Website business models

23 October 2009

Whatever model works (or doesn’t) for you, you need to constantly review your methods for creating more sales through your website. Unlike many aspects of direct marketing, website marketing is developing at a fast clip.

Why you must constantly review website tactics

The publishers in this issue of the Subscriptions Strategy newsletter test and change their techniques constantly to maximise market share and profit.

What, for example, should you carry on the home page? Most sites get this hopelessly wrong!

Paid content
How much editorial should you give away free? One of our example sites gives just a short summary – the rest is paid content. Others give away whole articles and utilises paid content to bring in memberships.

We give examples of both models and all are hugely successful websites. The paid content ‘extract only’ website has just been sold for £13m – we estimate it brings in 12m in subscription revenue.

Looking at detail
We don’t just provide an ‘overview’ of paid and free content models. You’ll get some important detail too.

For example, how do you construct your landing page, where the sale is closed? This in one of the main areas where most sales are won or lost, but also where you see the most common mistakes. The majority of websites, however, seem to think what they have is OK.

Where’s the marketing copy?
Some people believe all they need to do to sell a product is to put a description on the Internet and purchasers will send in money. These are the people who are now busy debating what kind of website model will cover their costs and earn back the money they squandered over the years.

How could anyone start a business without first getting the answers to these two vital questions: “How many customers will I get and what will they pay?”

A market test is all it takes to provide the financial information and metrics you need to find out what kind of paid content your readers will go for – and how much they will pay. Then you can go ahead with a project. But few bother.

When was your last price test?
If you doubt this point, ask yourself how many website publishers you know actually carry out regular price testing? Because without a price test, you can never know how much people will pay for content, nor work out how big your potential market is. So you can’t maximise profitability.

Testing paid content models
If I make that testing process sound simple, I know that it’s not. Otherwise every publisher would own websites that bring in £ millions. People refer to that conundrum when they say that: ‘Simplicity is the sign of genius’.

The Harvard University ‘Rule of Four’
To show how fundamental this stuff is, and that the rules don’t change, I’ll quote the age-old Harvard University ‘Rule of Four’:

  1. Provide a product or service that no-one else has
  1. Provide a product or service that everyone will want
  1. Price for profit
  1. Price for sale

Sounds about right, doesn’t it? It’s simple. But what actually happens is that most publishers run a discount offer for new subscribers and that’s about as creative as they get.

Your paid content business model
As the volume of orders and the price you get are the basic instruments of income and profitability, you can see why things are going wrong in publishing today – and not just for local and national newspapers. Thousands of business and consumer magazine publishers are carrying loss-making websites too.

You’ll find the answer to this industry-wide dilemma in this special issue of the Subscriptions Strategy newsletter:

Successful website business models

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Comments to hobday@subscriptionsstrategy.co.uk