Website subscriptions: Wave of the future or bad idea?

from WinCustomize Forums
The Internet is changing and in some ways it's for the better and some ways it's for the worse. If you're like me, you have this nightmare scenario where the net becomes a massive nickle and diming excercise where every site is demanding money from you when they used to be free. I pay $40+ per month for my net connection, now I'm expected to pay a bunch of money for the websites I visit that used to be free?

What I predict we'll eventually see are metaservices in which users subscribe to "web content" for $9.95 per month. They get to pick 20 sites that the metaservice has agreements with to be subscribers to. So on the good news side, I don't think we're going to see a scenario where users are going to be paying $50 per month to access sites. The bad news is that I think the days of the free net are going away unless some other mechanism can be found to pay for the cost of websites. Advertising doesn't work very well (regular TV model). The alternative that's proven successful is subscriptions.

One of the things I've seen from many sites is that they start taking away features and then asking for considerable amounts of money in exchange for what they used to get for free. This is problematic because it really poisons the user base. I mean really, how can you go from being a free site to asking for $10 per month? Or how about this, how can you go from being a free site to suddenly taking away half the features of the site to those who don't pay? I know that really irks me and makes me less inclined to subscribe to a site. I want to subscribe to sites to help them. I might be inclined to subscribe to sites if they offer additional goodies for me. But I don't want to feel like I'm forced to subscribe.

I do think that subscriptiosn are the wave of the future. I just think that sites need to be careful about how they go about them. The amount they charge should be based on how much money the site needs per month / how many people they hope to subscribe.

Let's use WinCustomize as an example:

Most sites don't give away financial data but we're pretty open about things around here. WinCustomize costs about $150,000 per year. It would cost dramatically more if it weren't for the volunteers who moderate the site. Add another $10,000 per year in misc costs and $10,000 as a "savings account" for future expansion and you're at $180,000 at what the site needs to generate each year to be an independent viable entity. That's actually amazingly cheap. Consider all those dot-coms out there that burned through millions per month and had websites not nearly as popular as this one. When Pets.com went down, they had fewer registered users than WinCustomize has today and vastly last traffic. Yet they went through hundreds of millions of dollars (while for us, $1 million in venture capital would last FIVE years). Anyway, bottom line, $15,000 per month in costs.

Next, how many people should a site hope to subscribe? What percentage? This is a real tough one because it is tough to measure the likelyhood of people subscribing. This website gets over 35,000 unique visitors per day. That's why it takes the equivalent of 14 T1's to handle the traffic. There is little information on these people.
Let's use April's data though. In April, this site got about 1.2 million visitors. Of those visitors, around 14,000 of them visited the site over 100 times (over 3 times per day). So in my view, those people would be the ones most likely to subscribe. Most people only visit a site one time per month, it's "the regulars" that have to be the focus. So what percentage of that 14,000 who use the site on a constant basis should the site hope to make subscribers? And remember, it's not 14,000 different subscribers per month. In January through April, there were 65,000 unique people who visited the site over 100 times. So you have to be careful about thinking that you only need $15,000 to be handled by 14,000 people because that's only one month.

For math purposes, I'm going to extrapolate out the data and say that during the course of a year, there are about 100,000 unique people who during various parts of the year are heavy users. 100,000 hard core regulars during the course of the year.

So if you need $180,000 then how many of the 100,000 people do you need to pay $20? You need 9,000 subscriptions which means nearly 10% of the regulars would have to become subscribers. You see the problem? Not gonna happen. No way. A better goal would be 3% of regulars but that's only 3,000 X $20 which is only a third needed. It won't even pay the bandwidth. Big sites like Gamespot recognize this. This is why they start getting into punitive systems. But can it really work? If you get too punitive, people just won't visit.

A possible solution is to focus more on special features that become quickly apparent to more casual users. Then instead of having to focus on taht 15,000 hard core users, you can target the 500,000 people each year who visit the site on a daily basis during various parts of the year. 2% of them is 10,000 people and voila, you're in better shape. The challenge then lies in creating features that are apparent to all users but don't clutter up the site or frustrate people. That's the challenge we face here at WinCustomize. Right now, WinCustomize is financed by Stardock which means it's viable as long as programs like WindowBlinds and Object Desktop do well. But I think most users would be more comfortable if the site were able to sustain itself.

