“Our experience in the last 20 months has shown that you can convert users over to a subscription and you have have fun doing it,” said Mark Ragan during his Keynote at the 2009 SIPA 33^rd Annual International Conference in Washington, D.C. this week.

Ragan told publishers that Ragan Select, his membership website for communicators, launched with a forced free trial. This means that anyone on his list got a message telling them that they received a free trial subscription to Ragan Select. The message offered them their password, instructions and congratulated them. With this, they immediately converted 25%, and maintain a 46% renewal rate from that initial pool of subscribers.

Since the launch, they’ve also used a handful of other methods for getting people signed up for Ragan Select. In terms of direct mail, they’ve used benefit forms, more forced free trials, and email promotions. Ragan claims to have a $1.25 to $2.50 ROI with these efforts.

“My most successful email promotion was a 49 cents a day offer,” Ragan told the audience.

Ragan also told publishers that while 46% of his initial pool of subscribers have renewed, another 14% renewed after their subscription had already expired.

His thoughts on this? “Content is king, but it’s not enough,” he told the audience. Ragan explained that without adding discounts to the membership website, his renewal rate might not be so high.

When someone subscribes to Ragan Select, they receive a bulk of discounts on products and events. Therefore, when someone wants to attend an event in the future, and their subscription has expired, they are reminded of the discount they’re entitled to with a subscription. This causes users to re-subscribe.

Ragan told publishers that they’ve gained traction on social networks and have even gotten subscribers to Ragan Select from Twitter, which, as he reminded publishers, is a no-cost marketing tool. Ragan stressed the importance of using free online tools as a part of your marketing endeavours.

“Sell your site on usefulness, but delight your customers with personality,” is Ragan’s motto. As far as investment in Ragan.com, which includes the membership website, a social network, videos and more, with emphasis on their fun personalities and “info-tainment”, Ragan told publishers that the site cost $100k to build, but profitability went from 31% to 49%.

More coverage from SIPA:

SIPA Take Away #1: 17 Testing Tools from Sandra Niehaus

SIPA Take Away #2: Get Your Staff Pumped About Search Engine Optimization

SIPA Take Away #3: Create an In-House Audio/Video Production Studio

SIPA Take Away #4: Membership Website Experience from Mark Ragan

SIPA Take Away #5: Best New Product Development Ideas

SIPA Take Away #6: 10 Ways to Sell One-Shot Products

SIPA Take Away #7: Google Really Does Love Online Publishers

Traffic and sales have doubled in the past year for Taunton Press, demonstrating that resistance to paying for content is diminishing.

In a panel titled “Success: D-I-G-I-T-A-L” at the MPA-IMAG Independent Magazine Conference this week, Taunton’s new CMO reminded the audience that it’s not too late to start charging for content. “We are the professionals consumers value and trust. If we don’t believe that, how will our consumers and advertisers believe it?”

To attract an audience, she advised to first whet the appetite with free content. Then train the consumer to understand that the premium content comes with a price.

Here are the top 10 lessons learned from Taunton’s membership websites:

1. Content

Content is always king, this has not changed. Paid membership websites can’t just be a replication of a print brand. While archives are one of the most important features, video is a must-have. Video helps to make the proposition more valuable, as you can teach certain tips and techniques much better in video than you can in text. Video also helps to create a stronger bond between the editors and the consumers, as editors are usually the talent in the videos. Scolpino also noted that the proportion of free and paid content is very important.

2. Pricing

Three years ago when they launched Finewoodworking.com, they thought they could charge almost $90 for an annual membership. “Don’t get crazy (with your pricing),” warned Scolpino. They soon switched their membership website pricing to match their print subscription price and site sales took off. They currently use parity pricing for online only. Print subscribers get a discounted rate and monthly subscribers pay the highest rate.

3. Acquisition

Organic web ads and sales from Taunton sites account for 80% of membership website orders. They also do cover wraps and space ads to introduce the sites and build brand awareness. Pay-Per-Click conversions are not as good, but they do see spikes in orders after a PPC ad is run.

4. Email marketing

Scolpino demonstrated a test they ran and found that creative testing played a bigger role than offer testing. She showed a graphic-heavy email promotion as her control, and a more text-heavy, benefit-oriented email promotion as her test. The text version lifted response by 127%.

5. Conversions

Keep your order flows as simple as possible. One one of their order flows, they originally had 6 steps to completion. They tested reducing it to 2 steps and saw conversion rates go from 6% to 11%.

