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I am starting a web-based service business and don

I am starting a communications business on the internet. Some of my competitors who provide a similar (but not exact) service use paid ad sponsorship, while others use paid subscriptions from registered users. Is there a trend toward one type of payment method over another? Is one type usually more profitable and easier to maintain?
Lena West answered November 5, 2008
URL: http://www.entrepreneur.com/answer/221721

Congratulations on taking the time to examine your business model and future revenue streams.

If you take into account that many of the companies that did not survive the dotcom bust were companies with advertising-only revenue models, your choice might become more clear.

You also might want to consider a mix--it really isn't an either/or situation.

Another thing you might want to consider if you adopted an advertising-only business model is whether that business model is scalable. How much? For how long? What would happen to your business in a recession or tough economic times?

Be sure to ask the same questions about a subscription model.

That is not to say that advertising-only business models are wrong; they're just more difficult to master, leverage and maintain.

Good luck,

Lena

Lena West is the CEO and Chief Strategist of xynoMedia Technology, a New York-based firm that helps high-growth companies leverage the power of social media, blogs, podcasts and online communities.