I too would like to learn how we can apply this same concept to web-services.
David
Posted by:Voice Guy | May 08, 2007 at 10:40 AM
Letting users "unlock" features is a great idea. If a site is more like a game, it's more fun to explore.
The trouble here is users viewing this the opposite way: that you are locking them out of something. Then there's the usability problem of trying to find your way back to something that has changed (or trying to help someone else get to where you are).
Overall, I agree. But like anything, it could be done quite poorly.
Posted by:AdamD | May 08, 2007 at 11:42 AM
Slashdot's karma/moderation system is one example that comes to mind. I think a carefully designed site could exploit this well - but it's easy to get wrong. In the same way that a game can gets frustrating if you aren't rewarded with new abilities at a regular basis, a site could have the same problem. You don't want to make people "grind" in order to access the features of your site.
Posted by:Dan Ogles | May 08, 2007 at 07:14 PM
But how do you make up for the revenue? The free plan with a premium subscription upgrade seems like the best way to monetize a site in the face of dropping CPMs.
I suppose if you gear it to goals based on content creation, you could end up with more pages to advertise on, but would it be worth the tradeoff?
Maybe some combo of the two would be best.
Posted by:rob | May 09, 2007 at 09:08 AM
Hmmm. This model [gradually exposing functionality] would be great for learning new software or interactions for beginners. Although it would have to be done very, very carefully or else it could be inCREDibly annoying!!
You'd want to do this when, like a game, you have a known beginner in a new "environment." Again, like a game, the user would need to be someone actively interested in learning about the new "environment". An example might be teaching a beginner to program in a simple IDE. Then you have guided discovery! Cool.
You could even have levels, easy medium hard, that guide the pace, sophistication, and extent of the guided discovery.
So it's not about "locking out" users, it's gradually revealing information in a way that helps learning, for a user that is looking to engage in an experience and learn something new.
Posted by:Rebecca | May 12, 2007 at 12:32 PM