Selling Subscriptions to Internet Content Summit: a quick report
I'm glad I attended this event on last Tuesday in New York. With nine different case studies, and after some delay before we got started, there were little pauses and no time to fall asleep (even the lunch break lasted probably less than 20 minutes!)

As a show, it worked very well because the speakers were professionals that know their businesses (and love them, seeing the passion with which they spoke of them,) as opposed to analysts who have covered advertising for years as if it was the alpha and omega of online business models, and are just reluctantly "discovering" fee-based businesses now (you know who I'm thinking about, just look at who mixed ad-related businesses with analysis and conferences.) Hello, what have we been monitoring here for the last 15 months? A conference free of forecasts to 2005 deserves cool points just for that anyway.

A few vendors (Emeta, Sandlot, Webloyalty,) sponsored or attended the event but were unobtrusive and even genuinely interested. Overall, there was a lot of interaction and questions, with a good sense of community. The speakers themselves often stayed during other presentations.

Here are a few of the key points I noted:

Selling online subscriptions is all about direct marketing. Driving conversions from free to fee, then keeping customers happy so that they keep renewing, is all about funnel management (from free to various levels of fee to actual usage after the first sale.) You don't just sit there and put a small button somewhere on your site asking for visitors to sign up. You need to make sure that all your free output (on your own web site, e-mails and newsletters, on your partners' publications,) leads to a relevant sales pitch. You also need to monitor whether customers use the service: if they don't, it's highly unlikely that they'll renew and recommend it to their friends and peers.

Research is ok, testing is better, tracking and measuring is best. It's the direct marketing party line. For one, research is flawed because people are aware they are observed and will respond accordingly, i.e. what people say they do and what they actually do are two different things. Good research might give you ballpark figures and trends, but nothing beats the actual marketplace for feedback. Once you're out there, you tweak your copy, experiment with new things, and keep refining the process. I was surprised to learn that even major publishers don't necessarily get as much fine-grained data as they'd like on how people behave on their site, so I'm sure this whole loop still leaves to be desired in many companies.

Retention is key. To nail the "subscriptions are a new and unproven online business model" coffin, several speakers had already been running their programs for years. They're still learning, testing and experimenting, but this is a maturing business. They all insisted that retention is paramount to your long-term health. There are only so many prospects in your universe, so if you want to keep growing and benefit from the stable and predictable business that subscriptions are supposed to provide, you need to keep churn as low as possible. Effective direct marketing might get people to sign up once, but it will only get you so far if your product doesn't deliver.

Selling content, as opposed to giving it away, drives service quality. The speakers had a very clear view of the service they offer, how it's positioned in the marketplace, and why customers pay for it. Once you start charging end-users (as opposed to advertisers, the real customers of free commercial sites,) you have more pressure to differentiate and improve what it is you're offering. In my opinion this is one of the most overlooked positive consequences of the free-to-fee movement in online services. When you're the customer instead of the product, web sites need to make sure they deserve your dollar and grow only better at it.

Some lessons apply for everyone. Speakers came from very different publishers, from fantasy football to paper industry trade pub to business news to e-greetings. Yet there was a strong sense of common purpose and perspective. We saw similar tactics used across the board, from B2C to B2B and from niche to mainstream.

Convert from free to fee first, then worry about upselling. Most publishers insisted on getting more paying customers onboard as a priority. Once people start buying and liking your content, you'll always have many opportunities to upsell them to bigger packages or cross-sell them ancillary products. Get them to sign up, make them happy about it, only then you worry about your dollar per subscriber.

Handle free trials with care. Publishers had different experiences with free trials, but it seems more effective to sign up people upfront with their credit card information, than to give away a full trial and ask for payment later. More people might sign up for the trial, but the conversion rate when it's time to pay will be lower. What is free (and for how long it's free,) and what is not needs to be very clear.

Just auto-renew subscriptions! I was wary of the idea of renewing subscriptions automatically "til forbid", but most publishers seem to do it without customer backlash. Two important things you need to do to combine aggressive marketing with ethics: disclose upfront you'll be auto-renewing, and make it quick and easy to cancel and charge back users who want to discontinue.

Shared accounts: risk or opportunity? We had very different answers depending on pricing and target market. More expensive, niche B2B sites apparently are more careful about shared passwords and might take technical measures (e.g. based on IP addresses) to prevent it from happening. Others think their product is affordable enough that most people won't try to cheat, and the cost of fraud prevention (and possible aggravation of some legitimate uses that it could block) might be higher than the revenue at risk. One B2C site even proactively lets users share their account with friends and family as a tactic to increase retention and word of mouth!

Anne Holland, the event organizer, wrote a more detailed summary, and she posted a few wrap-up notes as well on her blog (for the record, I tried to have her drink the red wine I offered her with white meat, then faced with vegan opposition I suggested cheese, but all Anne wanted to hear about was tofu!) Here's last year's event summary as well (the 2001 transcript is not for sale anymore.)

This year's transcript (including slides and everything that was said,) will ship by early June and is available for pre-order.