The subscription website or paid content business model, obviously, has many advantages over the free content model. Free websites rely solely on advertising to generate revenues, which can be tough at times. Without a steady source of revenue free sites cannot keep up and thus they easily lose visitors. The paid content model relies on both – the customers as well as advertising for revenues. Some of the advantages are described below:
One of the major advantages of subscription fee based model is that you generate a steady income stream. Typically a subscription term would last a month, or a quarter or, in some cases, a year. If you successfully retain a customer for a higher number of subscription terms you keep on generating income from the same customer without having to put in something extra. In other words, you get doubly rewarded for retaining your old customers.
Key to any business decision is cost. Website costs can be split into three areas: set-up, maintenance, and running costs. The set-up costs depend on what you want to accomplish with your website, and who you get to realize your requirements.
The startup and maintenance costs of subscription websites are somewhat similar to those of free websites. These include costs of basic equipment such as a computer and a desk, incorporation and domain name registration costs, and web hosting and website design costs, which are quite similar for both free as well as paid websites. The biggest investment is towards software. For small and medium websites this expense is also pretty low, and in some cases, this may well be available free.
The only additional costs you incur while building a subscription website are security and payment processing costs. These are very reasonable, as low as $450 or even lower.
Low start up costs mean lower risks. At the same time it also means that entry barriers are low. No wonder so many persons look upon paid websites as ‘get rich quick’ schemes. If you want to see your name in the list of success stories (some appear in the next section of this book) make sure you see this as hard work and a long-term business.
With steady income streams and low startup and ongoing costs, the profit margins sustained with such a model are definitely very high. With a successful website you can expect to reach break-even in no time. Typically for a content website a one month subscription would cost around $20. Even with a small or medium customer base, you can earn high profits. With each increasing member the incremental cost is truly negligible and your profits can grow exponentially. Remember, success breeds even more success. If your membership base grows, the word-of-mouth publicity spreads even more. A large member base also opens up the avenues for additional income streams – advertisers wishing to exhibit their wares to this captive audience, affiliate income and more.
Unlike traditional brick and mortar companies, websites can be successfully operated and maintained by a single person – you. Of course, if you do not have any technical experience you would need a webmaster and a database administrator, but still the manpower strength required to run a subscription website is extremely low. This has innumerable advantages. It reduces your operational costs in terms of salaries paid to your employees, and thus gives you an even higher profit margin. You do not have to wait for your hiring cycle to get completed before you can even launch your business.
One of the benefits of websites is that they are easily scalable. The same is true for subscription websites. Such websites can be updated and expanded at little cost in very quick time. The software and databases used are also easily scalable and can handle a large membership base whenever required. Unless of course, you have totally ignored the scalability aspect while having your website and your web software developed. The “physical” costs of scaling up are minimal; perhaps you have to spend more to attract members.
People pay to become a member only if they are interested in your service or content. Apart from generating revenue for your website, this has another advantage. Paid subscription would ensure that your customer base consists only of targeted customers and those actually interested in your service. In other words, such a model is more likely to retain your customers. A high quality subscriber base could always work wonders for your business. No doubt the subscriber would be demanding and would expect value. However your members clearly stand out as a special group that has a particular need and that values quality and time. Try filtering out leads to arrive at such a target group! You will never get the same results.
Any sales professional will tell you that it is much easier to generate increased sales from an existing customer than it is to find a new customer. A subscription website is an excellent way of cross selling your services (or products) to current customers.
One of the best examples of cross selling via the web is on Amazon.com. If you search for a book on the Amazon site, a message will appear on the same page, saying 'Customers who bought this book also bought…' and will list half a dozen other books for your consideration. This is an excellent way to cross sell additional services or content to your members.
You can also direct visitors to other parts of the site, to consider products and services that they hadn't previously considered. Successful cross selling is the result of recognizing a customer need and meeting that need with a useful product or service. Customers benefit from needs-based cross selling efforts because they receive the services they need and want.
Cross selling can help your business realize its objectives: providing useful services, retaining customers, attracting new customers, and staying competitive with other websites.
You could include affiliate schemes on your website. In affiliate schemes, you provide links to other providers and e commerce sites (or any site for that matter) on your site. Website owners everywhere are looking to build the visitor stream to their sites. They will provide you incentives (usually a commission on the sale of their product or service) or a fee per click for your customers or visitors to visit their site. This not only is a very effective marketing strategy but also generates income for your website, especially if you have a large membership base.
However, your affiliate partners should have offerings that are interesting to your members and visitors. The best evaluation factor you should use in deciding whether you include someone’s affiliate link on your site is to assess whether a visit to that other site provides relevant and interesting information or products to your member. Only if it attracts your customers, would you succeed in making this source come alive. Does your customer feel that you are giving him the privilege to reach that other site which he or she would not have ever found on his or her own efforts? Such an affiliate link serves a dual purpose. It delivers additional value to your customer and it earns you some additional income.
In most free content websites, it is debatable whether the owner should provide links to affiliates. A site visitor may just jump off your site to the affiliate site and that has not done you any good. However, in membership sites, this is not relevant. Your visitor is already a fee paying member and will come back again and again.
The web is global, there are millions of users already, and you are not just limited to markets where you have established a base. It is also multi-lingual; if your site is written in one language, never fear. There are service providers out there that will translate your work into the native language of the user and perhaps you can link it through portals in that language. Even if you do not provide a different language version, search engines do offer translation of content to information seekers and thus your site is able to reach other language speakers. Through the web, a niche market can be transformed into a mass market. People interested in your product will seek you out using search engines, following referrals from their friends, or by a host of other methods.
A website runs 24 hours a day, 365 days a year to a global audience. It gives you the opportunity to inform, educate, sell, educate and persuade your customers, clients, prospects, partners, staff, and contacts worldwide any time day or night. In the physical world, this was impossible (in most cases). Thus you have opened up a large new marketplace for yourself, which never existed before this.
You may have developed specialist know – how (knowledge and experience) over the years. You may be a research scientist working on a specific technology area such as image processing or cryogenic metal treatment. You may be teaching at the University or may be you are a trainer in Human Resource Development. Ever thought of leveraging this know-how and reaching a wide audience. If you have been holding seminars, tutorials and boot camps in your region, you know how much organizing that takes and what limitations that delivery format has. If you have extensive training material and resources that have been authored by you, you should consider making it available through a subscription website. You may need to organize your material and convert it into electronic format. The main factor you should use in deciding about this is whether you think your information is unique and there are persons who would benefit from that type of information and who would pay for receiving it.
Thus you can see that this business model can offer you an excellent opportunity to capitalize on available resources and earn additional income.