To Charge or Not to Charge – Considering a Membership Website?

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—,, 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.


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