Opinions on a subscription service for sites

[Zeras]

Last year, I developed a service that provides subscription services to web sites. Basically, it provides the subscription checks, user registration and management, reporting and online real-time billing for web sites. While I realise that some web sites can do this on their own, there are many that cannot or simply do not want to go through the hassle.

I will not be promoting or even mentioning my service here (it's not online anyway). My goal for this thread is simply to discuss the feasibility of such an idea and whether or not web sites and users would be more open to the service now given the current struggles in the advertising (CPM) industry.

After I launched the service last year, I contacted around 50 web sites individually (not spam) about it. Out of all the reponses I received only 2 of them were totally against the idea. However, last summer, advertising was still generating more than enough revenue for most mid-size sites. Most of the emails said the same thing which was something like "The idea is great but I am not sure our users would be open to it right now. Perhaps in a few months." As a result, I took the service off-line with hopes of relaunching it at a later time. I did this because once I started accepting subscriptions through the service, I would have been obligated to provide the service to the sites the users subscribed to for the duration of their subscription.

Well, that was then and this is now. Now, more and more web sites at least have a "premium content" area that is subscription only. While not thrilled about it, users are slowly accepting that sites must generate revenue to remain online and growing.

A while back there was a discussion about subscription networks as opposed to single-site subscriptions. In theory, this idea sounds great. However, it is filled with flaws. The first version of my service was built around the subscription network concept. I, like many of you, felt this was something users wanted and in fact, users do like the idea. The problem comes from the web sites. When I contacted a few sites about it, I received two distinct responses. They either loved the idea completely or hated it completely. I will explain why below.

When a user subscribes to a subscription network (for example, a sports network containing 10 different web sites), the subscription fees are usually divided three ways. The site where the user subscribe gets a percentage, the subscription network pool gets a percentage and the subscription service gets a percentage. Now, this concept works great if all of the web sites generate close to the same number of subscribers. However, that will not be the case and therein lies the problem. Web sites that feel their content will generate very few subscribers absolutely love the idea. They can sit back and collect network revenue even if they never get a single subscriber. Web sites that feel their content will generate a lot of subscribers absolutely hate the idea because they feel most of their money will be going to sites that contribute very little if anything to the network pool.

Another problem is that you cannot drop a site once they have one or more subscribers. In fact, you really should not drop a site at all considering that a user may subscribe to the network on Site A because he is also gaining access to Site B and Site C. If you drop Site B, the subscribers may get upset and either want a refund or perform a chargeback. Other issues that pop-up are when a subscription network has one or two sites that represent 80% or more of the subscribers. Those sites will probably realise they can generate more revenue with single site subscriptions than being part of the network.

Now, there are complicated revenue sharing formulas you could implement. You could weigh the revenue sharing based on a percentage of the total active subscribers each web site has. However, even this idea is flawed because a user may visit Site A and see the subscription service logo/information, then later visit Site B and decide to subscribe on that site. They subscribed because of Site A and Site B but only Site B gets credit. Another scenario is that a user may see the subscription information on Site A and go check out several of the sites in the subscription network. They may wind up actually subscribing through the tenth site they visit even though they started with Site A and they spend most of their time on that site.

While my service currently only provides single-site subscription services, I will be adding the ability to implement subscription networks before I relaunch my service. The subscription network will simply be a single site account with sub-site tracking. It will be controlled by the primary web site and it will be up to the primary site to divide the revenue among the other sites in their subscription network. My service will provide detailed real-time reporting so each site will be able to check their revenue statistics at any time assuming the primary site gives them access.

The reason I have written this book here is to get opinions and/or suggestions about the idea of a subscription service. I realise that most of you are probably more than capable of integrating your own site subscription service but I would appreciate any advice you could provide.

Since this forum is about generating revenue on the Internet and that is was subscriptions do, I felt it was relevant to post this here.

Thanks,
Zeras