Getting People to Pay: Sub-Based Web Sites

Folio: The Magazine for Magazine Management, Dec 1, 2000 by Jane E. Zarem

COMPELLING CONTENT THAT'S UNAVAILABLE ANYWHERE ELSE HAS ENTICED 500,000 PAID SUBSCRIBERS TO THE CONSUMER REPORTS WEB SITE, AND 65,000 TO PLAYBOY. IT'S A FORMULA, SAY THE CREATORS, THAT OTHER MAGAZINES CAN FOLLOW.

It's not often that Consumer Reports and Playboy are placed in the same category. Yet these two magazines--equally as popular as they are diverse--are among the very few that can boast successful subscriber-based, magazine-branded Web sites.

Both titles have been involved in online initiatives since the early days. Consumer Reports began in 1978, providing content to pioneers such as Viewtron, Prodigy and Dialog online services. Playboy's first site appeared in August 1994. Both magazines launched their current versions (www.ConsumerReports.org and www.playboy.com), which include the subscriber-only areas, in the second half of 1997. And both sites are currently experiencing significant subscriber growth and earning meaningful revenue for their respective publishers.

"Consumer Reports Online is probably one of the largest and fastest-growing subscription-based magazine sites on the Web today," says its vice president and general manager John Sateja. "We're rapidly approaching 500,000 paid subscribers--which amounts to about 50 percent growth against last year." That compares to 4.2 million paid subscribers to the print magazine.

"We've been quite successful in terms of translating our already successful print subscription business model onto the Web," Sateja adds. "And I believe the reason is that we provide useful and unique information--unbiased product evaluations, ratings and objective reliability information--for which people are willing to pay."

Playboy.com's president Lawrence Lux echoes that reasoning. "The content must be compelling," he says. "On that, you overlay proprietary information that people can't get anywhere else--and that's how you get a successful subscription-based Web business going."

Playboy.com's subscription-based area, called "Cyber Club," is showing "amazing growth, especially recently," says Lux. In October, the number of paid subscribers was nudging the 65,000 mark, up from 40,000 in January. That compares with a domestic subscriber base of 3.2 million for the print magazine and 15 million readers worldwide. So there's still plenty of room for growth.

Cyber Club members are willing to pay a premium to access Playboy.com's enhanced content. They pay $59.95 annually, $17.95 quarterly, or $6.95 per month. This compares to less than $15 for an annual subscription to the print magazine. A recent subscriber analysis showed that response to the three online terms is about equal, which would indicate an estimated annual circulation revenue of about $2 million attributable to Cyber Club's 65,000 subscribers.

But Playboy.com doesn't depend on circulation revenue alone. It sells advertising on the free portion of its site and generates e-commerce revenue, as well. "It's a good mix," says Lux. "We're not solely dependent on one revenue stream, and that's healthy for the business."

In contrast, Consumer Reports--to maintain its editorial integrity and credibility--takes no advertising, either in its print magazine or on its Web site.

Nevertheless, its content is so powerful that subscribers are willing to pay $24 a year, about the same as a subscription to the print magazine, or $3.95 per month to access the data online.

Consumers Union, parent of Consumer Reports, is a nonprofit organization. "We have 50 research labs, a 300-acre auto test track, and a staff of 500 employees--all funded through subscriptions since the organization was founded. And we intend to continue to do that online," Sateja promises.

So far, so good. The first two years of the online operation have been profitable, and Sateja expects it to bring in around $15 million in revenue this year. "Our analysis indicates that about 20 percent of our online subscribers are also subscribers to the magazine," he notes, "but online we're attracting new subscribers with a slightly different demographic--more women and younger people."

Both sites include substantial free-access areas, as well as paid. Playboy.com features themed content areas, commentary, interactive chats with Playmates or lifestyle advisers, and other branded events and information. Consumer Reports Online posts its current monthly issue online and makes critical information, such as product safety or recall notices, available in its free area.

"Insider"' access is tempting

The mission of Playboy.com's Cyber Club is to enhance the user's Playboy lifestyle by offering insider access to special content. "A lot of material that's generated for pictorials and stories just doesn't end up in print," says Lux, "because the magazine has size and space limitations. But it's still compelling content. So we put that in the Cyber Club."

A good example of just how compelling that can be is Cyber Club's recent experience posting about 50 outtakes of ex-TV bride ("Who Wants to Marry a Multi-Millionaire?") and recent cover girl Darva Conger. When those shots appeared on the site, bolstered by a flood of publicity, that week's average daily unique viewership spiked a whopping 124.8 percent from the week before.