Tim.McGuinn.es/s

Just spell it out

Setting the Subscription Fee – Where’s the Line?

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This week saw two new major brand entries to the world of subscription-based content.  First the Boston Globe announced that next year they were splitting and enhancing their online content offerings by creating a paid subscription site at BostonGlobe.com for $14.95 per month.  Their flagship Boston.com will remain free.  Magazine publisher (can I still use the “M” word?) Condé Nast announced Golf Digest on Demand as a premium subscription service for $9.99 per month, offering on-demand golf content like instruction videos. This is great. I have no problem with paid-for content. My question: how do you set these prices?  I once used the HBO test when deciding if a monthly fee had value. That worked until the day I signed up for a DVR and realized that a $10/month DVR was so much more valuable by allowing me to control by viewing compared to the $12/month for HBO.  Earlier this year. I tested the value of the DVR when we moved into our new place and tried to go with the HD over-the-air antenna = $free TV, but no DVR (unless I wanted to buy and pay monthly for TiVO).  We quickly learned the value of on-demand Curious George as the only way to get a two-year to sit long enough to fix dinner. Back to the fees question … where do you set that value?  The $9.99 for the Golf Digest on Demand makes initial sense, but every month?  And that’s where the line needs to be set, you want to find that sweet spot where the subscriber is willing to pay, but not inclined to cancel. The other issue these publishers should build into their pricing is that paid subscribers are FAR MORE valuable for partnership programs.  Any subscriber that is willing to pull out a credit card is going to be a FAR MORE desired target. These publishers should look to setting a price that is low enough to make the decision to join easy, and not one that makes the subscriber evaluate it’s value against another service. My take is to price low enough to cover operational expenses in order to encourage subscriptions. Then look to scale revenue on the ad/partnership side of the equation.  This is especially true if you are counting on user interaction and content to drive engagement since you’ll need the people to ensure the traffic

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