Website business models: Subscription based

With valuable content you could start a subscription based website

While many content sites spend vast amounts of money originating their own material and others trawl the internet to copy information for their own purposes, other dot coms have taken a different approach to generating revenue. These are subscription and registration based models.

These sites create good content that users want to read or buy as well as communities of users that exchange information. They can sometimes even generate the vast majority of the content themselves.

These sites are varied in their purpose and range. Typical examples include newspapers such as The Financial Times or the US newspaper The Wall Street Journal which employ different levels of paid for subscription such as click through headlines. But this category also includes music or games sites such as everquest.com.

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However, these sites all have something in common. They have tapped into specialist markets, gathered and harnessed a following and kept them coming back for more. Andy Matco, business development manager at World Online, believes this to be the missing link in many sites across the web:

“There is healthy growth in e-commerce in the UK but many sites haven’t worked. They have set up a site and spent far too much on advertising and then hoped for the best. If you want to make money you need people to visit your site and build up a community of repeat users.”

A good example of knowing your community and then establishing a lasting relationship with them is Ebay. This is a global online auctioneer that, once registered, lets its customers fill the site’s content and do the hard work for them. As well as a subscription and transaction base (when they take a percentage of a successful sale), Ebay is also a virtual marketplace with no direct link to and from the user. Updates, links and other elements are modified. But Ebay also offers partnerships with established offline companies such as The Royal Mail and Lloyd’s of London for delivery of goods and the financial aspects of the site respectively.

For more of a strict subscription model, a large archive website or database targeted at specific users such as researchers or journalists is a good way to make money on the web. Reuters, one of the largest news agencies in the world do this by charging a fee to access news stories dating as far back as ten years ago.

ISPs (internet service providers) such as AOL also use a subscription model by charging for internet access at various rates and have also introduced unmetered (unlimited) access or a set fee for monthly use of the internet. This is an extremely good way of making money and holding onto a user group but is geared more towards larger players.

If your model isn’t working then it will have to be enhanced. In order to achieve this and drive more traffic to your site as well as gaining additional advertising you can also add your own personalised features and methods. This is something Beenz.com has found in its time as a dot com. This is a more unusual model but one which combines content, information, advertising and partnerships while at the same time rewarding it’s users.

Charles Cohen, founder of Beenz.com says: “Beenz is a different model altogether. It is a transaction and service model that makes money on service charges from the merchants. This is closer to a fourth model where things like gambling and downloading music exist.”

Currently, it is this model that is attracting the most attention partly due to a legal case involving Napster.com. In the past Napster allowed its users to download music tracks for free but they will now have to pay the record industry a fee to use their music. It seems that content is valuable when delivered on the internet. In the near future users could soon be paying for content such as music, video and online games as a way of generating cash flow for previously free dot coms. This already exists in the form of micro payments, whereby each user pays a small fee for each song or element of a site, allowing for a most consistent source of revenue and one which customers are less wary of paying for.

 

A good example of knowing your community and then establishing a lasting relationship with them is Ebay.

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