All the current hot discussions on website business models, paid content, converting free-to-paid magazines, charging for news audience development etc., come back to one thing: subscriptions marketing.
Those discussions are similar in scope to the economists, accountants and bankers who, until 2008, forecast continual growth. Now, of course, we are well into a long, scary recession and everyone knows they got it wrong. But, despite all that, I see that financial and economic forecasts are now back into mainstream media on the assumption that readers have forgotten that they were massively misled so recently by the very same people.
Yet people still watch, read and listen to those same ‘experts’. You cannot tell what an audience will do, how they will react — or what they will pay for.
Publishers and website owners, meanwhile, are busy debating the popular subjects listed above â€“ free-to-paid, paid content, new revised business models etc. Here’s where they went wrong:
- Publisher’s business models are bad
- Publishers have run out of money
- Publishers should have monetised editorial content years ago
What every publisher knows
Every publisher knows advertisement revenue falls during a recession by up to 40% or thereabouts. The difference this time is that no-one thinks that revenue will come back: itâ€™s going â€“ gone – to the Internet.
As so many companies in other markets have discovered â€“ oil, motor, property, banking – no business can lose a large percentage of income without serious damage. Not unless they have an effective survival strategy that prepares them for future changes.
So how does this affect subscription marketing?
Subscription marketing has the answers, because itâ€™s all about maximising long-term income from your target audience. The debate about paid content and free-to-paid is mostly unnecessary because a series of tests within a market is all thatâ€™s needed to answer those two vital questions:
1. How much will people pay?
2. How many will pay?
Tests tell you what people will pay for your main product and all those other products you have bundled up up to sell through your website. Those are what used to be called â€˜ancillary productsâ€™ but are now central to turning a good profit from your customer base.
If you don’t have enough ancillary products, you are in trouble.
Death Valley awaits
Of course, it would be folly to roll out a business model unless you already knew how many will pay. It would be like driving into Death Valley without knowing how much fuel there is in your tank. Death Valley is very long, and scary, (100 miles, 50Â° centigrade). Long and scary is also what this recession is and you needed to have enough fuel in your tank to be able to get out without frying.
Recessions happen every ten years or so, so there has been plenty of time for all media folk to test how much people will pay and how many will pay it. To see how much reserve they have in their tanks for the hard times ahead. But few have done it. Probably because they are not sure how to.
And because ‘there is no money in the budget’. Well, there is certainly no money in the budget now there is a recession.
The point is, with a favourable test result, there is no need to rely on advertisement income.
What will people pay?
In all the tests we carry out with specialist, B2B and consumer clients, we found readers are willing to pay if they are given a good enough reason and an effective and convincing explanation of the benefits of your product.
We use email promotions, direct mail, home page copy and advertisements to bring about the change in perception needed and to build profitable subscribers.
Would you pay to enter a car boot sale?
No. Car boot sales are free so on the face of it, no, people wouldnâ€™t pay. But to close this piece, Iâ€™d like to recount a tale â€“ something that happened to a group of us in a small town car boot sale.
The field was fenced, with a wide, open entrance by the road. I had finished looking around, so I stood outside, waiting for my friends. Ten minutes later, they came out and I turned to walk with them. Then I saw behind me a queue of around 20 people had gathered. No-one had entered the field in those ten minutes.
All thought they had to pay to enter.
Who knows what an audience will do or how they will react?
(This is an update of an article I wrote on 17 November 2009. Unfortunately, little has changed!)
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