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An Example of A Subscription Based Website
To fully understand the business plans behind subscription based sites, it is best to take a look at some popular websites who have already established themselves in the online world. By looking at these types of sites, you will be able to see how far online subscription content can actually stretch.
Dating Sites (Match.com, eHarmony)
Online dating sites are a newer type of subscription based website. These sites make the majority of their money through monthly, multi-month, and yearly subscribers. Profit for sites like this depends solely on the number of subscribers that the site receives, and the subscribers' commitment to the site. How much do online dating websites actually make? Hard to say, without actual subscriber numbers. Match.com claims that "Every year, hundreds of thousands of people find love through their website". And, Match.com is said to have over 15 million clients in over 240 countries. If these numbers are at all accurate, Match.com is raking in at least $200,000,000 a year... at a price of $30 a month for a subscription.
The cons: Sites like eHarmony and Match spend a tremendous amount of money to advertise for their websites. You have probably seen the television commercials. These sites also spend money to advertise on other websites, which can get just as expensive as TV advertising in some cases. Sites like eHarmony and Match also have to beat out competitors like PlentyOfFish.com. PlentyOfFish is another dating site. However it is completely free to use. PlentyOfFish makes it's money through advertising.
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It is quite clear that subscription based sites make their money by offering a service in exchange for cash. But what determines if a subscription based website will do well or fail? Quality and marketing. A profitable subscriber based website must meet as least some degree of quality and customer satisfaction. Every site will get a couple of bad reviews. But, too many bad reviews can be very harmful to a sites reputation. And in the online world, site reputation means a lot.
If a customer was to visit a restaurant, and receive poor service, there is not a lot that could be done. He or she could tell friends and family about the restaurant. But this is still a limited way of communication.
Online businesses are completely different. Remember, online customers/shoppers/subscribers/etc... choose to use websites for one major reason, because they are convenient. However, obtaining reviews for major websites is convenient as well.
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Start something unique. A business model can only be copied so many times before a niche is full. If you are going into a niche with a lot of competition, try and bring at least one significant element to the table. In a crowded online industry, differentiation can be key.
Consider your competition. What other dating websites can you name off the top of your head, besides eHarmony and Match.com? These websites have already been in existence for several years. More than likely, they also have much more spending power than you as well. This can give them an overwhelming advantage within a niche, which makes it very hard for a starting websites to compete.
Do your research. And do a lot of it, before you give full commitment to a subscription based website.