CHALLENGE

Inside Washington Publishers was founded in 1980 during the early golden days of the print newsletter publishing industry. By 1996, it became apparent the Internet was going to change the face of that industry, but no one was sure exactly how.

Like most print publishers of the day, Inside Washington's biggest concern was how to take advantage of the Internet without cannibalizing the steady print profits they counted on. The team's first idea was to use the Internet to save money on fulfillment by urging print subscribers to switch to email and Web delivery. They tested it carefully on one single newsletter, Inside California EPA, where they could save about $70 in fulfillment costs per subscriber per year.

The results were dramatic -- dramatically bad. Inside Washington President and Founder Alan Sosenko says, "We got almost no takers. We got a lot of calls as soon as people heard they wouldn't get the mailed copy, they didn't want e-only. The lesson was people in our world want mailed copies. It's palpable, you hold it in your hand."

Sosenko's team went back to the drawing board. They knew there was a way to profit online, they just had to figure it out.

CAMPAIGN

First the team met, brainstormed, crunched numbers, and then met, brainstormed and crunched numbers some more. Ultimately they came up with an unusual solution....

Inside Washington created a series of new Web sites that were companions to the print publication. Aside from the standard database of back issues, the sites also include thousands of government and legal documents related to their niche topic.

Then Inside Washington offered access to these sites as an add-on product to a print subscription. For, say $300, a print subscriber could get single-person access to the site. For $800 they could share their site access with three other people at their office location. For a little more, they could add on more seats. But -- and this is important -- nobody could buy Web access outright. Each Web seat would still be tied to a print subscription.

After testing the concept successfully with InsideTrade.com in 1997, and InsideDefense.com in 1999, the team rolled out InsideEPA.com last Fall. Here's how the conversion worked:

Step 1) Starting in late August 2000, Inside Washington's marketing department inserted flyers into print Inside EPA newsletter issues offering a free trial to the upcoming InsideEPA.com site. Readers had to register to get a user name and password for their trial.

Step 2) When the site was ready, the team also emailed current site license customers inviting them to try the new site.

Step 3) The site was opened for free, trial users from October 1- December 15. During that time, users were encouraged to invite their co-workers to also register for free access. (But nobody could share access with the same name and password.)

Step 4) On November 21, the marketers emailed their first conversion promotion to trials. It was the first time a specific price for the service was mentioned. Sosenko recalls, "People kicked and screamed. Online delivery should be free!" But he knew people would pay up if the information were valuable enough. So Inside Washington remained firm on price.

Step 5) December 15th, Inside Washington shut down all free trials and only allowed access to buyers. From that point on anyone who wanted a trial would have to pay $100 for two weeks.

Step 6) Marketing, customer service and sales began the job of converting trials into buyers, using outbound phone calls, emailed messages and printed inserts.



RESULTS

So far a total of 250, more than 30% of InsideEPA.com's free trials, have converted to paid buyers at price points ranging from $300 to "negotiated site licenses of very substantial dollars." As a whole, Inside Washington Publishers now makes about 15% of its revenue online -- all of which are add-on dollars to its regular print subscriptions.

Most print subscribers start their Web add-on purchase at the lowest single-seat level. From that point on the service sells itself, as people, who are used to being able to pass print newsletters around the office, want to share the Web site with co-workers as well. Sosenko says, "They start at $300 and go up to $800, and more, in an area where we probably wouldn't have gotten additional revenue to begin with. It's not likely each group of four would have bought a second print subscription."

However, at larger organizations Inside Washington has sold literally hundreds of additional print subscriptions as a direct offshoot of the Web project, because the subscriptions themselves are the key to getting more Web seats. For example, the Inside Trade newsletter has gained approximately 150 new print subscribers at $1000 a piece as a direct result of InsideTrade.com. As Sosenko says, "That's $150,000 a year we wouldn't have had."

The company is also seeing higher renewal rates as a result of the value buyers get from the sites. Inside Trade's print-only subscribers currently renew at an average of 83%, which is already something to celebrate. Its print + web subscribers are renewing at 91% -- which is practically unheard of.

This success has come despite the fact that, as Sosenko says, "People squawk all the time about our prices."

He sums up, "I believe we've only begun to scratch the surface of the opportunity. I've been in this business for 40 years and the Internet really is the most forceful, most impactful, the biggest thing that's happened in the publishing business. It's a whole new world."

Tech Note: Inside Washington uses NetTracker technology from Sane.com to track all site usage. Two full-time customer service reps handle the online accounts, and some of their time is spent monitoring subscriber access. If they see something that looks a bit fishy, they contact the customer in a friendly manner to see what's up. If they see something that looks very fishy, then cut the customer's access off completely until the account can be renegotiated for more seats. Usually the customer buckles rapidly.