6. Research

Never lose sight of how important it is to get consumer feedback on their level of satisfaction with your membership site.

7. Offers/Upsells

Taunton’s primary offer for their membership websites is a 14-day free trial. They tested a 14-day free trial vs. a hard offer and found that the trial lifted response significantly.

8. Vendors/Software

Scolpino reminded us of the importance in taking time to make sure all your systems talk to each other so that orders are processed and captured across all systems for reporting purposes. Easier said than done, but very much worth the time and effort required.

9. Retention

The average monthly membership term across the Taunton membership websites is 7.2 months. This is until annual conversion or dropout. They are seeing 55-72% of members renewing.

10. Consumers will pay!

Overall their membership base has grown from nothing to 80K. Their membership website revenue has gone from nothing to over 2 million. It is possible to go from free to fee!

Scolpino noted that the membership website that has the most content behind the wall also has the most members, further driving the point that consumers are willing to pay for valuable, edited, trusted content.

She sees the success they are having as a good indicator of the future success for the publishing industry as a whole.

More from MPA-IMAG 2009:

The Future of Publishing with Bo Sacks

August Home Publishing is a True Inspiration for Multi-Platform Publishers

With advertising sales dropping, many publishers are considering charging for content. Will you?

After hearing Jim Malkin, CEO of SourceMedia speak this week at FOLIO about how he intends to transform into a paid-subscription model, we thought now might be a good time to talk about Membership Websites and the Five Deadly Membership Website Mistakes you can make.

Every story that a publisher has ever published in its magazine or newsletter or book series is an asset. And the question that every publisher must ask is, “How can we best monetize that asset?” If the publisher monetized the asset in the past by selling advertising, it’s highly likely that the economics favor an ad-driven online publishing strategy.

Therefore, think about the economic history of the existing print publishing business. Regardless of the amount of available content, the way the organization is set up to make money and the economics that have worked in the past are what matter. If a publisher operates a user-driven business in the physical world or online, where circulation is the primary source of revenue, then a Membership Website makes sense.

On the other hand, if the business is sponsor-driven, where advertising generates 70-80 percent of the revenue, then the publisher probably think twice about launching a Membership Website. The best chance for success in that case is to deploy the content as part of an Internet Hub (a 24/7 media nexus for a magazine or newsletter brand that is primarily sponsor-driven and where content is open and free).

Choosing one model or the other—free or paid—is the bellwether decision for any print publisher contemplating the development of a successful online publishing business.

Delivering the content in an open (free) architecture maximizes page views and, therefore, advertising and sponsor revenue. Placing the content behind a firewall, where users pay to access it, limits page views—perhaps by a factor of 90-95 percent—and, therefore, advertising opportunities and competitiveness. The content can’t be used for both. In order for an advertising-driven website model to work, the content must be given away free to generate the largest audience for the advertisers.

Many sponsor-driven publishers who now run large, successful Internet Hubs—Forbes.com, PCWorld.com, Computerworld, and USA Today (to name a few)—toyed with operating paid membership or premium websites and chose not to do so in order to maintain the page views necessary to maximize online advertising revenue.

What to charge for a membership website

If you do decide to launch a Membership Website, remember that buying access to a Membership Website is not like buying fish, which is sold by the pound.

The price a publisher charges for access to a Membership Website must be based instead on the price consumers have shown they are willing to pay to receive the publisher’s other information—not by the volume of information the publisher makes available on the membership site.

We’ve found that the best pricing model for Membership Websites—with almost uniform success—is “parity pricing.”

This is the concept wherein the price a publisher charges for access to a Membership Website is consistent with the price consumers pay for the corresponding print product. If a consumer is willing to pay $20 for a print subscription to a magazine, that’s probably the precise price to charge for a related Membership Website, regardless of the massive amount of content that the publisher may include on the site.

On the consumer-publishing side, in fact, we’ve found $20 or $30 to be an amazingly consistent price point for Membership Websites, which correlates almost exactly to the market price of the corresponding print subscription.

Are you considering launching a membership website to make up for a loss in advertising revenues? Check out our free white paper Five “Deadly” Membership Website Mistakes.

Executives from ESPN, Rodale and Harvard Business Review discuss the challenges and benefits of charging users for online content

During this panel, General Manager & Editorial Director of ESPN Publishing Gary Hoenig admitted he didn’t know anything about SEO 6 months ago.

The concept of using SEO to acquire subscribers fascinates him, but acknowledged it isn’t exactly easy. “You can harness it if you try really hard,” said Hoenig. “You must allow the search engines to work for you, not against you.”

