The Vanishing Subscription Model

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There were three: The Wall Street Journal, Zagat and Consumer Reports, which appeared to be successfully able to charge users for access to content on the Web. The WSJ is going free very soon (apparently) and Zagat is having to add more free content and is arguably seeing its brand weaken under competitive strain from myriad sites that offer a free version of its restaurant reviews. (I’ll be getting the Zagat emails shortly contesting this claim.)

Angie’s List also charges and I would argue is under the same competitive pressure as Zagat.

That leaves Consumer Reports, which is apparently succeeding wildly online. That makes it an almost unique phenomenon.

This New York Times article from last week goes into some detail about the evolution of the publication. It charges because it must: the magazine has no ads and its culture and credibility mandates no advertising. It also has enough brand strength and consumer trust to make the subscription model work. Importantly, though there are many product review sites, there are none with the credibility of Consumer Reports.

Not everyone can make a living off ads. That’s especially true in local, where fragmentation rules. While it doesn’t seem viable for any startup (save in some B2B niche context) to think about charging for content, I think the subscription model may make a return some day — but it will have to be in precisely the right combination of circumstances: unique content with brand strength.

4 Responses to “The Vanishing Subscription Model”

  1. Ahmed Farooq Says:

    I’ve always been a huge fan of CR – but seeing the revenue vs operating expenses figures absolutely boggled my mind 🙂

  2. Angie Hicks Says:

    Hi Greg, hope you’re well. It’s been a while since we chatted, and I just saw your posting on The Vanishing Subscription Model. I can’t say we agree with your implication. We’re having great success with our subscription model.

    • We’re currently experiencing higher renewal rates than ever before.
    • We’ve had 100 percent member growth in the past year.
    • We’ve expanded our service area from 33 cities in 2006 to 124 today.
    • We plan to expand to London and Toronto next year, as well as blanketing the U.S. in 2008.
    • We also are planning significant additions to our member services next year.

    I might even argue that Angie’s List is precisely the right combination of circumstances: unique content with brand strength. Food for thought. I always enjoy your blog. Happy Holidays, Greg!

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