What's your take on all this? What do you think needs to happen? How do you think things will progress?
16,372 views 26 replies
Reply #1 from WinCustomize Forums Top
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Reply #2 from WinCustomize Forums Top
Did someone say "Free Lunch", ahhh well, as long as you stay below that magic 20 bucks per month my wife won''t kill me...MUCH But seriously is there ever going to be a Winter and Spring CD available?

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Reply #3 from WinCustomize Forums Top
Is it possible that sites like SkinBase or LOS are paying proportional amounts of money? What you exactly pay for $15,000 per month? This amount it looks unreal to me. I am just interesting to know more about it
Reply #4 from WinCustomize Forums Top
WinCustomize uses >10X the bandwidth of those sites so the costs are >10X as much. Costs grow more than linearly on websites as well since additional hardware, overhead, and IT costs have to get figured in. If you can keep your site <1.5 megabits you can put it on a cable modem or on a shared bandwidth setup. The most popular downloads on Skinbase may have 2000 to 3000 downloads total in the site''s history. A popular skin here may get that in a day.

Another issue is that those sites are 100% volunteer. WinCustomize is not. Virtually everyone is a volutneer here but our IT people are not, they''re professionals and are salaried.

These are just a couple small things that show up when your site goes from being hobbiest level (where people are pleased to get hundreds of "hits" per day) to mainstream level where you''re getting tens of thousands of visitors per day.

If you think $15,000 per month is a lot, you''d freak out if you saw the costs of say Gamespot.com which are probably in the MILLIONS per month or the other bigger sites.
Reply #5 from WinCustomize Forums Top
Now I understand...Thank you for your info
Reply #6 from WinCustomize Forums Top
Here''s a funny stat, just your skins alone require the equivalent of 3 fully saturated ISDN lines to host (.4 megabits per second). And that''s just one person.
Reply #7 from WinCustomize Forums Top
I''ve always thought that the scenario you described, metaservices, is inenvitable with regards to the net. It just makes too much sense.

This is akin to paying X number of dollars to your cable TV provider or dish provider for a certain group of channels. The cable TV provider in turn makes deals directly with the channel/content providers. Sure you could probably pay the content providers directly (as I believe some dish users do) but at perhaps a higher cost since you''re not leveraging the enconomy of scale as you would in the metaservices/cable/dish provider scenario.

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Reply #8 from WinCustomize Forums Top
Yea, just wonder who will put something like that together first.
Reply #9 from WinCustomize Forums Top
Any product or service can command a price so long as that product or service is scarce. The services provided by WinCustomize, while very good, are not (relatively) scarce.

WinCustomize provides a convenient central location to find multiple skins for the various applications I use. In this way, it''s a lot like Yahoo''s Financial pages or Foxnews'' news page. However, "convenience" is not a scarce good on the Internet. Skins, tutorials, skinning apps, etc. can be located in innumerable locations around the ''net with only a modicum of effort on the part of the searcher. If WinCustomize folded today, it would be *relatively* easy to find comparable services on other web sites around the world. That''s not to say that WinCustomize doesn''t do it better than most others, it''s just saying that what they provide is not tough to substitute.

On the other hand, if the net ever becomes structured or controlled in such a way that high quality skins and skinning apps are available from only a very few web sites, then those remaining outlets will likely be able to start charging for their time. However, I don''t see this happening any time soon.

My point is this: I would pay for the services I get from WinCustomize if those services were *relatively hard to substitute*. But with LOS, DeskMod, DeviantART, and any of the 50,100 web sites I can search (from a Google of Windowblinds skins), substitution is easy.

As a counter example, I *do* pay for the entire Object Desktop. I have seen no other apps like it that are as easy (for me) to use. I know other desktop mod apps are out there, and I''ve fiddled with some of them, but none are as simple, well built, or conveniently bundled like OD, in my opinion. Plus, Stardock provides near constant updates to their program. That makes their services rarer and tougher to substitute.
Reply #10 from WinCustomize Forums Top
If the load from WC got dumped on the other skinning sites, it''d turn into a game of "who folds first". Either that or they''d just turn on bandwidth limits and a lot of users would get their skins slowly, if at all. DeviantArt is about the only place I would say could take it, and even then . . .
Reply #11 from WinCustomize Forums Top
If a subscription was required for entry, then I would have to require that all skins available should be of the absolute highest quality. All skins would have to be continuously updated to support current versions of the programs for which they were designed. I believe that all skins listed should support all applications listed, suites.

