Making Payers of Slate's Online Subscribers
Melissa Bane, senior analyst at The Yankee Group, Boston, said the best Slate can expect is a 50 percent drop in readership when the subscription walls go up on March 9.
"They've got a pretty tough challenge ahead of them," she said.
For starters, Slate doesn't have the offline brand recognition or the clear pocketbook value of The Wall Street Journal. And Slate doesn't have a readership that prefers anonymity like pornography consumers. Bane also said that except during Monica Lewinsky-type breaking stories, it's difficult to believe that Slate's readers crave daily updates like sports and entertainment readers or the 20,000 or so investors who pay for TheStreet.com.
Still, Slate's prospecting offer of $19.95 for a year's subscription and a choice of premiums -- a Slate logo umbrella or a Microsoft Encarta Virtual Globe -- seems like a bargain aimed more at testing to see whether readers will pay at all rather than an exercise in profit-building.
Colene McBeth, associate publisher of Slate, Redmond, WA, said Microsoft is committed for the long haul.
"To be honest, we haven't been given a deadline to make this work," she said.
Slate hopes to attract 20,000 subscribers during the next several months, McBeth said, adding that it will take "at least a couple hundred thousand subscribers to break even."
"I think it's important to note that it takes at least five years for most print publications to make money," she said.
Slate has begun by e-marketing to an undisclosed number of people who have registered for various services on the site since its launch in June 1996, including 25,000 who get the publication delivered to their e-mail boxes. Slate also is pitching heavily on its home page.
Beyond converting existing readers, Slate's plans are open, said circulation manager Linda Leste.
"We're going to be doing a lot of testing and learning," she said, "so we'll probably try just about every type of media out there."
Brendan Amyot, chief operating officer of TheStreet.com (www.thestreet.com), New York, recommends prospecting online where transactions are already taking place.
"Those users are predisposed to pulling out their credit cards and making a purchase online," he said.
The Street.com began an estimated $10 million prospecting effort in January, hoping to garner between 75,000 and 100,000 paid subscribers by year's end. The campaign includes banners on sites such as Hoover's Online, Wall Street Journal Interactive and Excite; television spots on ESPN and CNBC; print ads in Wired and Smart Money magazines, The Wall Street Journal and Investors Business Daily; and various financial radio spots.
Amyot said TheStreet.com offers prospects a two-week free trial and is converting between 15 percent and 20 percent of them to payers. Site access, plus a daily bulletin, costs $9.95 a month, or $99.95 a year. Site access without the daily bulletin costs $6.95 a month, or $69.95 a year.
Amyot thinks paid subscriptions are the future of online publishing.
"Writers cost money," he said. "People are tired of sifting through tons of aggregated content to find value. When they find it, I think they'll pay for it."
Tom Baker, business director of Wall Street Journal Interactive (www.wsj.com), said people hold online publications to a higher standard than print publications.
"People see the Web as a place where you can get everything you want to know on a subject," he said. "Sites that can pull everything together so people feel they have more control over the information are probably the ones that are going to be able to charge."
Wall Street Journal Interactive claims about 170,000 paid subscribers, two-thirds of whom do not subscribe to the print edition. A year's subscription costs $49, or $29 for those who also subscribe to the print edition.
Regina Brady, leader of interactive services at Acxiom/Direct Media Inc., Greenwich, CT, said Slate's ace in the hole is Microsoft.
"Just think of the wealth of database information that Microsoft has," she said. "If we can start by assuming that the average Slate subscriber is a 45-year-old male who drives a foreign car and likes wine, then we can do some overlays [identify matching demographics in the Microsoft database using other lists] and target them offline."
Leste said "mining Microsoft's database is the next step."