Commentary

Why Paid Subscriptions Are Important

I'm a big believer that consumer media preferences are shaped pan-channel. I think that zipping through ads on TV makes consumers less tolerant of marketers' interruptions online, and that the ability to suppress pop-ups results in further TV commercial impatience. It follows, then, that if a 45-minute show costs $1.99 on iTunes, a 90-minute movie shouldn't cost $10.50 at the theatre, or $19.99 on DVD; it should cost $3.98. Or that if March Madness can be viewed live online, so should The Masters, The Olympics, and my niece's semi-final game in the Frederick County high school lacrosse championships.

All right, it doesn't follow exactly, yet. But specific initiatives are shaping consumer expectations broadly. We can't help it. We're humans--we generalize. It's an evolutionary asset for us, but a competitive liability to publishers. Unless your audience is comprised of lesser vertebrates, in which case you may disregard the rest of this column.

I believe, then, that video on demand--in all its formats--is going to energize paid content online. Every time a person purchases an edition of "Law and Order: SVU" to watch on the train, or buys "Cinderella Man" through their cable provider to watch in HD-Dolby 5.1 in their living room, the seal has been broken. They're now paying for media that was once delivered free to them, because a new value proposition justifies the expense.

With TV, time-shifting is the greatest driver. Online, the primary drivers are unique relevant content, convenience, and portability. Never mind convenience and portability--by offering any type of content online, convenience and portability are already part of the value proposition. The only driver publishers should consider when developing paid content strategies is relevant, unique content.

WSJ.com has it, and has always had it, and recently celebrated its 10-year anniversary of selling their content online. Congratulate them, but don't emulate them: their all-or-nothing strategy is unique to them. Very few other publications will ever be able to pull it off.

Instead, publishers should look at paid content options in the way that they look at their unpaid subscription options. MediaPost, for example, offers more than 20 separate e-mail subscriptions. The New York Times Online allows members to subscribe to any of over 100 distinct RSS feeds. And I'll wager both lists are growing, as both publishers look to increase their relevance through this combination of tighter and tighter content targeting and consumer control.

Let me introduce you to Aviva Goldfarb, a 38-year-old mother of two living in an affluent Maryland suburb. Like many parents, she balances her work responsibilities with her home life and places tremendous value on her time. Fitness and nutrition are important to her, and she really, really likes to cook.

She may be part of your audience, and she may also be a customer of your advertisers. But she's also your competitor. Because Aviva is the publisher of The Six O'Clock Scramble, a weekly newsletter that features menus and ready-to-print grocery shopping lists for quick, healthy, family-oriented meals for the whole week. It's not on a blog, alongside the ubiquitous "Ads by Goooooogle." Nor has she gone out and sold sponsorships to Cuisinart and Betty Crocker. Aviva charges subscribers $4.95 per month for the newsletter--2,200 of those subscribers, in fact.

Do the math and you may be unimpressed with the impact of about $125k to your annual topline. But you should be impressed by 2,200 paying subscribers, no matter what they are paying or what they are buying.

It's clear that The Scramble's success isn't due to raw marketing power. Aviva found a way to deliver value that people could justify paying for, and that, very likely, they recommended to other people. She filled a need in a way that nobody else has, with unique relevant content. And she found a big need--her potential audience of health-conscious busy parents is massive. She got in early.

There is still a lot of "getting in early" left, for publishers who likewise find a niche. In fact, I believe the narrower the niche, the greater the opportunity for success. Consider the word-of-mouth impact of a service similar to Aviva's but to a lesser-served but community-centric group, focusing perhaps on vegan or kosher or lactose-free menus and lists.

This is where paid subscription initiatives will take off--far outside of the mainstream. Why? Because of the confluence of three factors:

1. Consumers are more apt to buy online today than previously. The reason they don't is more a function of supply than demand.

2. Small markets on a global scale are suddenly not small markets. And because of the fulfillment ease, content subscriptions will break into foreign markets much more quickly than retail, where much of the focus has been to date.

3. Social software knits communities into markets. Communities are stronger than ever online, and there is far more intelligence into how to join their conversations than ever before.

But why is paid content important when--finally--online advertising is starting to fulfill its promise? Because, given the exponential increase in content choices, a unique, relevant voice has become the cost of doing business for publishers. Not every publisher can make paid content work online, because not every publisher has a unique, relevant voice.

But every topic has a unique voice, somewhere. And consumers are finding them, listening to them, paying for them. From Aviva Goldfarb to Jim Cramer (with his financial newsletter,Action Alerts PLUS), publishers are creating content with unique value, convenience and portability that people are increasingly likely to begin shelling out money to read. Even if your ad model is working and you have no intention of ever selling subscriptions to all or part of your site's content, wouldn't you --and your advertisers--be more confident knowing that your content is worth paying for?

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