Subscription Model Fail Whale

Users naturally get upset when someone pulls a bait and switch wool over their eyes and put in place a subscription model on what used to be free content. Building a community and building a business around a community are not the same thing. This is especially true when a community organically develops around a previously free model. People invest their time and energy around the community but as soon as a pay wall goes up the social contract gets replace with a bottom line. I understand that people need to make money, we don’t like in communist Russia, but lets not forget that communist China is the fastest growing economy.

Andrew Warner, the founder of the startup and entrepreneurship focused site Mixergy, changed his site so that content older than a week is only available to paid subscribers. There is nothing wrong with making a buck, and I am sure he will do okay, but by making a quick buck we actually short our users. Funny enough, Andrew has interviewed dozens of successful entrepreneurs that have made a successful business by providing free content to build a platform to spring board their business.

Leo Laporte has built a podcasting empire with shows like This Week in Tech, MacBreak Weekly, Security Now, FLOSS Weekly and many more. Leo podcasts are ad supported and he spent a lot of time in making sure the ads are relevant to his audience. Another example and another entrepreneur whom Andrew has interviewed is Gary Vaynerchuk. Gary started out by making video reviews of wines for his blog. The video reviews where free but they where also presented and sponsored by his real business Wine Library. Gary has now moved on to write a book Crush It! A similar story can be told of Seth Godin. Seth writes freely available essays on his blog and writes a large number of books based on his writing. Seth has also “spun off” several online business. It is important to make the mental distinction that the free blog, podcast, essays are distinct from the paid service, product, or business. You don’t monetize your community by slapping a price tag on them.

Newsday recently learned by putting up a pay wall to your content does not lead to immediate success. Newsday is a half a billion dollar business and recently made the move to make their content online accessible to paid subscribers for a $5/week subscription. It is reported that after three months Newsday was able to sign up a mere 35 subscribers. I know Andrew will fair better than Newsday, there are a lot of passionate startup founders and entrepreneurs, but the complete and utter failure of Newsday is worth nothing. Subscription model to web content is not an original idea. It is not a purple cow, it will not help you get viral, it introduces money to the equation and money has a different expectation.

One Response to Subscription Model Fail Whale

  1. I appreciate this feedback because you actually use your real site to do give it. Lots of people who criticize this move did it behind fake names.

    You talked about newsweek’s apparent failure, but you didn’t balance it by discussing the sites that successfully charge. I’ve interviewed many of Mixergy, lynda.com for example. But there are many others, like VentureHacks.com

    As for pulling the wool over your eyes, I’m sorry you’re surprised. I could have done a better job of letting people know. I’ve said in many past interviews — and so have my guests — that I plan to charge. But I flipped the switch on the premium service before I told people about it. It was an accident.

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