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Subscriptions are the New Black

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Re: Subscriptions are the New Black

#41

Post by patio11 »

jacquesm wrote: post #5

Subscriptions have been 'the new black' and a mainstay of my income since 2000 or so, but subscriptions do not lend themselves to all kinds of content. Advertising has always been a way to make otherwise losing propositions profitable, and as long as there are companies marketing products there will be advertising. It would be wasteful not to tap in to those dollars. As Patio11 elsewhere already pointed out adsense i…

Advertising has always been a way to make otherwise losing propositions profitable

Or you could, you know, be the guy paying for the AdWords. I sell a product to consumers over the Internet. Stop the presses, I know. I have many competitors who do free versions essentially the same product, monetized by ads. My ads, since if Google polled the entire world saying "Hey who of you would pay cash money to speak to an elementary school English teacher currently making Reading Rainbow bingo cards?" I'd be up in the front row shouting "OOH OOH PICK ME!"

Since I know what Google charges me and I can estimate what Google keeps, I can ballpark estimate the CPMs for their sites. Its in the $2 a month range. The effective CPM for my site is more than twenty times higher than that.

Ads also have a pernicious effect on your product design. A core skill for B2C products is optimizing them so that the user gets through the workflow successfully. We optimize for success, because successful users pay us money. If you have CPC ads on your site, you have to optimize for failure: the ad has to be more enticing than your application/content or you don't get paid.

Granted, there are some audiences who don't pay money for anything (why hello, students) and some applications whose users will not pay money for them (why hello, URL shorteners/social networkers/anything starting with the letters Tw), but you don't have to make these. There is literally infinite need for solutions to problems, even in B2C (C stands for consumer, i.e., one who buys products), that you could deliver profitably. And then spend a portion of those profits tossing nickels to sites without business sense so you can steal their users and charge them dollars.

Re: Subscriptions are the New Black

#42

Post by patio11 »

davemc500hats wrote: post #29
jhancock wrote: post #27

Earlier quoted context omitted.

I understand what he's implying. His case is thin. PayPal is huge and can easily afford the customer service required by noobs forgetting their password. Can you think of another way to operate such a business? His solution implies that google, yahoo, facebook should be the next PayPal in this regard. OK, so now those organizations have to handle this type of support.

>>PayPal is huge and can easily afford the customer service required by noobs forgetting their password nope, wrong again. ARPUs for PayPal users are probably only around $5-25 per year (excluding the minority of fanatic eBay regulars), and you can easily eat up all of that cost or more in telephone customer support.

To elaborate on Dave's point here, the ARPU for Paypal is low because Paypal's revenue is just a cut of the transaction value that they facilitate. For example, I pay them about ~$1.19 or so out of every $30 purchase.

US-based customer services reps cannot complete a phone call for less than $7 fully loaded. You really, realllllly do not want to have a CS infrastructure taking multiple calls to resolve Mrs. Smith's inability to successfully use her computer when Mrs. Smith is probably going to be worth less than a buck fifty to you and will likely need more handholding next time, too.

Re: Subscriptions are the New Black

#44

Post by cheriot »

Tim_M wrote: post #43

> In 2015 the default login & payment method(s) on the web will be facebook Connect, Google Gmail, or Apple iTunes. Why not openid?

Regular users would need to:

a) care about managing their online identity

b) remember a valid URI

What do you think the odds are?

Re: Subscriptions are the New Black

#45

Post by callmeed »

davemc500hats wrote: post #38
callmeed wrote: post #8

It sure took the author a long time to get to his main points–I almost gave up. Maybe reading Williams Zinsser should be the new black ...

sorry, i'm sure with less insanity and a better editor i could have gotten there much quicker... but between sleepless redeye blogging and my usual retardedness, "i didn't have time to write a short letter" my apologies, and thanks for hanging in there if you got to the end. my condolences if you didn't

No problem—and BTW I wouldn't have said anything if I didn't think your main points were worth reading (they were).

Re: Subscriptions are the New Black

#46

Post by jhancock »

patio11 wrote: post #42
davemc500hats wrote: post #29

Earlier quoted context omitted.

>>PayPal is huge and can easily afford the customer service required by noobs forgetting their password nope, wrong again. ARPUs for PayPal users are probably only around $5-25 per year (excluding the minority of fanatic eBay regulars), and you can easily eat up all of that cost or more in telephone customer support.

To elaborate on Dave's point here, the ARPU for Paypal is low because Paypal's revenue is just a cut of the transaction value that they facilitate. For example, I pay them about ~$1.19 or so out of every $30 purchase. US-based customer services reps cannot complete a phone call for less than $7 fully loaded. You really, realllllly do not want to have a CS infrastructure taking multiple calls to resolve Mrs. Smith's i…

I understand the math. Every business since the world's first has prioritized customer support relative to the value of the customer; this is hardly a secret exclusive to PayPal. Dave's proposition that other sites may alleviate some of these costs seen by PayPal is interesting, but unproven.

A more likely case than relying on "maybe users will remember their passwords better" is that Facebook could capture a larger part of transactions (say 30% as App Store does) which enables them to better cover support and fraud.

Re: Subscriptions are the New Black

#47

Post by jacquesm »

patio11 wrote: post #41
jacquesm wrote: post #5

Subscriptions have been 'the new black' and a mainstay of my income since 2000 or so, but subscriptions do not lend themselves to all kinds of content. Advertising has always been a way to make otherwise losing propositions profitable, and as long as there are companies marketing products there will be advertising. It would be wasteful not to tap in to those dollars. As Patio11 elsewhere already pointed out adsense i…

Advertising has always been a way to make otherwise losing propositions profitable Or you could, you know, be the guy paying for the AdWords. I sell a product to consumers over the Internet. Stop the presses, I know. I have many competitors who do free versions essentially the same product, monetized by ads. My ads, since if Google polled the entire world saying "Hey who of you would pay cash money to speak to an ele…

> If you have CPC ads on your site, you have to optimize for failure: the ad has to be more enticing than your application/content or you don't get paid.

I've been saying that for years, nobody believes it.

But it is definitely true, if you're a destination site and your clickthrough is lousy then you are in a good spot to do subscriptions. It means your product is better than that ads.

Re: Subscriptions are the New Black

#48

Post by Sukotto »

jacquesm wrote: post #47
patio11 wrote: post #41

Earlier quoted context omitted.

Advertising has always been a way to make otherwise losing propositions profitable Or you could, you know, be the guy paying for the AdWords. I sell a product to consumers over the Internet. Stop the presses, I know. I have many competitors who do free versions essentially the same product, monetized by ads. My ads, since if Google polled the entire world saying "Hey who of you would pay cash money to speak to an ele…

> If you have CPC ads on your site, you have to optimize for failure: the ad has to be more enticing than your application/content or you don't get paid. I've been saying that for years, nobody believes it. But it is definitely true, if you're a destination site and your clickthrough is lousy then you are in a good spot to do subscriptions. It means your product is better than that ads.

   If you have CPC ads on your site, you have to optimize
   for failure: the ad has to be more enticing than your 
  application/content or you don't get paid
If either of you ever come back to this conversation, would you please point me to a detailed description of this point?

I'm having trouble getting my head around it.

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