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Old 11-01-2008, 03:45 AM  
Nautilus
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Quote:
Originally Posted by georgiaasphalt View Post
How do you figure? Say you have 20 videos. Your membership is $20/mo. You just sold that video for $1. The more videos you have, the less their individual value.
Because I'm not counting individual values, just the amount of money we get from one customer, and our bottomline.

Quote:
I do hear what you're saying about consumers not having unlimited budgets and I get that. But, why should they get sooooooo much for such a small monthly fee?
Well not necessary they should. Although I'm debating with you about advantages of all included monthly subscriptions, we ourselves are selling extras for the extra price Have been doing it for years, and doing pretty well. We upsell our own sites from member zones, and sell access to our entire network for $84.95. That adds up about 25% to our bottomline. Also I'm thinking about your idea about removing archives and upselling them for yet another extra price. I think that might add yet another 10-20% to our bottomline, if done properly.

Quote:
Loss...not necessarily. How about profit margin? As soon as you implement a subscription model your profit margin decreases and continues to decrease with every new song/movie you add. Sure you hope to offset that by selling more subscriptions, but at some point that growth is going to level off or become minimal. Then what? In the long run the subscription model's profitability declines. I definitely don't see their business model as flawed. Just different and in my opinion, more profitable.
I'm pretty sure they're counting profit margins per individual titles, and happy with what they see. And then they report loss. To me that sounds like something is wrong with their approach to doing business online.

Profitability per title is theory, profitability of your entire company is reality. If they can get 10 million members to their content library at $20, their overall profitability would skyrocket. But they went another route - selling individual titles through third party providers, which is wrong in my opinion. iTunes and the likes should be sources of the additional income, like clips4sales and similar site for us, but main income should come from their own site(s). That's why I think they're making like 20% of what they could online, and report losses. Because they use only additional income sources totally ignoring what should be their main focus.

Quote:
Regardless, the subscription model is probably always going to be the primary model in this industry unless there's some huge issue that causes a change.
I certainly agree with that
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