Alternative Online Business Models
Amid some my recent rants against AdBlock Plus, which magically makes advertising on Web sites disappear, were some suggestions about Web sites perhaps being forced to look at alternative business models. Given advertising is widely seen as the most viable business model right now, there doesn’t seem to be much interest or traction when it comes to other ways of making money.
Nevertheless, let’s take a look at alternative business models, their prospects and who’s using them.
Site Subscriptions: Some Web sites offer advertising-free versions if you’re willing to pay a monthly and/or annual fee. Daily Kos, for example, charges $4/month, $40/year or $100 for a life-time subscription. By far, the Wall St. Journal has enjoyed the most success in selling online subscriptions
Sponsorships: For people who don’t want to pay a subscription, you make them watch a short commercial before they’re allowed access to a Web site. Salon.com used to use this tool but it appears they have abandoned it.
Premium Access: You provide a bunch of information for free but charge to access other parts of the Web site. The New York Times, for example, offers access to columnists, editorials, online classified and archives if you subscribe to Times Select for $7.95/month or $49.95/year. Despite having 228,000 subscribers, there has been speculation recently that the NYT could bring down the walled garden.
Archives: You can free access to everything published for the last week or month but you have to pay a fee to read any stories that appeared earlier. Traditionally, the sale of archived information has been a high-profit operations for many major newspapers.
Donations: Based on the idea that people will voluntarily feel the need to support Web sites they enjoy reading, some companies such as Daily Kos have Paypal-powered donation boxes just in case. This tool is also used by software developers who offer their products for free but solicit donations to support their efforts. Truth be told, I don’t think too many people are that altruistic to make a donation.
To be honest, all of these models are nice complements to advertising but not standalone business models for anyone trying to generate serious revenue online. The bottom line - at least for now - is that advertising is the major pillar support the Web’s economic infrastructure, which is why AdBlock and other ad-blocking software is so controversial. My sense is online publishers such as the NYT will start to take ad-blocking more seriously as their off-line advertising revenue continues to decline.
More: Notes from the Digital Frontier has an interesting column on how one of its writers, Amanda, interacts with ads in different mediums.
Interesting quote:
“We don’t want to go down a route that would seem adversarial at all. People are free to ignore ads, and they often do that, but when you have a third party blocking those ads, that’s the real problem.”
- Mike Zaneis, vice president of public policy for the Interactive Advertising Bureau.
September 13th, 2007 at 1:53 pm
Rouxbe has a very interesting variation on the sponsorship model:
http://blog.rouxbe.com/what-happens-after-the-30-day-trial/
September 13th, 2007 at 2:20 pm
With the exception of the WSJ and porn sites, consumers are not willing to pay for content - period. Fee supported content sites is not a mainstream successful business model. Consumers want good content, are not willing to pay for it, but will suffer through ads to get to it.
September 13th, 2007 at 2:21 pm
Interesting model. It certainly gives the user plenty of options. It’s this kind of creativity that many Web sites will have explore.
July 29th, 2008 at 1:32 pm
[...] Sources There are a lot of great articles, posts on the web about business models. One site in particular, Business Models on the Web by Michael Rappa was a great resource. Quite a few of the models listed above are from Michael Rappa’s site. Other Notables: The Long Tail Of Business Models and Alternative Online Business Models. [...]