I had to throw that in there, but the primary message he delivered was that everyone in the room needed to focus more on who they are at their core. Publishers must clearly differentiate between what is commodity information and what is true analysis, to better understand which content they can get away with charging a premium to access.

Is your content worth anything to the consumer?

Hoenig insisted that if you don’t know the answer to that question, you have an ongoing problem.

He iterated that price point is key and reminded us about the miracle .99 print point iTunes has captured the market. If you can find a price in your universe that’s like that, you should be leveraging that opportunity, said Hoenig.

Is it OK to have advertising on your paid membership website?

Membership websites have their advantages and you don’t want the site cluttered. If you decide to take advertising in your membership product, you should try to give the advertiser a unique experience, perhaps by allowing them to be the official sponsor of a certain section of your membership website, as ESPN.com has done with their Insider product. “You really want to differentiate between the two types of advertising,” said Hoenig.

“The key to membership website success (or online success in general) is to start thinking of yourselves as content providers and out of the restrictions of paper and ink,” he added.

In terms of profitability, one membership website is equal to several magazines

At Rodale, there are 8 digital products that they charge monthly subscription fees for and according to MaryAnn Bekkedahl, EVP & Group Publisher, their paid digital subscriber revenue is currently equal to their paid advertising digital revenues.

She mentioned that digital services turn profitable in 2 years, versus the 5 years it takes on a magazine. Bekkedahl mentioned that with those kinds of profits, “we’ll keep doing it.”

Bekkedahl noted the key to success for their membership websites are the unique tools, often revolved around weight management, and the brand. Men’s Health Personal Trainer succeeds, in large part, because it’s Men’s Health.  

She also added that the paid offers always work best when you can bundle them with a print offer. “When you can sell them all together you not only get the highest price point, but you get the most engagement.”

“I just don’t know” if premium sites are our one hope

A refreshing dose of honesty came from Hank Boye, Publisher at Harvard Business Review, who candidly told the audience that he just isn’t quite sure if their premium site is the one hope they have at succeeding in the long run.

“A premium site makes a lot of sense but it may not work ultimately,” admitted Boye. He’s more focused on the brand and the degree to which people want to engage. “Forget the economic pieces for a minute… experience the brand and pay us the value for what you get,” said Boye. “There isn’t one strategy that’s going to save you,” he said.

More Magazines 24/7 Coverage:

Print Vs. Web – The Editorial Challenge
Editors gather for a candid discussion about what’s working online and what isn’t

Rethinking Decision-Making in a 2.0 World
Google’s Analytics Evangelist, Avinash Kaushik, tells magazine publishers why some of their sites “suck” and what kind of thinking is required to fix them

Raising the Digital Bar in a Down Economy

Panelists share digital revenue percentages and thoughts on how they might increase revenues in the coming months and years

The web is not a big magazine. The average user goes online to research a topic, and will spend about 10 minutes doing it. This is the key in defining print vs. online usage. A user subscribes to a magazine for leisure, while the average Internet user subscribes to a membership website for information.

When a user subscribes to a magazine, they are spending approximately 12 hours a year reading your magazine (for a 12-month subscription) and spending an average of $26.00.

With membership websites, the average membership website subscriber will show up 2.7 times per year and will spend about 10 minutes per visit. That’s an average of 27 minutes per year.

What’s the difference?

On the web, a user knows exactly what they’re looking for. They’re typing in a topic or question into your membership website search tool, and they’re reading what they need. On a membership website, users are much less inclined to browse than in a print product; there’s a lack of urgency to consume the information in a timely manner.

In print, a user has the opportunity to “finish” a task, such as reading your whole magazine so they can recycle it and look forward to the next issue. Therefore, a subscriber is much more likely to spend up to an hour browsing the pages of your magazine. The urgency is much higher in a print product, where the user has the opportunity to complete a task.

The difference between print and web is that on the web, the user generally knows what they’re looking for, whereas in print, the subscriber will discover things they didn’t even realize they needed to know because they are reading from front to back. This is something they can’t do on a membership website.

When traditional publishers bring their brand online, their first mistake is to build a membership website with the mindset that the web is a big magazine. A membership website is much more in-depth than any print product. It requires much more attention, frequent updates, and acts more like an encyclopedia; if an encyclopedia was updated digitally on an hourly basis.

Misunderstanding the characteristics and attributes of a Membership Website compared to a retail-based Newsletter Website is a common misunderstanding when publishers are launching a paid-access-only website.

