Subscription Model

 Subscription Model

Description: Sites using the subscription model require users to pay a fee (generally monthly or yearly) to access a product or service.

Examples of the Subscription Model: Label 2.0, Scrooge Strategy, Netflix

I talked to Greg Rollett, the founder of Label 2.0, a marketing school for musicians that sells its services for a monthly membership fee. The service teaches musicians how to use online tools to help further their careers, find more fans and navigate the business of music.

1. Why did you decide to use a subscription based model over a one-off sales model?
When Eric [Hebert] and I decided to work together I was actually presenting him with an offer to promote a product that I had created and he was working on something similar. Instead of offering a one-off sale for both products and fighting for the same niche (our sites have nearly identical target audience and traffic). We decided that coming together and creating a long term relationship with the people we were helping would be better for our business in the long run. We have enough content and features that every month will be an exciting new journey. The business model was pretty simple. We took the features that we liked the best and least from popular internet marketing strategies for membership sites, continuity programs, etc as well as different ways to run the membership software and found what was going to be the easiest for us to use and easiest for our members to digest

2. How did you prepare to have a successful launch to your service?
Luckily Eric and I had been building up trust and a user base for years through our blogs, Twitter, live speaking events and client work. We have both worked on high profile projects and that helped us secure a great position in the market. We both posted teaser blog posts and within a few days we had over a 100 musicians testing it out and providing feedback for our public launch. We expect 300-500 paying members within the first 2 weeks.

3. What are your price-points and how are you maintaining a personal touch with your subscribers?
Our pricing model is high for the industry we are in and we know that. At around $50 a month and $400 a year we have priced ourselves to only work with those that really want to see an impact in their careers. If you look at the bigger picture and see that for consulting we typically charge $100 an hour, you are getting a great deal, but losing that one-on-one feeling. That is why we are having bi-monthly conference calls, webinars, walk-throughs, Q&A’s and really doing our best to ensure that every musician gets their bang for their buck.

4. What are the biggest obstacles in the subscription-based model?

1. Price – Musicians are used to free. MySpace is free, YouTube is free, there is free information everywhere and musicians would rather spend $500 on a new guitar pedal than invest $50 into something that can find them hundreds of fans with which they can begin to make a living on.

2. Stereotypes – Musicians do not think of themselves as marketers. They feel like that is what a manager, record label or promoter is supposed to do. We are helping them turn that stereotype upside down by teaching them how to market themselves to create better relationships with their fans which is going to help their business in the long haul.

3. Monthly membership sites have a high attrition rate – The reason is after their 1st or second time they login, they forget about it and never come back. We are doing everything that we can to ensure that there is always something going on, from new lessons to trainings to calls and webinars to activity in the forums to leveraging the community to make everyone stronger.