Your site is convenient, well layed out, but not worth subscribing to under the current setup.
Reply #12 from WinCustomize Forums Top
I wouldn''t pay for access for a skin site and I help run one!

While I agree with Hiddenatnight in principle, it''s not an either/or scenario. Value goes up as scarcity increases. You can sell *anything*, it''s just a matter of what percent of people are willing to spend money on what you''re selling. It''s never a 0 people willing OR ALL people willing.

I think subscriptions for popular sites are going to happen. It''s purely a matter of what percentage of people will subscribe to them. A website has to be popular to even attempt subscriptions. And if the website gets too tough on non-subscribers, it''ll lose its popularity (i.e. word of mouth has a tangental value too). So any site that wants to do subscriptions (whether it be this one, Gamespot, or whatever) has to make a delicate balance of not alienating casual users while courting the "regulars".

3 out of 4 visitors to any site are "Casual users". Those users should not even be aware of the benefits of subscriptions. It''s once you have that 25% of "Regulars" that you try to persuade to become a subscriber.

And there may be other ways of generating revenue than subscriptions. For instance, Premium skin packs. Sell them for $8 apiece and perhaps that would do it. Hard to say.

My article was largely focused as a warning to sites considering subscriptions. You can''t say "Oh well my site gets 500,000 visitors per month so if 1% of them subscribe.." because you can only look at the people who visit your site every day (or nearly) over a reasonable period of time and if you look at your web stats, that''s a small percentage.
Reply #13 from WinCustomize Forums Top
I think there are more reasons for a given product to be able to command a specific price besides scarcity. Factors like convenience factor in, as well as quality, brand loyalty, etc. For instance, there are plenty of good quality built cars out there with plush interiors and fine craftmanship, but some people are more willing to spend the extra 10-30,000+ dollars to get a specific brand of vehicle because that branding denotes something to them. I think the model we are talking about with websites is something akin to shareware/donationware scene - you use it as a casual user for free for some limited time, but if you use it more you''re encouraged to make some monitary contribution to help fund it''s development past and future and reward the creators for their effort. As reward for your support you get some extras, better features, faster upgrade path, higher support. I think it''s a worthy model.
Reply #14 from WinCustomize Forums Top
As one who has subscribed to this site, I figured I`d weigh in with a couple of my reasons.

First (and foremost), It`s one way I can help support the site. I know what it costs to provide that kind of bandwidth (even before Brad posted it). Certainly, if WinCustomize went away, there are still other sites, but there are things I get here that I can''t get from DeviantArt(for example) and vice versa. Also, I''m not much of an artist, so me providing skins (or the like) is an unlikely (and probably scary ) proposition. And the fact remains that any popular site will soon succumb to either the need to pay for the site one way or the other, or go under and disappear.

Second, if the subscription were merely to access what I`ve already had access to, I would also not subscribe. Thing is, providing additional value is a valid model for a pay system. And ads just don''t cut it, both in terms of return, and in terms of what I''m willing to put up with. The vast majority of advertisements are ugly and invasive, and would have to crawl up from the muck for an eon or so just to improve to the point where they were only brain numbingly stupid. I''d rather lob a few bucks at a subscription.

Given that the subscription is stated to include extra features, etc., that aren''t available otherwise, I think it is valuable to me to pay for it. When my subscription expires in a year, I may feel differently about it, but on the other hand, I may be perfectly satisfied with it.

Enjoy
Reply #15 from WinCustomize Forums Top
Please don''t skin me alive for a dissenting view. I have been coming here for a long time, even if you don''t know me by my silly handle. I like this site and most of the people here like Frogboy.

First of all, Wincustomize is mainly a showcase for Stardock skins that only work with Stardock apps. When Skinz and Deskmod went under, Stardock had to do something in order that skins for their apps became available, thus Wincustomize was born. To pretend that Stardock is paying $15,000 a month out of the goodness of their hearts would be insincere.

