February 4, 2009

Here is a Method That is Helping FT.com Make Millions of Dollars

by Praveen Rajan

FT.com Earns Up to $28 million US Dollars Every Month From 10% of Their Registered Users

How does a publishing business like the Financial Times (FT.com) make millions of dollars online?

financial-times-homepage

Simple: they give away free content.

The Silicon Alley Insider recently published excerpts of an interview with FT.com managing director Rob Grimshaw.

Here’s how it works:

  • Everyone gets access to 3 articles per month
  • Register with the site for free and you can read 10 articles per month
  • Pay $3.44 per week and you get access to everything online, except for the FT’s famed LEX column
  • Pay $5.75 per week and you get EVERYTHING, plus access to the FT from your mobile

financial-times-pricing

People Will Pay for Specialized Content

Here’s how FT.com makes money online:

  • 62 million individuals visited FT.com in 2008, about 5 million every month
  • 20,000 new users register for the FREE service every week, and provide their personal details (opportunity to upsell). In the last 18 months, 1 million readers registered with FT.com
  • 100,000 paying subscribers — implying that FT.com makes between $16 million to $28 million a year from subscriptions

And the clincher?

Because registering requires readers share lots of personal information, Rob says the FT.com can charge advertisers $40 to $60 CPMs.

Remember the 80/20 rule?

About 10% of FT.com’s registered users are paying customers. The $28 million that they contribute, is funding the cost to give the service away for free to the remaining 900,000 users.

What Does This Mean To You?

If you’re in a business that specializes in a specific field, then think about how you can “bait” potential subscribers.

Giving away free content is just one way to get customers to sign up and provide some basic details. This gives you the opportunity to upsell premium pricing plans over a course of time.

But FT.com also employed the use of smart pricing variables, exploiting human psychological weaknesses:

  • The jump from 3 articles to 10 articles is significant - why wouldn’t you sign up for the FREE account?
  • Paying $3.44 per week is “cheaper” than paying $13.76 per month ($3.44 x 4)
  • The difference between $3.44 and $5.75 is very small - why wouldn’t you pay a little bit more to access everything?

By the way, FT.com specializes in financial news, not “just” content. So stop telling yourself that this tactic would only work for FT.com or content-driven businesses. It can work for any business that is focused on a specific niche.

Remember: the trick is to “milk” money from a smaller segment of customers that are willing to pay for access to your extended range of premium services. Contrary to popular belief, people are willing to pay for good content.

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