ELECTRONIC SUBSCRIPTIONS: Successful content and business models

Introduction

• Ever since content providers moved beyond their print boundaries and into the so-called Information Age, they have been looking for ways to make money out of their electronic products. Many initially turned to bundling print and online subscriptions, typically at a rate of 130% of the print publication price. However, the culture of sharing knowledge for free which is at the root of the internet made content providers turn, instead, to advertising-, sponsorship-, or referral-based revenue models to earn an income from digital content. More recently, it has been questioned whether these streams will be strong enough and have the growth potential to render content-based services profitable. In addition, great publicity has surrounded The Wall Street Journal Interactive, which has made a success of charging for its content.

Emerging subscription models

• New ways of providing subscription offerings are emerging, of which three key examples are:

* The tiered model, which offers a range of levels of access to content dependent on the amount of data or financial investment supplied by the user. The Economist has adopted this approach for its web-based offering.

* The modular model, which allows users a choice of subscription packages to different categories of content. This model is used by property information site Estates Gazette Interactive.

* The sub-site model, whose users are charged an annual fee to access sites developed within the umbrella brand. Financial information service TheStreet.com is using this model.

• Case studies of the services mentioned above are presented in the report as well as an example of an online-only subscription-based service - NetImperative - to demonstrate how this type of player may tackle building up a subscription model.

Is any one making money from subscriptions?

• WSJ.com, the financial news site, was launched in April 1996, and is currently the most high-profile paid-for subscription site on the web, with over 438,000 subscribers. WSJ.com?s subscription model success may be attributed to:

* First mover advantage

* Dual revenue streams

* Strong brand

* Complementary on/offline services

* Loyal, high earning subscribers

* Continual development

* Support of global organisation

• WSJ.com is not a unique phenomenon however: Metal Bulletin, The Bookseller and Oxford University Press - the three companies interviewed by EPS which include subscriptions as an aspect of their revenue model - have already started to make a profit from their electronic services. Indeed, The Bookseller.com has turned a profit earlier than originally expected, while MetalBulletin.com began to make a profit shortly after the service was launched.

What types of content are suited to subscriptions?

• Market experience to date suggests that it is easier to charge for content relevant to the business-to-business (B2B) marketplace rather than the business-to-consumer (B2C) marketplace. This is supported by Ben Eva of The Bookseller: B2B information is of far greater value to subscribers as it can influence decisions with major financial implications. There may be hope for B2C content providers however: Hugo Drayton of the Electronic Telegraph points to the fact that most consumers understand that they get a far better ISP service if they pay a monthly subscription, and this willingness to pay for quality may yet cross over into the content arena.
• Metal Bulletin has found that users are prepared to pay for the analysis which it provides on top of the news it delivers. Data that is updated in real time is also worth a premium: Metal Bulletin is able to charge more than double the rates for daily updated material for information that is updated in real time. Oxford University Press also found that regularly updated material, particularly in the form of major reference works