Stardock makes some very good and unique skinning programs, there''s no doubt about that. They pretty well have a monopoly on desktop skinning, there is no real competition. I believe the people of Stardock should be payed well for their hard work. I''m not one of those that expect everything on the ''net to remain free forever.

But how much are the skinners making? Besides very few, the vast majority of the skinners out there are getting zilch for dozens (or more)of hours of hard work. There are thousands of skins here made for the free use by anyone. Should they be sold now like pay per view?

My point is this: Stardock is considering (and implementing)charging money for webspace to hold work (that they get for free) that goes with programs (which are sold on a subscription basis). Shouldn''t the skinners get paid by Stardock too?

Stardock Programs = $
Stardock Yearly Subscriptions = $
(Proposed)Wincustomize Subscriptions = $
Skinners Paid = 0

Isn''t $15,000 per month just the cost of doing business?

Please don''t hate me for asking.
Reply #16 from WinCustomize Forums Top
There is a point I would like to make to Citizen Chimpy Pimpy, The fact is this, if I were to create skins, I would want others to use them, I could create my own site, and sell them and make money, or I can have a site I can go to and upload things for free, at someone else''s expense, there are many sites that offer uploading, and storage on the web for your computer programs, but they are expensive and they do charge.

I think maybe in the future we can have a marketplace for skinners, who can offer premium skin suites at a low cost, and they could buy space to sell, just like the outdoor marketplaces, that sell your self-created arts and crafts.

But, until then, I think that we as users, should help support the site we enjoy, we have been spoiled so long, that we cannot see beyond our own pocketbooks. What is sad is that many people will pay hundreds of dollars a year to access pornography, and other illicit sites, but to help pay for something worthwhile? 19.95 a year is a real bargain. I belong to 3 sites, Realone I pay 9.95 per month, for exclusive entertainment. They have over 400,000 subscribers. I use Intertainer.com for 7.95 per month they have tons of free stuff, TV, Games and Drama and Pay per view movies, and also Bootlegsports.com for 3.50 per month...all these sites are successful and making money because they are not free....but they offer greater flexibility and user interaction.

Maybe there is a better way to pay for this site, maybe skinnesr can pay 19.95 per year to be able to upload and use the marketplace services I suggested to create premium skins for a package price. The citizens can pay 2.50 per month or 25.00 per year to access and purchase everything from this site. 2.50 per month is nothing. Of course hopefully skinners can still create non-premium skins etc.

I do not know how this can work, but as I see it, they are saving money by not be charged an uplink fee, and that is my point the previous scenerio actually exists on other sites. You can purchase your own web space, or you can pay someone else. But, we need to support this site, I will tell you that other then my Bootleg sports sites, I have never seen a more interactive site, and a site where our opinions are important enough to be heard, that certainly is worth the price of admission.

By subscribing we can take ownership of this site for ourselves...and have a greater say in what is happening, subscriptions also force an owner into keeping the site updated, and fresh, so to keep the subscriptions going year to year, the power of the subscription is important, because it allows us a voice, all I have to do is unscubscribe. Personally I cannot wait for my next payday to come around which is just a week away, so that I can purchase a subscription myself, I have seen the offering and the skin browser it is really cool....as a single dad it might be a little spendy right now, but I will find the cash.

Anway that is one man''s opinion. By the way, nobody will hate you for your opinion at winscustomize, afterall, that is what this site is about....thanks again.
Reply #17 from WinCustomize Forums Top
Chimpy Pimpy:

The thing to realize is that sites like WinCustomize or any skin site doesn''t have to host the skins. And it''s the hosting that is where the bulk of the costs come from.

For example: When a skin author uploads a skin, it could ask them to provide a link to where the file is located. We don''t want to do that since it would likely bog down other sites.