Newsletter Website: Newsletter Websites are generally set up for subscribers to a print newsletter with access to back issues in either HTML or PDF form. The site also sells subscriptions to the newsletter.

Membership Website: A Membership Website provides a library of information of a specific topic or cluster of topics of interest, which members pay to access. Its two-pronged business goal is to acquire and retain members. There are two types of Membership Websites. The first is paid for by a donor, the second is paid for by the member.

The Difference Between a Newsletter and Membership Website

A Membership Website is an online medium—a destination—in and of itself. It may be structured as a “pure-play” site, which does not depend on a primary relationship to, or experience with, an online or offline product. Or it may be structured as a “companion” website, which does relate to an online or offline product. Either way, “members” or “subscribers” register and pay to access information, organized library-style by topic of interest, or research information or find answers to a question.

Subscriber-access-only companion sites like Newsletter Websites are more correctly defined as retail sites, where the subscriber can access or download PDF versions of the related publication. The Motley Fool’s six print newsletters, for example, all have related subscriber-access-only Newsletter Websites. They do not meet our definition of a Membership Website, because they are not destinations. Rather, they are companion retail subscription websites, where newsletter subscribers can download PDF versions and non-subscribers can purchase a newsletter subscription.

Unlike a Membership Website, which is content-based, a Newsletter Website is commerce-based with an overall objective of increasing product sales and providing customer service to existing subscribers. A Newsletter Website includes, for example, a customer-service functionality to manage the ongoing relationship with the subscriber; it might also allow the user to download back issues, perhaps for an additional price. Most importantly, the organization of information on a Newsletter Website is by issue date, not topic of interest.

Last fall, one of the largest membership websites decided to make all of it’s content free and abandon the subscription model. That website was NYTimes.com. After opening up their website, they saw a traffic jump almost immediately of over 2.2 million unique visitors to the site.

Following this news, Rupert Murdoch seriously considered leaving his more than one million subscribers behind and opening up WSJ.com for free as well. He didn’t, however he did open up much more of his content and has since seen a 256% increase in unique visitors this year .

Everything you publish can be found somewhere else, plain and simple. Your content may have more integrity and a brand behind it, but on the Internet, people are not looking to pay for information. Google is their online God, and Google will deliver them the most relevant information for free.

This is where publishers come in. Some of us have decades of content that no one is going to see. Putting your content behind a firewall with a subscription fee is not going to get you indexed in Google the same way posting an article on a blog will.

Even with a membership website, your users are still only seeing a small percentage of what you have. Taking it from behind the firewall skyrockets the number of pages you have on your website and gives you supreme visibility in the search engines. Add some conversion architecture to let them sign up for a free email newsletter (that eventually will sell them a product) and that’s where you can make your money if you’re product-driven. If you’re ad-driven, it’s easy. More pages = more page views = more advertising revenue.

Every 21st Century media company MUST use the Internet to:

• Offer users many products on many platforms. Recognize the Internet as a place to recycle, reuse, and republish information in many different formats to save on material costs, maximize customer satisfaction, and increase revenue.

• Offer users a free, robust online content experience. Tons of valuable, fresh content will keep users returning to the site(s) again and again, allowing a publisher more opportunity to cross-sell them into other product platforms.

• Offer users a personalized marketing experience. A publisher’s website or network of websites should become a digital marketing machine and act as the basis for the publisher’s entire online strategy.

People are always going to find the same type of information on the Internet as you are offering to them. The key is to make sure it’s your site where they find it.

A Membership Website is an online information product. It is a gated, content-based site, which requires registration and payment in order to view the content (or most of the content) that has been placed behind a firewall. Similar to subscriber-supported print magazines or newsletters, membership sites are considered user-supported—although some carry advertising.

Membership Websites compare to a book, an encyclopedia, or a library, but one that is online, frequently updated, and available 24/7.

Building a Membership Website associated with a magazine, newsletter, or book series always requires a great deal of forethought and evaluation, because the model doesn’t work for every publisher. Success involves much more than simply having an existing archive of issues and articles.

There are what we consider five “deadly” mistakes that have become all too familiar when we evaluate less-than-successful Membership Websites. We call them “deadly” mistakes, because any one of them can cause a Membership Website to flounder. By taking note of these common mistakes, publishers can determine—before investing valuable time and money on the project—whether a Membership Website should be part of their online publishing strategy.

MEMBERSHIP WEBSITE MISTAKE #1
Misunderstanding Membership Website information architecture

Invest the time and money required to create a Membership Website with user friendly, topic based information architecture.

