The Internet has given entrepreneurs a tremendous advantage: Never before have we had at our fingertips access to so much information that can help us run our businesses more successfully.
What's especially great is that a good portion of that information is free. So, you wouldn’t expect entrepreneurs to pay for it, but Nathan Chan, the brilliant mind behind Foundr magazine (and an Entrepreneur.com contributor), has created just such a site. Foundr operates on a successful paid-subscription model that drives revenue from high-quality interviews with entrepreneurs like Richard Branson, Seth Godin and others.
Do paid subscription models still have a place in the digital age? The creator of Foundr magazine can help answer that question, which is why I sat down with Chan for a behind-the-scenes look at his company’s success.
The "Foundr" magazine monetization strategy
Chan started Foundr in 2012 upon recognizing that, while there were (still are) countless publishers on the market providing advice to entrepreneurs, nearly all of them offered content geared toward those who had already started a business.
Chan wanted to fill the void he saw with a site offering resources for new entrepreneurs -- people trying to build their businesses from the ground up. Even better, he gathered his information from reputable sources, using interviews with famous entrepreneurs like Tim Ferriss, author of The Four Hour Work Week, and Richard Branson, founder of the Virgin Group.
Since Foundr magazine offered valuable, exclusive information, Nathan was able to charge a premium to his subscribers, driving over 300,000 paid subscribers in just ten months.
Why the paid subscription model may not be the future of "Foundr" magazine
Nathan’s paid subscription model has worked well for him so far, enabling him to replace his full-time job with his subscription revenue after only six months. That said, he’s now thinking about offering his content for free. Here’s why:
- In his mind, free content makes a greater impact on the world.
- Foundr magazine could expand its reach much further and potentially earn hundreds of thousands of subscribers with free content, quickly outpacing its paid subscription revenue.
- The subscription revenue he’s currently generating pales in comparison to the value of the leads that the magazine generates.
While Chan hasn’t yet committed to making such a change, it’s something he’s seriously considering -- and something all those involved in the production of paid content should consider.
"Foundr" proves the value of good content.
Good content offers tremendous value for its viewers. Quite simply, people are looking for solutions. While they can find a lot of great content online for free, not all of it solves the problems they face, making them often willing to pay for higher-quality information.
Entrepreneurs considering creating a paid subscription model should follow the systems and strategies Chan has in place:
- Conduct interviews with distinguished experts. Nathan focused his attention on experts like Richard Branson and Barbara Corcoran, who are widely known. People hold the views of knowledgeable people in higher regard.
- Speak with your readers to understand their problems and offer actionable tips to overcome them.
- Consistently deliver great content to position your brand as a leading publication.
- Recognize the return on social media exposure. Chan has described many cases where entrepreneurs benefit from hiring someone to share content. In particular, he argues that while entrepreneurs in the early stages of their ventures may be able to get traction on social media on their own, they’ll also likely reach a point where they need to consider investing in paid shares.
While it is possible to create a publication that relies on subscription revenues, the bar for the quality of your content needs to be set very high. Nobody’s going to pay for information that can be found through a simple Google search.
Is premium content the way to go?
At first, Chan said, he used a paid subscription model for his online magazine because that seemed like a simple way to monetize it. He made a six-figure income from this approach, though those earnings likely stemmed more from the quality of his content than his monetization model.
There’s a reason that he’s considering changing to a different monetization strategy, however, and that’s the fact that he stands to potentially make a much higher ROI from free subscribers, either by selling his own products or participating in partnership programs with other merchants who are trying to reach new business owners.
Offering free content may be the best approach for Chan to reach more of his target audience, but that doesn’t mean it's the right fit for every publisher. For example, consumer review sites like Consumer Reports can’t accept advertising, because they have to remain impartial. If your business serves a similar function, consider carefully how valuable an impartial impression is to your audience’s view of your company and its content.
Clearly, you must take into account the needs of your own subscribers when developing a monetization strategy. At the end of the day, it’s worth noting that paid subscriptions are still a viable option for many online publications, but that they’re not the right fit for all.
To see our full conversation, check out the video below:
Or, to share your opinion on the use of premium versus free content, leave a comment below with your position: