Question

Topic: E-Marketing

Building An Online Paid Membership Community

Posted by Anonymous on 3/24/2009 at 2:44 PM ET 250 Points
Many online sites (Facebook, MySpace, Yahoo, Twitter, many more) are free to sign up and give you space to network with others. In my experience, this is a poor business model; where's the profit or even operating expenses coming from? The answer has been advertising, but the conversion rate is abysmal. The other question I've already posted which this is connected with can be found under "Taglines/Names" as "New Spiritual Portal. The core concept is to create a portal which serves the spiritual community on a low-cost, but not free, basis. How viable is this concept? I have researched it and there doesn't seem to be anything quite like it and a growing need to weed out the many offers of goods and services under the category of 'spiritual'. I'm looking for some advice at this early stage; next, I will be putting together a business and marketing plan to obtain potential partners, both for the business and on the financial side. Answerers of this question may be asked to participate in upcoming phases of this plan, if interested.
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  • Posted by Inbox_Interactive on 3/24/2009 at 3:22 PM Accepted
    Facebook: worth about $15 billion

    MySpace: sold for $580 million in 2005

    Yahoo: market cap $19 billion, despite being down more than 50% from its peak

    Twitter: no certain numbers, but some say around $100 million, give or take

    Are you sure you want to stand behind the comment that these companies have a poor business model?

  • Posted on 3/24/2009 at 3:44 PM Member
    do you have a connection to heaven
  • Posted by michael on 3/24/2009 at 4:13 PM Accepted
    The fact that they all are working means that each is missing something. Or that people have too much time on their hands.

    You don't have to prove their lack of business sense to make your business viable. You just have to reach your market better than they can.

    "They" created groups within their models to reach those segments.

    Point is...the water's fine. Come on in.

    Michael
  • Posted on 3/24/2009 at 4:18 PM Author
    Maybe I misspoke about 'poor business model'...sure, there are plenty of BIG players out there getting plenty of VC for their brand...but these are the exceptions, not the rule. Eventually, they will need to show some sort of profit to maintain this status. I've been around long enough to see the rise...and fall...of others who had high value in the marketplace but could sustain their business model. However, I'm looking for assistance and advice about starting a new community based on membership.
  • Posted on 3/24/2009 at 6:09 PM Accepted
    It's unlikely that our assessment of the opportunity for or viability of your business concept will really be helpful. What you need is some research that essentially asks that question of your primary target audience.

    You could probably structure a simple concept test and conduct an online survey to see how people react, what their likely purchase rate would be, etc. The biggest problem I see is finding respondents who are in your target audience ... but that's telling you something:

    How would you find your target audience if you had the business up and running? How would the right people learn about the site? Where would you advertise/promote it?

    Don't presume that "if you build it they will come." That's been the downfall of many new businesses. You'll need to invest in awareness-building campaigns to get the word out. If you can figure out where and how you'll do that, then you can use those same vehicles to recruit the participants in your survey.
  • Posted by Jay Hamilton-Roth on 3/25/2009 at 9:29 AM Accepted
    Since you claim that this is a new model, you'll need to build the community first. Unless you already have a strong networked community, you'll need to let people try out your services for free to understand the benefit (and to build critical mass).

    If you haven't already, you might want to look at: www.selfgrowth.com
  • Posted by saul.dobney on 3/31/2009 at 11:12 AM Accepted
    I think what you are after is what a lot of people are trying to work out (and have been trying to work out for the last 10 years) from business directories to newspapers among others.

    Unfortunately just paying to be a member isn't a great offer unless the member gets something really good at the end. In particular why would people pay for what you offer, when they can get it free somewhere else?

    Most of the business models that seem to be working are around the exchange of valued goods - eg gambling, music, photos, software, adult materials, e-commerce, travel, dating and privileged access to high quality information. The exchange part adds the value and is where the site can take a cut.

    Generic discussion, friends, membership, recommendations and even newspaper copy don't have enough deep value, so no-one signs up. But then critical mass doesn't work because no-one expects to pay.

    Can you guarantee (money-based) a level of quality in what is on your site and in the access to resources you will provide?
  • Posted on 4/5/2009 at 11:04 PM Author
    Thanks again to this community for all its thoughtful responses! I will be formulating my strategy and may have more questions to seek help with in the near future.
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