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.

Hacker News: Social News Site for Entrepreneurs

Many content producers, such as blogger and online publishers, are familiar with social news and bookmarking sites such as Digg.com, Reddit.com, and Slashdot.org. To have your blog or article listed on the front page of these sites will garner a lot of attention and hits, so much so that sites often go down with the extra traffic that this event is known as ‘digg effect’ or ‘slashdot effect.’ In the case of Digg and Reddit, users can submit links to news breaking blog posts or interesting articles online and other users vote up and down, add comments, and share the link on Facebook, Twitter, or Google Buzz while an algorithm selects which articles to promote to the front page. In the case of Slashdot, users submit articles and human editors weed out the interesting articles to publish on the front page. Hacker News is a social news site much like Digg or Reddit but for startup news, entrepreneur resources, and technology tutorials.

Hacker News was founded by Paul Graham through his startup funding firm Y Combinator. Paul Graham is a angel investor, venture capitalist, entrepreneur, hacker, and writer. Back in the Web 1.0 era, Paul founded and later sold one of the first online stores to Yahoo! His startup later was branded as Yahoo! Store. His background and startup experience led to writing essay on startup and business, which led to Y Combinator, which in turn led to Hacker News.

Like many other sites, such as Digg and Reddit, the true value lies within the community and Hacker News is no different. What make Hacker News different is the calibre of user and contributors which leads to quality of resources for those starting a online business. One of the reason why Hacker News has so much traction amongst the entrepreneurs is that many of the founding team members of the startups that Y Combinator funds end up contributing to it. As of February 2010, Y Combinator has founded over 170 startups. Contributors to Hacker News includes the likes of Paul Graham himself, Alexis Ohanian founder of Reddit, Andrew Warner founder of Mixergy, amongst others.

Hacker news is more that just a social news sites, it’s also a forum for startup founders. One of the most value aspect is the pool of entrepreneurs and like minded individuals on the site. A common request from users that post on Hacker News is to ask fellow users to rate and provide constructive feedback on their web application, iPhone app, or startup. You will also see, questions and polls being asked of the Hacker News community that are relevant to startup founders, such as questions about certain technology, surveys about the Hacker News users, and sign-up for folks looking for a co-founder.