Citizen Media Business Issues: Memberships and Subscriptions

(This is the fourth in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site. To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

UPDATED 10/24/07

As web-based media becomes more popular, some news and information sites find they can charge for a subscription or membership as a source of revenue.

The benefits of selling subscriptions are many, but the reason magazines and newspapers have been using the model for decades is because it takes some of the unpredictability out of the business — and can help with cash flow with advance payments. It also creates a sort of attachment or loyalty to the content or brand in the customer’s head, perhaps leading to renewals and word-of-mouth publicity.

The magazine and newspaper models don’t translate exactly to internet outfits. Also, what works for online sites of mass media institutions doesn’t necessarily translate to citizen media sites.

Sites with subscription systems are rare, and citizen media sites even rarer. Making content “premium” puts both a monetary and psychological barrier between people and your words. That is to say, some people might not have the money, but the vast majority just simply won’t pay because they’re trained to be cynical about anything on the internet asking for money – after all, they may reason, what can’t be found for free with a Google search? Also, one of the greatest things about citizen media is the connection between publisher and reader.

Another more practical concern is that implementing a membership or subscription structure can involve some sophisticated coding and can generally work only if you have your own web site (blog-hosting sites like Blogger make it nearly impossible). While companies like Membergate and Interlogy offer services to organize and maintain subscription-based web sites for you, they have several drawbacks in terms of design, customization, and cost (Membergate’s software packages range from $4,000 to $30,000, all of which include their design). If you would like an idea of the design feel, this page has a list of sites running Membergate software, and this one from Interlogy’s site has a list of client “case studies.” Some useful tools to help you with programming and design will be covered later in this series of postings.

Still, it can be done. These types of membership/subscription structures aren’t necessarily all-or-nothing pay-or-leave systems. In fact, as we’ll discuss, you can charge for a subscription to content that’s simply delivered to you in a more aesthetically pleasing way.

There are several possible membership structures. Here are some of the most common:

• Full Membership/Subscription

Content on these sites is not available to anybody without a paid membership. Full membership news sites, be they big media or citizen, are pretty uncommon. They are often used by highly specialized trade journals like those available at the American Institute of Aeronautics and Astronautics’ website. The AAIA offers a membership to their organization that gets you discounted rates on subscriptions to the various journals they publish both online and in print.

This structure is especially difficult for citizen journalists who don’t have any built-in recognition/value like would an online presence of a larger organization. Given the failure rate of even well known companies’ ventures, chances are extremely low that a new enterprise will be able to successfully implement (or launch with) a full subscription system.

• Partial Access

Partial access means that certain content is only available to subscribers. One example of a partial access site is TheStreet.com. The Wall Street financial web site has a great deal of valuable information available for free, but charges for special “subscription services” featuring a greater level of attention to particular aspects of investing. The idea is that people will visit the site for the free information, get a great benefit from what they read, and want even more (“the REALLY good stuff”).

Along these same lines, real estate site Inman News provides a great deal of frequently-updated free content. It also offers a subscription service if users would like access to other features (special reports, reprint rights, search functionality, etc.).

Another example, though not journalistic, is the online rating and dating site HotOrNot. Startup-Review.com published a case study late last year detailing how, even though the buzz is long gone, the pair of grad students who started HotOrNot were very successful in adding a layer of pay content to their web site while maintaining the popular rating system. Essentially, their site offered a fun (arguably) picture-rating program that attracted millions of visitors. Shortly thereafter, they introduced functionality that allowed users to be indirectly contacted through a “do you want to meet me” bar above their pictures. Mutual “yes” clicks could agree to exchange contact information for a fee. Millions of non-paying visitors continued to frequent the site, simply playing with the ratings and not using the dating service.

While a great success story, HotOrNot obviously shares little in common with citizen journalism web sites. The reason for its inclusion as an example here is just to demonstrate how well creatively designed premium material can work with a solid no-charge foundation.

Be careful not to misinterpret “partial” access for “illusory” access. If you don’t provide enough good free content to attract regular non-paying visitors or if too much content is fragmented between the premium and regular service levels (i.e. a site that gives away the headline, but charges for the article), you’re really running a full membership system.

• Early Edition

Content under this system is made available to subscribers before presented to the public. Two examples of this are the videocasts Red vs Blue and Diggnation.  Both of these sites allow users to pay for an upgraded account that allows them access to some or all episodes before everybody else.

A few months ago, The New York Times’ web site combined Partial Access with an Early Edition style of membership with their TimesSelect program. In addition to members-only features, subscribers to NYTimes.com were given the opportunity to read selected articles from Sunday’s New York Times before they were even published in the newspaper.

The fact that the Times has abandoned this strategy and is now promoting a different premium service that focuses on ease of reading just goes to show how fluid and constantly changing these matters are. Even the New York Times is struggling to find the best way to monetize their online content.

• Ad-Free Version

Another idea is to set up a separate page layout for members, which presents content without any advertisements. People don’t like ads, but if the content is good enough they can be seen as a necessary evil. If you make it clear that the reason ads are displayed is to offset your costs in both time and money, most people will understand.

This model is perhaps the least likely to chase away potential readers. If the price is reasonable and membership is not compulsory in order to view the site’s content, some people may pay to avoid advertisements, while others (hopefully) will tolerate the ads and continue visiting your site.

This model seemed to be a bit more popular a year or two ago. The fact of the matter is we’re now trained to tune out most ads on the web. We know roughly where they will be and can instantly spot edges between ads and content; and if we happen upon a site that puts its advertisements in an unconventional place (i.e. in the middle of the screen) or if the lines distinguishing ads from content isn’t clear, we feel put off or uncomfortable. That being said, ad-free membership systems seem like a nice option to offer, but don’t expect people to line up for it.

Also, it’s a bad idea increase the intrusiveness, frequency, or amount of your advertising to make a paid account more appealing. People have ever-decreasing tolerance for ad-infested websites and tend to simply move on.

MacRumors makes use of this strategy by charging a fee for an ad-free front page ($25/year at time of writing). Slashdot has a more complex system that allows you to buy 1,000 ad-free pages for $5. You are allowed to customize these ad-free pages to remove ads from comments, articles, the main page, or all pages depending on how quickly you mind going through your 1,000.

Suggestions

• Don’t increase advertising to funnel people towards an ad-free membership.

• Do seriously question an implementation of a full subscription (and to a lesser extent, partial access) format. While a move for an existing site from free to paid content is somewhat notorious for destroying readership, a successful start-up with a full subscription format is practically unheard of without a reputable brand or core group of interested parties going into it.

• Consider other revenue models, too. This is the only structure that puts your costs directly on the reader and, aside from possibly the ad-free and early edition formats, the only one that will definitely result in fewer of them.

• Weigh what content you decide to charge for and whether you’re okay with trading many would-be readers for revenue.

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)