Subscription News Sites

The Wall Street Journal's WSJ.com claimed 591,000 subscribers on June 30, 2001, but like almost everyone else in the online news business, WSJ.com laid off staff that year.

Salon.com started selling subscriptions in April, 2001, and, according to some sources, had 12,000 subscribers by the end of June. At $30 per year per annual subscription, that's $360,000. But at the same time Salon was boasting about its subscription program, one of its founders was quoted as saying the company was "running on fumes," and that the only reason it was going to survive was that it had picked up $2.5 million in new investment capital. Salon was still losing money at a horrific rate like $2.9 million per quarter despite the subscription revenues, and in several public interviews Salon executives said total revenues were down 45% from 2000.

At the same time, FuckedCompany.com "one-man band" owner/editor/publisher Phil Kaplan claimed he was making $1 million per year, mostly from $75/month subscriptions, working from home with only one assistant. Phil said his trick was that he was posting only about 10% of all the (negative) business news and rumors submitted to him on the public section of his site, and gave access to all of his content only to paid subscribers. Before he started selling subscriptions, Phil relied on nothing but advertising revenue for his income. And, he said at the time, he hardly made enough money to eat from ad revenue.

SearchEngineWatch.com, founded by Danny Sullivan in early 1996 as "A Webmaster's Guide to Search Engines," and part of Internet.com since late 1997, has a free area that carries user-level information, but charges for access to a private section of the site that gives professional Webmasters and site promoters deep insight into the listing methods and operations habits of search engines. Sullivan has said, in several casual email exchanges over the years, that SearchEngineWatch.com is consistently profitable, even though the same has not always been true of Internet.com as a whole.

There are enough other subscription sites out there that listing them all would take more pages then there are in this whole book. The common factor shared by the ones that make money is that they all offer specialized information and insights that are not available elsewhere. Most are run or figureheaded by one or two strong personalities, and subcriptions are promoted aggressively on the free sections of their sites, and by making sure the site's figureheads either write plenty of articles for other media or are quoted heavily as "industry experts." Another common tactic is to have a site's "stars" give plenty of presentations at industry gatherings in order to enhance their "expert" status yet further.

A notable example of a site that follows this pattern is www.useit.com, where Web design and usability guru Jakob Neilsen holds forth. The site's major free feature is Neilsen's popular biweekly Alertbox column. There is also a list of recent interviews Neilsen has given. And then we come to the meat of the site: a list of highly-specific usability reports you can pay to download for prices that range from under $30 into the hundreds. Neilsen says repeatedly that ads on Web sites do not work, and says this is why his site doesn't carry any. Yet when you come right down to it, his entire site is an ad for his publications and the services of his consulting firm, the Neilsen Norman Group. Make of this dichotomy what you will, but Neilsen certainly makes money, not only from selling reports online, but from lecture fees, consulting work, and book sales. He has staked out a business niche where he has special expertise, and has marketed himself successfully within that niche. It is a niche filled with people and companies that can and do directly use Neilsen's advice to help increase their bottom lines, so he can charge substantial sums to share his considerable knowledge without potential customers balking at his prices.

Neilsen doesn't sell subscriptions per se, but sells articles one at a time. In fact, he is dubious about fixed-rate subscriptions for Web sites in general, except for a few "must read" trade publications that have nearly captive audiences. He cites Variety.com, the online edition of the famous entertainment industry daily, as an example of a site for which a paid subscription model makes sense.

Salon.com is another well-known Web site that has been moving toward a subscription-based revenue stream. Even so, it may never make money. It is filling an online niche (literary journalism with a strong liberal bias) that has never been much of a profit provider for print magazine publishers either. Perhaps Salon, like many magazines that serve the same market offline, would be better off if it looked for direct financial support from wealthy individuals or foundations that believe in what Salon is trying to do and want to invest in its future for non-pecuniary reasons.

Perhaps WSJ.com should have little or no staff of its own, and would be better off if Dow Jones looked at the Internet primarily as an alternate delivery medium for the "print" Wall Street Journal instead of trying to produce a significant amount of online-only copy for WSJ.com, and marketed the online Wall Street Journal primarily to people who live in areas where the print version is hard to get, and to readers anywhere who prefer reading downloaded material on their computer screens to cluttering their desks with paper, instead of treating it as a separate publication at all.

Another possibility more Web publishers may want to consider is delivering subscriber-only material in email newsletter format. Industry- and topic-specific subscription newsletters delivered by postal mail have thrived for decades. Moving this concept to the Internet does not take a major mental stretch. Indeed, many successful postal mail newsletter publishers have already moved either partly or completely online.

Chapter 6, "Email and Chat as Profit Builders," will talk about email newsletters in more detail.