MEMBERSHIP WEBSITE MISTAKE #2
Insufficient content for a valuable user experience

Make sure your Membership Website has plenty of content—at launch and in the future.

MEMBERSHIP WEBSITE MISTAKE #3
Disregarding the historical print business model

Only consider a Membership Website when you’ve historically been a circulation or user-driven business model (70 percent or more of your publishing revenue has come from users buying your information products).

MEMBERSHIP WEBSITE MISTAKE #4
Omitting the all-important Internet hub

Make sure you launch an Internet Hub to power your online marketing efforts and use your print publications to drive online traffic—every other source will cost more and make the success of your Membership Website much less likely.

MEMBERSHIP WEBSITE MISTAKE #5
Pricing membership website access by the pound

Price your Membership Website at the same level you would price a print subscription or reference book to maximize your Membership Website revenue and profit.

While a Membership Website can be a profitable addition to a publisher’s online strategy, the decision to launch one must be carefully considered. If the publisher has been sponsor-driven in print, a Membership Website may be a bad idea unless the publisher can come up with some clever way to populate an Internet Hub and a Membership Website.

Membership Websites are relatively expensive to build compared to other website models. Once set up with a good content management system, however, they can become an excellent revenue opportunity for a competent online publisher.

- Continually rebalance mix of paid and free

In 2008, publishers are still debating the balance between free and paid content. Because the concept is so cyclical, it’s important for publishers to continually examine their strategy. Unfortunately, there’s no right answer, there is no best business model.

John Boris, VP Marketing Zagat Survey said they revisit their business model on a quarterly, or sometimes monthly basis. The questions to keep asking are: what’s the traffic looking like on the ad-supported side? What’s the subscription revenue looking like on the membership side? The goal is to continue to test and improve both sides of the business.

- Sell service as well as content

For the premium content you offer online, you must also sell the value of service that you provide. Especially if you have lots of competition – you must think about ways to frame your marketing message. Think about the time and effort you might be saving your customer.

Inman News, a subscription-based real estate publisher, was facing heavy competition from free online news sites. So they went from being a premium news site to becoming a premium social network focused on real estate industry. They made the news portion free and created a social network that has a premium level. Learn more about that case study.

In what way can you create features that best meet the needs of your customers and keep you competitive?

- Exploit your niches

One primary requirement for a paid membership site is to have a very narrow niche – it must be content that your customers can’t find anywhere else. Niches can be very profitable. One of the sessions was presented by TheLadders.com, which is a profitable membership site for the $100K professional looking for the $100K job. Work those niches!

TAKE-AWAY #2: Make 2.0 Work for You

TAKE-AWAY #3: Optimize your marketing mix

TAKE-AWAY #4: Defend against economic downturn

- Find a technology or platform that’s a good fit for you

MarketingSherpa’s Entrepreneur of the Year was Paul Allen, CEO of FamilyLink.com, a venture-backed startup in the genealogy and family space. The company’s genealogy site, WorldVitalRecords.com, provides access to nearly 2 billion family records, has 30,000 paying subscribers and is growing by thousands a month.

Allen spoke about some recent success he’s had in building out a Facebook application called “We’re related”. It’s had more than 3 million installs and nearly 100,000 active users. While his demographic is typically 55+, who are primarily interested in learning about family history, his goal is also to connect living relatives, which is where Facebook came in.

Thanks to the “We’re related” Facebook app, traffic on WorldVitalRecords.com has gone from roughly 500K monthly unique visitors to 1.5 million in less than 2 weeks. And while the conversions he’s gotten from Facebook are only .26%, there are more than 10 million people in that funnel, so it’s certainly worth it for him.

He predicts Facebook could grow to be his #2 sales channel, right behind affiliate marketing, thanks to the reach in new demographics and off-the-charts engagement metrics.

- View 2.0 as a long term strategy

When thinking about social networks, it’s important to look beyond the immediate ROI and consider the potential for viral growth.

- It doesn’t have to be hard

There are ways to take advantage of 2.0 features without spending 6 figures. Adding links to social bookmarking sites is very easy. Another idea is to expand your comments policy – allow users to comment on all of your content, not just some of it. You should think about building communities from your existing platforms. For example, membership websites already provide their users with user names and passwords. Why not take it one step further and allow them to create a sharable profile?

TAKE-AWAY #1: Adapt to changing subscription models

TAKE-AWAY #3: Optimize your marketing mix

TAKE-AWAY #4: Defend against economic downturn