Making the Info-Subscription Model Work: Freemiums, Social Networking, & Referrals

Making the Info-Subscription Model Work: Freemiums, Social Networking, & Referrals

The commentary (both here on this blog and in other blogs) on my previous post regarding the New York Times and their proposed subscription-based revenue has been quite insightful and thought-provoking.

BUYERS: With Respect to the Consumers (Readers)
From the consumer side, there were a few competing perspectives. Some of you said that consumers won’t stand for it. For example, in an article about the profitability of the advertising revenue model, Andrew mentions that quality news can already be found online, so when an information website switches to a subscription model, “its time to do your own switching, that is switching to a new free website.” Anamaria Tolci (of Facts and Trends in the Emarketing Worldrecounts letting her online WSJ subscription lapse, stating that other free acceptable alternatives were available to her. Karina, in “Paywalls for news: Good idea or not?” mentions that television news viewership may increase if a significant number of online newspapers opt for a subscription model.

Others said, essentially, get used to it, because it’s already here. For example, Renato (ofbrzsurfbizzmentions that we’ve been paying for various types of content for years, and others, in various comments, echoed his sentiments.

Then there’s the “right vs. privilege” of free information access debate. Some e-marketers make us wonder what kind of damage will be done by going to an information subscription model, such as Kristel Kouly from E-Marketing questioning whether journalists have an obligation “to provide the citizens of the world with quality news” or Ana Lucia Riveraasserting that the trend toward subscription models could lead to “misinformation of the masses.” As others point out, the NY Times is a business, and has to make money somehow (and if ad revenue isn’t it, then maybe a subscription model is). Thus, many say that consumers shouldn’t feel so entitled to freebies when it comes to information. (Damilola Dipeolu raises the question as to whether the NYT is “in the business for profit or for humanitarian services.”)

SELLERS: With Respect to the Information Providers
Basically, the main problems with moving from free-content (using an advertising revenue model) to paid-content (using a subscription revenue model) can be seen as the loss of readers due to higher costs and no additional benefits, as well as the loss of advertisers due to the loss of readership. (Suzy de Castro’s two recent blog entries regarding “The Future of the Newspaper Industry” and “Paying for Online News” discuss various business/revenue models for the industry.)

There are several potential ways to made the subscription model work, but I want to discuss a combination of three of them here: (1) the freemium approach, (2) the social networking approach, and (3) the affiliate referral fee approach.

1. Joe Yeung of Chasing Opportunties recently blogged about how companies are now trending toward “pay-for” models rather than free, ad-supported models. He mentions “freemiums” (when a basic model/edition/option is available for free, while a more complete or higher quality version is available for pay). We’ve seen this revenue model lure in consumers of product offerings from software to online services (such as Flickr, Skype, and Pandora), so why not for information as well? I know that when I read an online news article that interests me, I’m often left wanting more. Perhaps this is due to online readers only wanting short articles or to the lack of resources (i.e., money to pay reporters) for free info websites. Either way, in my desire for more in-depth info on a particular topic, I might be willing to pay on an article-by-article basis for an additional few pages, rather than searching all over the internet for essentially the same info. Thus, an information website that uses the freemium model gives us free news in brief, but offers more in-depth info at a charge.

2. Let’s add a social networking element to this. On occasion, I’ve had a friend email me a link to an article that I’m not able to access because I don’t have a subscription to that information website (e.g., the Wall Street Journal). So there I am, with a teaser of info about not just something I want to know, but something that’s been suggested by a trusted source, a friend. Now I really want it, and, if a freemium-type model was in place that I could easily transact, I’m more likely to pay for the additional content.

3. Finally, how do the websites get more people to recommend even more material? Well, this one’s a bit tricky, but it’s possible that by offering to pay a referral fee, more “friends” will recommend the articles to more of their buddies. So what do we get?

  • Free shallow content to the masses.
  • Paid in-depth content to those who want it.
  • Rewards for those social networkers who “share.”

Of course, this all could evolve into a bad online version of a multi-level marketing nightmare where you feel the need to place those socially networked friends on your blocked email list. (Is there any coincidence that multi-level marketing is called “network” marketing by those in the biz? Hmm…)

The real point here is that one particular approach is probably not enough to save the information content websites, at least not the information content sites where we would expect at least some level of professionalism and unbiased content.

As for online opinion, like in real life, it will most likely always be free.

                                                                Be sensible,
                                                               Anthony Miyazaki

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