Part 2: On the Plus side, no ads and small fee

You most recently launched the Plus Edition, a pay subscriber edition of Langalist.com.­ What influenced your decision to offer this?
Earlier, I talked about the origins of the newsletter in a free weekly mailing to a small number of readers. Fast-forward two years: The list had grown to a size where I could no longer afford to publish it out-of-pocket. The operation now requires three high-bandwidth websites and a separate high-bandwidth mailing list host.

So, after much internal debate, I began accepting advertising as a way to defray my escalating publishing costs and to keep from losing my shirt on the deal. With readers clicking on the ads and checking out what the advertisers offer, the newsletter became more or less self-sustaining.

But the mailing list continued to grow, and so did the costs of the infrastructure. My direct, out-of-pocket costs for a twice-a-week newsletter now run to around US$30,000 a year. Last year during the dot-com boom, advertising more than offset that amount.

But with the dot-com bust, ad revenues are way down and I didn't feel comfortable publishing the newsletter and simply hoping that enough people would respond to enough ads to cover my costs. I'm not a big gambler (laughs).

Plus, the advertisers who remained tended to pay their bills very slowly. It's not unheard of to wait three or four months for a payment that's not all that much to begin with.

So, I looked for a way to avoid the uncertainty of ad revenues, simple as that. I needed to at least cover my costs and recoup something for the time and effort I was pouring into the newsletter. Asking readers to contribute a very small amount in direct fees was the obvious step.

(Editor's Note: For an insightful discourse on the current debate of "pay vs. free," see the latest ibizStrategist issue.)

So the Plus edition newsletter is solely supported by subscription revenue?
That's right. The ads were in the free newsletter to generate revenue. If readers were paying for their issues, even just a little, it didn't feel right to also hit them with ads. So I decided the paid-subscription versions of the newsletter would be ad-free. I also offered the newsletter in several flavors (HTML, plain text, and 'digest'), and added extra content to replace the removed ads, and kept the price very low...about a dime an issue, or US$10/yr for almost 100 issues.

Readers liked the deal: Even before I'd published the first issue of the by-subscription newsletter, more than enough readers had signed up to make the new venture worthwhile. And I'm happy to say that more readers are signing up literally every day. Just seven weeks into the paid-subscription model, it's already grown to the point where it could be my sole livelihood, if I wanted or needed it to be. At US$10 per reader, you don't need a huge subscriber base to make a decent living.

Interestingly, the free list also is continuing to grow, so I'm now in the good position of running a large free newsletter (160,000 subs) that's paying its own way, and a by-subscription newsletter that's turning into a very nice business in its own right. And because both newsletters are growing rapidly (about five percent each month), clearly the readers are happy too. That's a win-win!

How did you build your infrastructure to support such a low cost subscription?
I use tools that I can manage on my own. I do the web pages in FrontPage. I minimize the use of labor-intensive site features, using simple Javascripts which I can write myself, for example, for various site automation elements. I farm out the web and list hosting rather than trying to maintain a server or servers here on my own, and that frees up time to produce content and actually run the business.

By carefully choosing these outside services, you also can manage costs. It's not hard to find a list-mailing service that will send out 1,000 copies of your newsletter for a buck or less, for example. Things don't have to be gold-plated to work well.

What about the future of pay subscription based models? Do people feel better if they pay something for good content?
There ain't no such thing as a free lunch. Once people get over the insane "give everything away for free" euphoria of the initial online craze, I think we'll see two major constellations: One of larger publications and sites where TV-like advertising models can work, and smaller publications and sites that are directly supported by readers in some way.

There'll also be a third category: Labor-of-love sites that will remain truly free, or "funded" by volunteer labor. But these will be in the minority, because sites and servers and bandwidth and content costs money, and someone, somewhere has to pay for it. The sites that can't get large-scale advertising, can't interest readers enough to directly support them, and that don't exist as labors of love, will inevitably go away.

Were there some successful examples that helped you take the leap to offer the pay subscriber edition?
It's a little embarrassing to say this, but I winged it. It was a seat of the pants thing. The prevailing thinking is that "people won't pay for content." But some people will pay for some content: Manage that equation carefully, and you've got a viable business.

Finally, can you tell us about the unique aspect of the Plus edition and its donation to charity?
One of the themes of my newsletters is "giving back." Originally, I produced the newsletter entirely out of my own pocket; that was my giving. Readers contributed ideas and information: that was their giving. It was clean, simple, and good.

With the operation growing way beyond that scale, and by adding advertising in the free editions and a cash fee for the paid subscription models, things got murkier: The "giving" was obscured somewhat by commerce.

So I built in a kind of safety valve: I said that if the paid- subscription edition turned a profit, then a portion of those profits would be donated to registered and legitimate charities around the world, helping the less fortunate.

Readers responded well, and the paid-subscription newsletter reached its initial financial goal very fast. So, I immediately contracted, in the subscribers' collective name, for a year's support of a three year old child in Haiti through the services of Save The Children.

Several weeks later, the paid subscriptions had grown to the point where I was able to make another contribution in the name of all the subscribers, this time to the Red Cross for earthquake relief in India. Soon, I'll be able to make a third contribution, I'm not sure where it will go yet.

But this way, even though the newsletter is a commercial operation, I'm hoping we can help retain the sense of giving back, and of personal connectedness.

Thanks for sharing so much goodwill with our readers!