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Ten routes to successful online subscriptions

"Online subscription models can deliver today", says Dominic Jacquesson, chief operating officer of newsletter publisher Electric Word plc. Here, he imparts ten of the lessons they have learnt during the course of setting up a successful online subscription business.

By Dominic Jacquesson

Since the late 1990s, magazine publishers have been searching for business models that can deliver online profits. The hype came to an abrupt end in March 2000 - the stock market and online advertising bust, consumer mistrust of online purchasing, and the slow rollout of broadband services collectively lead most publishers to turn their attentions elsewhere, or simply to retrench and focus on survival.

However, recent successes have been scored which point the way forward and which also demonstrate the unique natural advantages that publishers can exploit online. The Wall Street Journal gave the first insight into what the future might look like, with an immediately successful online subscription model launched nearly five years ago. Reed Elsevier’s Science Division alone generated 72% of its revenues through online subscriptions services in 2002 – over £500m. The message is clear; online advertising has yet to reach maturity, but online subscription models can deliver today.

Electric Word plc is an AIM-quoted newsletter publisher active in professional and public sectors. Over the last year we have established a successful online subscription business in our sports science division. Whilst there are constant challenges to face, we have learnt a number of valuable lessons, ten of which are imparted below to help you make the most of your online potential:

1. Use your content to draw traffic to your site: Traffic generation (ie marketing) is the fundamental bottleneck to growth you will face online. But whilst non-publishers are having to invest more and more in order to "buy" traffic through cost-per-click services such as Google Adwords, publishers have a natural asset; relevant specialist content from their back-issues. So rather than letting it languish behind password-protected areas, flaunt it to all those search engines by publishing it as a freely available archive.

2. Establish your copyright ownership: This is a pre-requisite for the first lesson. Publishers’ approaches to copyright vary considerably, particularly when using freelancers and other third parties. However, ensure that your policy allows you to publish online – both for marketing and for republishing materials for online sale.

3. Make your content search engine friendly: Also linked to the first lesson – whilst you can get immediate benefit from putting relevant content online, you can multiply this benefit by optimising your page structure for search engine crawlers. Whilst you may be able to do some of this in-house, the rules change constantly and it’s probably worth finding an external expert to keep you up-to-date. But don’t go over-board – as with builders, "search engine optimisation" (SEO) is an arcane world so don’t let yourself be bamboozled.

4. You can’t survive by only selling subscriptions off-the-page: Only a fraction of prospective customers visiting your site will feel confident enough to purchase online immediately. So do your best to collect their email address before they leave your site, to build an email database of qualified prospects.

5. Build trust and establish expertise: Offer benefits to your visitors and email prospects. Your relevant archived content on the site is a good start, but you need to do more, by providing regular news and high quality articles to your prospects – interspersed with marketing of course, to encourage their conversion to paying subscribers once you’re over the trust threshold.

6. Focus on quality copy: Well written, compelling marketing copy makes a real difference online. Avoid distracting gimics and graphics, instead putting time into developing at least a few benefit-rich marketing pieces to exploit across your site and e-marketing activities. Length is good, and utilise an expert copywriter if you don’t have the resource in-house.

7. Keep e-marketing on external systems: You have built an email database and are generating subscriptions through regular communications and marketing. But suddenly somebody complains to their ISP that you’re a spammer. You may be entirely innocent, but ISP’s are inclined nowadays to back their paying subscribers, blacklisting you with little recourse. If you rely upon your own e-marketing servers, you have no way out. So instead run your bulk email through a third party service, which leaves you footloose if things go wrong. Software applications such as Lyris can be rented for a small monthly fee and offer advanced functionality such as A:B split tests, allowing you to mimic techniques you use in traditional direct marketing.

8. Search for the right fulfilment system: Traditional subscription fulfilment bureaux and software providers have been painfully slow to extend functionality to the web. One exception is Sandlot, the developers of Eclipse, but this is a top-of-the-range solution with prices to match. Many companies, such as Worldpay, offer online-only payment solutions and fulfilment services, but functionality differs, particularly when you are looking for recurring billing or integration with financial systems. Remember that credit cards are the currency of the web – alternative payment methods will mean increased costs.

9. Beware of VAT laws: British publishers have grown used to a VAT-exempt environment. However, online publishing is considered a service and so attracts VAT, even if the content you are offering subscribers is exactly the same. B2B publishers may need to collect VAT data, whilst consumer publishers will either have to charge EU consumers VAT, or accept lower margins. It’s worth discussing the options and risks upfront with your tax experts and finance department.

10. Measure and monitor: Whilst it’s easy to come up with myriad new ideas for online marketing, you’ll learn little unless you have measurement systems in place. So invest in visitor tracking software for your sites, monitor your search rankings and traffic, and enforce coding systems so that you can identify which offers and marketing approaches are acutally working.