Developing pricing strategies and programs I would like you to think about the concept of how to go from "free" to "fee". As the online advertising market continues to struggle, many online content marketers are wrestling with the issue of how to add at least some level of paid subscription income to their revenue mix in order to reach or improve profitability. Since the business of selling content online is still basically in its infancy-and many consumers clearly still think of Web content as simply and rightfully free-few roadmaps are available to show the way to effective marketing strategies, but some guiding principles have emerged.
The stories behind successful online content marketers show that to make the switch from free to fee, a site must first and foremost forget about consumer surveys and simply have faith that its offering is of high enough quality and is sufficiently unique to entice consumers to pay. Second, good old trial and error seems to be the only realistic method for making the two key pay-for-content marketing decisions: How much to charge site visitors and where to place the site's so-called wall that divides free and paid-access content.
According to the head of the Wall Street Journal Online operations is that many on-line firms are looking at is that they have a massive audience coming to their free site, and what kind of price will not bring that down to zero. As online content providers ponder their options, consumers are trying hard to scare them away from introducing any access fees at all. In a March online survey of more than 2,000 U.S. consumers, conducted by Jupiter Media Metrix in New York (now a division of comScore Networks Inc., based in Reston, Va.), 71 percent of respondents said they either "strongly" or "somewhat" agreed with the statement which read, "I can't understand why anyone would ever pay for content on the Internet." But online content marketers advise ignoring consumer surveys on this point.
"To ask someone who's been using a site for free if they would like to start paying is not going to get you a straight answer," says the president and CEO of AskART.com, based in Phoenix, which successfully switched a portion of its content from free to fee in October. The site, with an average of 75,000 unique visitors a week, offers information on American artists and their paintings, including art auction records and other collector's information, that at first was offered at no charge but is now kept behind a paid access wall, with prices ranging from $9.50 for one-day access to $19.50 for monthly access.
Ask ART says from the time the site was launched as a totally free offering in spring 2000, they always planned to make a portion of it paid access, because they had confidence that art collectors would recognize the value and be willing to pay. So far, his faith has been validated: As of June 2002, the site had some 10,000 paid subscribers, and the added revenue stream (the site also gets revenue from paid listings of art dealers and banner ads) enabled askART.com to achieve profitability for the first time in February 2002.
Similarly, WSJ.com, initially launched in mid-1995 as a partial, free version of the Wall Street Journal print newspaper, offered a full-text, online version of the printed journal for free from April to August 1996 as a trial, but "always with the notion that it would switch," to a pay-for-access model. The company held firmly to this business plan because its management was confident that their online content was "high value;" now, WSJ.com has 640,000 paid subscribers.
In the consumer market arena, Ancestry.com, launched as a free site in June 1996 but has been a pay-for-content site since June 1997. Ancestry.com offers subscribers online access to a wide range of databases-from draft records to parish records to foreign census reports-to help them track their family trees. Some of the historical records databases posted, queried and maintained online by Ancestry.com are proprietary to the site, while others are in the public domain, but are often only accessible to the public for free if they travel to regional or national libraries and record centers here and abroad. The site has more than 700,000 paid subscribers.
For this case study, I would like you to:
1. Find a company that is attempting to for from "free' to "fee"
2. Describe their pricing strategy (your text book will be a good source of information)
This should not take you more than 20 minutes to complete (assuming you have read the chapter). Please email me if you have any questions.