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E-Business Secrets
Brian Livingston
How a major paid subscription experiment is working

Can a pure content site become profitable by charging readers on a paid subscription basis? Salon.com, a site that offers reporting and analysis on a variety of subjects, provides an intriguing example. Now a new look on the progress of this pay-to-view model has been provided to us by a company insider.

In an article written for publication in the December 2001 issue of WebTechniques.com, Salon Senior Vice President and Managing Editor Scott Rosenberg makes the case that the Web site's subscription model just actually became viable. The company has retained visitors by keeping most of its content free, while gradually moving more and more of its articles and offerings into an area open only to paid supporters.

Still, as a business, the company looks grim. Salon lost $5.6 million in the third quarter of 2001, with quarterly revenues sharply down from a year ago to only $567,000. But 45 percent of that revenue came from subscriptions, showing that Salon is diversifying from its former reliance on advertising.

The financial losses have taken their toll on the share price of Salon, a public company. Trading below $1 for an extended period, the stock forfeited its place on Nasdaq's main exchange earlier this year (although the company still trades as a "penny stock").

Even so, the company does have a loyal audience, with 3.8 million unique visitors in a recent month. And executives announced in September a round of $3.25 million in new financing from such investors as Michael Fuchs, the former head of Home Box Office (HBO). Whether or not Salon prospers or even survives, the lessons of its subscription experiment so far can provide valuable insight for other content services that might be able to improve on the model.

Salon launched its $30-per-year subscriptions in April 2001. Rosenberg says in his article that more than 11,000 people signed up in the first week. The company said in a statement at the end of September that it had acquired more than 20,000 subscribers. Although he won't state the current subscription total, Salon Chairman David Talbot was recently quoted as saying the service is "ahead of projections" to have 50,000 subscribers by the end of its first year.

In his article, Rosenberg writes that the group decided it was necessary to develop its paid content service internally, relying on outside vendors only for credit card verification and related services. He says this kept costs low and provides more certainty that critical support will continue to be available. Whether this approach will ultimately succeed and whether other sites can successfully copy it, remains to be seen.

SALON PREMIUM: AN INSIDE LOOK AT PAID SUBSCRIPTIONS

http://www.webtechniques.com@836.as/?4e43

E-BUSINESS TECHNOLOGY REVIEW: THE WORLD'S SMALLEST RADIO

Looking for a new product to sell on your e-commerce site? You could do a lot worse than what's billed as the world's smallest radio. The entire device is the size of most earbud headphones and stays in your ear while you're listening.

Developed by Sinclair Research in the United Kingdom, the Z1 radio is AM-only, which may not be a problem if you're interested in listening to sports or news while stuck in a boring conference. An FM-only radio, the X1, was developed separately. Both devices list for about $14.

WORLD'S SMALLEST AM RADIO

http://www.sinclair-research.co.uk@54.vg/?61cb

WORLD'S SMALLEST FM RADIO

http://www.sinclair-research.co.uk@54.vg/?7553

LIVINGSTON'S TOP 10 NEWS PICKS O' THE WEEK

1. "Pottermania" may put magic into online toy sales

http://www.wired.com@a2.tc/?40b

2. Poor service cuts sales enormously, study says

http://www.industryclick.com@th.gs/?7f3

3. More signs show Web surfing is returning to normal

http://www.bizreport.com@5a0.tc/?bdb

4. Experimental, unobtrusive Web ads are now in testing

http://www.pyrads.com@31.dk/?fc3

5. New Zeus defends sites against DoS (denial of service)

http://www.theregister.co.uk@e.la/?13ab

6. Is your e-business using the right shipping boxes?

http://www.wired.com@836.as/?1793

7. Formula maximizes profits when auctioning items

http://papers.ssrn.com@a6r.ms/?1b7b

8. HTML tips: A primer on using GIF versus JPEG images

http://www.webmasterbase.com@3n.be/?1f63

9. No names: Services that make your surfing anonymous

http://www.sfgate.com@1c.to/?2733

10. Qaeda's nuke papers turn out to be an Internet joke

http://www.dailyrotten.com@54.vg/?234b

E-BUSINESS SECRETS: Our mission is to bring you such useful and thought-provoking information about the Web that you actually look forward to reading your e-mail.

ABOUT THE AUTHOR: E-Business Secrets is written by InfoWorld Contributing Editor Brian Livingston. Research director is Ben Livingston (no relation). Brian has published 10 books, including:

Windows Me Secrets:

http://www.amazon.com@isbn.at/?0764534939

Windows 2000 Secrets:

http://www.amazon.com@isbn.at/?0764534130

Win a book free if you're the first to send a tip Brian prints: mailto:tips@SecretsPro.com


Brian Livingston , an InfoWorld contributing editor, has published 10 books, including Windows Me Secrets and Windows 2000 Secrets. Win a book free if you're the first to send a tip Brian prints. Send in your tips today, at tips@secretspro.com.


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