Making heavy users pay – the optimum freemium model for news?

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Having an attractive free offering and building a large non-paying user base as first steps to building a large paying user base is a theme that has been running through a number of Fred Wilson’s posts recently – and so it was again at the weekend when he wrote Monetize The Audience, Not The Content.

I’m going to pick out two quick quotes.

First – on the absurdity of putting only some of the content behind a paywall:

The worst examples of subscription services are those that break the content up into free and paid. It’s as if some content is worth more than other content.

And second, on the merit of making the whole site open and asking only heavy users to pay (a model the FT has had for a while):

[The FT] model recognizes a few fundamental facts about the internet. First, you need to make your content available for search engines and social media linking. That drives as much as half or more of the visits these days. And if you have an ad model at all, and most newspapers do, then you need those visits and that audience.

Its also true that the ‘drive by’ visits will bring new audiences, some of whom will become loyal and ultimately paid audience members.

Most newspapers are struggling with profitability online and thinking about introducing charging, with many proprietors musing publicly about the question.  One of the obstacles is the fear that the first news site to crack and begin charging will haemorrhage traffic to those that don’t  – adopting the FT’s model doesn’t carry that risk.

 

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  • The FT uses a combination of both models: some of its content is available only to paying subscribers; as well as limiting the number of monthly article views per non-paying reader. http://membership.ft.com/sitetour/index.shtml

    Print media needs to be careful about copying the FT because of the particular characteristics of its readership. Most readers will find its content essential to their job; and they are unlikely to find a subscription a burden on their wallets, especially those who epanse them or have corporate subscriptions.

  • Good point re the FT being different – I once heard someone say that people consume the FT intensively as the most efficient way to get the content they want which is totally different to the slow browse experience of most other papers.

  • Interesting blog item, again!

    We make content providers pay. Then we deliver lots more services because they are mostly in drive time somewhere in the Greater South East (http://www.cambridgenetwork.co.uk/docs/160709%2…).

    This seems to work fine for over 1,000 companies like ARM, CSR, etc. All of these companies are concerned to engage a brilliant community of technologists from around the world. I doubt 16,500+ techies from 6,500+ organizations would ALL have paid to become members – but I guess contacting those Users and figuring out how to serve them better is next. However we are always going to run some free stuff – check out http://www.cambridgebusinesslectures.com/

    We also do run a premium service for Founder Members, who pay quite a bit more to have the privilege of organizing Special Interest Group events for the rest. This makes for a pretty full calendar http://www.cambridgenetwork.co.uk/docs/20%20Jul…. I blogged on why they do that recently http://blog.cambridgenetwork.co.uk/2009/07/tech

    Matt Schofield
    CEO
    Cambridge Network

  • just reading the FT results – 18 per cent increase in paying online subscribers to 117,000. They have about 11m uniques, so they currently have about 1% paying. You would think this could reach at least 10% if not more.
    http://business.timesonline.co.uk/tol/business/
    (free link from The Times!)

  • Thanks Henry – I think 10% would be high. I have in my mind a benchmark of 3-5% conversion to paying for freemium models.

  • Thinking about it some more – 18% over a year on a small base like this isn't a very big increase. At that rate it will be a long time before they are making sufficient sub revenues to move the needle on the overall business.

  • I think you are right re 3-5%.
    I guess the key is transitioning from a print to digital business model. At the moment it seems to be just about maintaining its print circulation at a higher price with a small increase in digital subscription. How this will continue to transition will be fascinating to watch.

  • Hi.. Your post got me thinking… What is more valuable for a software company (like facebook or flickr). 1,000 paying users or 100,000 non-paying users? What are your thoughts? View my blog post here: http://www.purlem.com/blog/?p=57

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