Incidentally, most of the sections here are not for Stardock apps.
Reply #18 from WinCustomize Forums Top
I think it is laughable for people to imply that this or any other skin site is doing us skinners a favor for hosting our skins. I don''t feel like doing the math tonight, but I would estimate that all skins combined require less than 3 MB of space. Naturally that''s not taking into account the bandwidth to download them. I know very few skinners who would lose any sleep over a drop in downloads. I also know very few who actually have the fantasy that they will make money from skinning. There is some money to be made for a few individuals but I doubt it''s easy for even Pixtudio to make money, and they are aguably the best skinners in the world.
Reply #19 from WinCustomize Forums Top
that''s all my skins <3 MB
Reply #20 from WinCustomize Forums Top
My last two Litestep skins would equal almost 3 MB. It depends on what you''re skinning. One reason I subscribed was because Wincustomize did come to the rescue when ls.net and skinz.org went down. I''ve been here pretty much from the beginning (UserID=34) and I appreciate what they''re doing, and I didn''t have to subscribe

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Reply #21 from WinCustomize Forums Top
Similarly, I don''t see how skin authors think that they are doing the site a favor by allowing the site to HOST the skins. A site can link to skins with impunity as is.

Let''s say Skinner X gets ticked off and deletes their skin off of site Y. Site Y could just link to the skin that is on site Z and still get the same banefit without the bandwidth. I would consider such a practice rude but it''s not illegal (other sites do that to WinCustomize ALL the time now and Talisman does this to all the sites).

Bandwidth isn''t free. Someone has to pay for it. My view is that the people who use the bandwidth should pay for it. But I''m just crazy that way.
Reply #22 from WinCustomize Forums Top
OK, a few comments:

$15,000 per month is enormous and Wincustomize should strive to try to add a little bit of revenues to help pay the bills. But as it is now, this is Stardock''s site. They run it, control it, add or remove the features they want, and pay the bill. I''m fine with it: Stardock pays, Stardock controls. It''s only fair. But, if the goal of Wincustomize should ever be to become completely independant financially, then Stardock would lose all influence, or all the right to have any influence on this site...
Is that what Stardock would wish? I don''t think so.

I''m thinking aloud here. How many Object Desktop subscription does $15,000/month represent? 300. I''m wondering if Wincustomize brings 300 new subscription every month? Considering the 35,000 unique visitors, it''s not an impossible thought.

Anyway. Back to the topic. In reality, my belief is that Stardock indeed gets some subscriptions out of this site, but not enough to cover all the expenses, therefore the need for Wincustomize to find other avenues of income. Here is an idea of how subscriptions could work:
1) everybody can access this site and downlaod a whole bunch of stuff for free, up to a maximum of 50 Megs (that''s a lot of skins!)
2) Everybody can get unlimited downloads if they contribute to the site. Contributions can be financial (20$ year) of non-financial (make skins and upload them here)
Sounds fair to me and everybody gains from it.


Now, a note about the general idea of subscriptions on the Internet: I will never ever ever ever pay for any content on the Internet. I may contribute, do some work for free to help out, etc. But otherwise, no way. Unless maybe I win the lotery.

Only exception: sites providing content that I already pay for. For example movies, records, books... When the day comes where I can rent my movies, buy my music and my books online, then for sure I''ll pay. But it''s be more a pay-per-download thing than a subscription.
Reply #23 from WinCustomize Forums Top
Paxx: The stats are pretty clear. People come to this site FROM Stardock not vice versa.

People assume we have to host skins. We don''t.

The only way this site won''t have Stardock influence is if non-Stardock resources are used to make it financially independent.

The skin browser, for instance, is developed by Stardock. The core IT development is done by Stardock. If the site is able to break even via subscriptions, it''s not going to be any more or less influenced by Stardock.

Someone has to call the shots. There has to be someone who has the final say. I''m not sure what exactly you envision. Let''s say deviantART''s picture prints and such were able to make the site financially independent. Does that mean Jark would lose all influence? No. Now, if some third party wanted to offer a huge sum of money in exchange for a say on how the site is, that would be one thing.

As is, users have a great deal of influence on the site. Admins have a lot of say on hwo the site is run. They may not always realize it but they do.
Reply #24 from WinCustomize Forums Top
Another way of looking at it, influence on a given thing is determined by who''s spending the money on that thing.

As long as Stardock is the one spending the $$$ on the site, it''s going to have a preponderance of "influence" regardless of whether the site is able to generate revenue or not.
Reply #25 from WinCustomize Forums Top
Yes, but if Wincustomize pays back to Stardock the money Stardock puts into it, then Stardock really just becomes a provider.

Anyway, thats only theoretically speaking cause it won''t happen.
It would be nice to get that 30% revenue you were talking about.
If the site can bring 5,000$ per month, then I would consider it an achievement in itself.