Actually it's my second month running a membership website but the first month I didn't have a payment option set up yet because I wanted to test everything to make sure there were no bugs, security issues etc. On May 1st was when I launched the Premium part of my website Mixtapes.tv. The business model I used for my membership site is the Fremium model aka the “try it before you buy it” model. In this day and age plus the type of audience I'm selling to, this model works great. I believe my product was good enough so I didn't have any issues with offering it for free and then later offering a upgrade to unlock more features.
A little bit about my membership site.
It's called Mixtapes.tv, it's a site where DJs, Artists, and A&Rs can upload and share there mixtapes for free. Users are able to sign up and download these mixtapes for free as well. The key to this site is knowing what parts should be free and what parts shouldn't be. For example users can sign up and download 5 mixtapes a month as zip files but a premium member can download unlimited mixtapes, another feature is premium members can download individual tracks but free users can't. The method here is that you have to make the free service good enough for them to want to upgrade to the premium service. For example a user can use the site forever as free member to listen and download unlimited mixtapes. This creates user retention and will eventually lead to upgrades.
The money is in the re bill.
Don't know how many affiliate marketers are reading reading my blog but if you've ever promoted ringtone offers, you must have wondered how some of these companies are able to pay affiliates $16 to $30 per lead on a $9.90 offer, that's because within 3 months they've regained 100% return on there investment. Most users will not cancel there subscription because it automatically gets added to there cell phone bill and they forget about it, and since it's only $9.90 they don't really pay attention to the charge. This is why low subscription pricing is so valuable. Jeremy from ShoeMoney.com touched on something similar when talking about Gym memberships and how it's the perfect business.
My First Month Running A Membership Website
The Premium part of my site went live on May 1st, and the first 7 days no one upgraded, LOL. I was like oh shit no one likes the site but then on May 8th my first premium membership came in. I was so excited even though it was only $5.99, it feels really good when someone wants to buy something you are selling. After that first sale the upgrades started coming in with a average of 2 sign ups per day. So far I've had one disgruntle customer which was not my fault but as a result of a server side issue between PayPal and Wishlist Member.
Results after 30 days
I know it's not Yacht money but that's not my aim at this point, right now all I'm doing is focusing on making the service the best it can be. If I achieve that then I won't have to worry about making money because the product will sell itself. Now remember these members are now in a billing cycle and this month an estimated 30 more Premium upgrades will occur which will double the earnings the following month, the real money will be made months down the line with the compounded revenue generated through subscribers singing up month after month. So far over 8,000 members have signed up 32 of which are premium members, keep in mind that 60% of those members signed up the 1st month before the premium option was available.
Not to mention I really haven't dialed this thing in yet, I'm still testing. I haven't implemented follow up via email marketing, special offers, advertising, affiliate program or anything else for that matter. 90% of the traffic going to the site right now is coming from my other websites HipHopMusicDotCom.com. and a little from ComeWatchMe.com, once the traffic from search engines starts to really pick up in a couple months I'll start to look more like the competition, who has a whopping 20,000 premium members, so I know the market is very healthy.
Don't treat a membership website like a regular eccommerce website, it's not a sprint it's a marathon.You think of it that way and you'll see the real profits in the long run, I'm going to be writing a post soon about how to set up a membership site and the right tools to use to get it done.