Live From New York: Panel Presents Online Subscription ‘Best Practices’
Strong offline brand identity, e-mail newsletters reminding customers of their subscription, and unique and varied content highlighted the suggestions offered into making subscription-based online media profitable by a panel on The Frontier of Business & Technology, hosted Wednesday evening by the New York New Media Association.
For many Internet-based businesses, the fattened bottom lines have stemmed from IPOs or venture financing while the actual operations maintain operating losses. Making paid subscriptions work is probably one of the more intriguing aspects to online marketers, especially in light of general content services such as the online magazine Slate, which were unable to do so. The panel explored the practices of online adult sites, which generate nearly $1 billion of the $1.4 billion spent for content online annually.
Mainstream media is taking note. According to one speaker, Mark Hardie, senior analyst at Forrester Research, entertainment and technology services companies such as BMG are curious both about the subject and its business models, which demand more participation than other medium.
“It’s experience interruptus–click, look, click, look,” Hardie said. “If you had to do that much work for TV, nobody would watch it. But this business model makes you reach into your wallet and pull out a credit card.”
In the online adult industry, the subscriptions are lucrative: prices average $20 to $25 a month, with a 15% membership drop off on every monthly file build. At that price, even at a 17% annual retention rate, the gross margins exceed those of most other subscription services.
The speakers presented a series of practices easily adaptable for most online marketers. Steve Becker, lead Internet strategist for General Media, (Penthouse magazine’s parent company), believes that conversion rates–from trial to paid subscription–are higher when a strong offline brand exists.
Jane Duval, editor and founder of Jane’s ‘Net Sex Guide, engenders loyalty through the use of an opt-in newsletter. “It’s the best thing you can do,” she said, especially in a field where there is virtually no cost barrier to enter.
Mainstream media can also take a page from the industry’s affinity program model. The larger, pay-per-view sites underwrite smaller free sites by purchasing banner advertising, which in turn feeds consumers into the by-subscription sites, according to United Adult Sites president Mark Tiarra.
Vendors as well as direct marketers, are using the industry to test practices. Visa is learning to deal with chargebacks, or disputed claims. According to Becker, consumers have become aware that they can dispute a charge when there is no signed authorization slip. But, noted Tiarra, Visa is clamping down on charge backs, and as consumers become more comfortable giving their credit card numbers for mainstream goods, Visa will already have the resources in place for dealing with disputes.
