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FAQs | Management

Generating Revenues for Online Publishers

Q: Besides advertising, what options are there for online newsletters and similar content providers to generate revenues?

While some believe that paying for online content just won’t work, others disagree. If you’re not yet ready to throw in the towel, read on. There are many options ahead of you, including:

  • Subscriptions
  • Marketing business to business
  • Linking online content to a tangible, offline product
  • A teaser campaign on linked sites
  • Repackaging online content into email
  • Site licenses
  • Building community

Subscriptions

  • Migrating to a subscription model is a major life-or-death process for an online publication. Many publishers do not make the transition successfully. When you make this move, focus on retaining your existing customer base. Trying to expand that base at the same time is too ambitious. [Terry Steichen, tjs@huskynet.com]
  • In trying to generate subscriptions, there are two things that we know do not work: banners ads and random emails to large lists. We have found success through giving "teaser" content to other Web sites with a prominent link to a subscription page.

It is not revolutionary that in order to get people to pay for content, you must get them to want the content. To do this, the easiest (and cheapest) way is to offer a sample. The Web sites you choose must be carefully selected to reflect the market you are trying to reach.

Well-written content is in high demand on the Web. Motley Fool gets paid to advertise because the sites to which we license content share revenues with us. People will pay strictly for convenience. We have even had success selling subscriptions to a weekly product that simply reprints what we offer for free on the Web and sends it out in an email. But this type of product can only work when readers are hooked on the content. [Bernie Dietz, Business Development, The Motley Fool]

  • As a consultant to Digital City, Inc., I’ve witnessed that end-users are willing to pay for what they want. For example, AOL content costs a monthly fee, and with 10,000 new subscribers per day, one can certainly recognize that there is a market for paid content. As certain smaller Web sites start charging for content, it will be a more selective process. While the Wall Street Journal is charging for online subscriptions, washingtonpost.com has elected to remain free. It will be interesting to see which model turns out to be the more lucrative. I do think it will be more difficult for niche sites to charge compared to online networks like AOL, Compuserve and MSN; mainly because the online networks provide much more content.

Niche sites that are marketing to business-to-business clientele will have great opportunities. If they build their reach, there are several models to profit from -- above and beyond subscription fees and ad revenues. Paid sponsored content is the model that I believe will work well for both free and paid access sites. [Mark N. Dorf, dorf321@aol.com]

  • Note that there is no single 'subscription model'. Rather, what you have before you are a potentially large number of pricing options. Depending on the e-commerce capabilities of your underlying software, you may be able to offer various mixes of free/paid content at various discounts (tailored to suit key segments of your target market). You may want to separate some content into the free category, some in the standard category and the rest in a special pay-per-view category. You will need to experiment to find what works best for the particular content. [Terry Steichen]

Site Licenses

  • A site license is when you sell a subscription to a company, then the company distributes the publication to its employees [or others covered by the license]. If you have an existing customer base, the easiest way to generate more income is through a site license program. Some newsletter publishers, particularly in the business-to-business space, have found them to be effective because the distribution costs are very low and the license price is often very high (sometimes above $100,000). One drawback, however, is that it takes a while for companies to pay up, since the sum is so high. This longer-than-usual pay-up period sometimes makes publishers nervous, but once you get over that, the business model can work well. If you are concerned with the payment cycle you can include quarterly payments as an option. [Feedback, feedback@netpreneur.org; Valerie Voci, vvoci@pnbi.com]
  • Site Licenses may pose a problem for you if you don’t have major brand recognition. [Bill Robins, brobins@merlin.netresponse.com]

Building Community

  • A Web-based publication is very different from print-based media. Most publishers naturally tend to (initially) try to offer their products, such as newsletters, in the same basic form. They even want to charge about the same subscription fee and provide the same editorial content. Most discover that this doesn't usually work. Even site licenses may not work. One reason they don’t work is that it's incredibly easy to copy (in whole or, more often, in part) an electronically-delivered document to other interested parties via email. Many who do this don't really think they're doing anything improper. To be successful, providers of such online content must offer it wrapped in a set of additional features designed to create a sense of "community" among the subscribers. They need to create an offering that pulls subscribers to it (on a Web site), not the other way around. Once you’ve got their attention, you need a solid offering to hold them. [Terry Steichen, tjs@huskynet.com]
  • Using the unique properties (namely interactivity) of the Web as a medium is right on target. There is, of course, the issue of how quickly the community can be expanded in order to generate ad revenues. The issue of getting end-users to pay for Web content is still a big unknown. Certainly Women’s Connection Online (http://www.womenconnect.com) serves as one model of a revenue-generating online community. [Linda Kolker, lkolker@erols.com]
  • Generating a decent community that is self-sustaining is tough and a labor-intensive project. There is more to it than just providing the means. The area must be seeded by the hosts. [Bernie Dietz, Business Development, The Motley Fool]

You’ll Have Your Work Cut Our For You

  • In my opinion, if the Wall Street Journal, New York Times, LA Times, Boston Globe, Omaha World Herald Cleveland Plain Dealer, Miami Herald, or Seattle Times can't make money on the Web, small publishers will have an even harder time.

An Internet service started with the model of free at first and later charging once it’s popular, is a good idea. The drawback, of course, is that once you start charging, some other company may start an identical service for free, using your same model. An example of this is the search engines; Yahoo was first, and now there are 50 search engines.

I suggest you tie the product to something tangible like a print product or a fax product newsletter. People just expect information on the Internet to be free, and they expect to pay for it when its comes in hard copy. [Ryan Phillips, Publisher of the Journal Newspaper Chain, www.jrnl.com]

  • Subscriptions haven’t worked for the online newspapers. Knight Ridder's Mercury Center recently decided to drop it's paid tier. Other than the Wall Street Journal, and a subscriber-only tier for Gator Sports, a service of the Gainesville Sun, most online newspapers aren’t profitable. Gainesville is an interesting case, and perhaps a model for the future. Netfolks won't likely pay for material they can get in the regular daily newspaper, but they may pay for more "must have" information of the caliber of WSJ's or of a very special interest like home team sports.

There are also services which are very costly for the newspaper to provide their readers, such as Houston Chronicle's fine RealAudio shuttle coverage, which may someday require subscription services. Or, the Christian Science Monitor charges $15/quarter for a daily email of the paper, but provides free access to the newspaper online, and even a "freemail" version of this service that includes just headlines and news briefs.

I suggest that you explore more business-to-business applications. Many papers are making good money with archives. Look for better marketing of this utility via the NAA Web site in the future (http://www.naa.org/hotlinks). [Melinda Gipson, gipsm@naa.org]

 

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