Josh Kopelman, in his blog Redeye VC has a nice post about the challenge of subscriber services online (including online community sites), pointing out that elasiticity of demand isn’t linear:

“The truth is, scaling from $5 to $50 million is not the toughest part of a new venture – it’s getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny.”

This “first penny problem” continues to be the most vexing dilemma faced by internet entrepreneurs.