Adapting business models to online expectations

With its aura of 'free and available' the internet is threatening the business models of successful subscription publishers – producers of specialist publications that get their revenue primarily from subscriptions rather than advertising. Most are usin

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As visitors to the FT’s revamped site will have discovered, publishers are changing the way they are using the web. Actually, they have been fiddling around in search of business models that work for seven years, but the current shift is a fundamental one: away from advertising and towards subscription.
I have been looking not at newspaper websites, but at those from newsletter and high-priced specialist magazine publishers. They have never relied on advertising, so have had longer to get their models right. No model dominates, but there are plenty of ideas out there.
The web has assaulted the newsletter industry more than most. The very word newsletter, which used to imply expensive and paper, often now means free and electronic. There is furthermore a belief that ‘everything is on the net free, somewhere’. Often, to the chagrin of publishers, that has been true; it is changing, but perception will inevitably lag reality.

The sales imperative

All of which means subscription publishers are having to adapt their own business models to survive – usually by using the internet themselves. The good news is that in many ways it is ideal for them – it can hold vast amounts of searchable, updatable material, and can if necessary make sure we pay to see it. If publishers want to put everything they have ever produced online, they can. That, however, is the easy bit. The tricky part is persuading us that it is worth paying for in the first place.
From a trawl round sites from a number of established publishers, it is clear there is no consensus on the best way to part visitors from their money. I found I could divide them into three groups: hard sell, medium sell, soft sell. Hard sellers go all out to extract cash at every turn; soft sellers put more emphasis on creating attractive sites, in the belief that greater rewards will come later.

Hard sellers bring their offline tricks online

Right at the hard sell end is the London-based Penny Share Guide ( It has simply put its breathless marketing literature online, with no attempt to adapt it for the web – the tried-and-tested buzz phrases (“Pay no money now!”) are plastered all over. Cheap certainly, but one thing it not is targeted; which is of course the main strength of conventional direct marketing.
Richard Band’s Profitable Investing is another tip sheet, this time American and coming from the Phillips International publishing empire. It uses hard sell too, though with more subtlety. The home page is the entry point to an online newsletter – but every click brings up a “subscriber log-in” page, accompanied by great efforts to get us to sign up. Again the traditional tricks of the trade are amply used: free reports, special offers, the lot. The cleverness of this approach comes from the fact that it is mass-produced. A number of investor newsletters are produced using the same template – each written by a different comforting-looking middle-aged man, and held together by a ‘portal’ called InvestorPlace (
Phillips’ other stream is healthcare, and here we find an intriguing variation. Once again comforting folk, this time in white coats, host their own areas – Dr Sinatra ( does longevity, while Dr Lark ( does nutrition. There is much more free content, including message boards and Dr Sinatra’s recorded “hotline”. There are newsletters too, though much cheaper than the finance ones – because these are only one revenue stream. Dr Lark uses the same online technique to sell you the Lark Letter ($39.95 a year) as she does a bottle of Daily Balance Energy Vitalizers ($24.99). For Phillips, there is no difference between selling pills and paper – it’s all blur on the web.

Medium sellers keep something under the counter

Euromoney, the financial publisher, and Jane’s, which specialises in defence, are in the medium-sell group. Euromoney gives away a lot of content for free, while trying to persuade us to take up the paid-for Confidential service by pointing out that only thus will we be able to read the three latest issues of its main magazine. This seems sensible, though detail needs to be improved: I clicked on a front page story, registered, and found I had signed up to Only a small confusion, but probably enough to irritate the high-powered finance-man-in-a-hurry.
Jane’s has put enormous effort into its web presence, and it shows. The home page acts as a portal leading through to articles – though never the full version. Some are specially written for the web, others are truncated versions of a newsletter piece – and at the end of every one is an online order form for a subscription to the relevant publication. This is a neat way of making the site valuable in its own right while attempting to extract cash where it can. Jane’s also sells articles on a pay-per-view basis – so it is testing two distinct models on the same site.

Soft sell with a priceless twist

Lloyd’s List is a soft seller, though an imaginative one. It has lots of material available free, and without registration. But the one thing it does not provide free is a search facility. To get that you have to sign up for a seven day trial – after which you will have to open your wallet. Clever that, because a big publishing site without a search engine is not much use at all.

First published 12 July, 2002
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