CHALLENGE

When the online content syndication market tanked
three years ago, uclick, the net's largest distributor of comics
and puzzles, began looking for alternate revenue streams.

No one thought subscriptions were worth testing.

COO Chris Pizey explains, "We thought, 'Oh my god, nobody's going
to pay.' Then the ad market started to sink too, and we thought,
'What the hell.'"

uclick aggregates some pretty impressive brand names, such as
Doonesbury and Garfield. However, if uclick slammed a you-must-
pay barrier down on the content, it would always be available at
no cost on lots of other Web sites.

How do you get people to pay for something they can get at no
cost with a few mouse clicks?

"We had pretty low expectations," Pizey admits.

CAMPAIGN

Because their expectations were so low, uclick started
in December 2001 with a low-profile test. Instead of trying to
sell famous name cartoons immediately, they focused on the puzzle
end of the business.

"The gut feeling was it was more saleable as a subscription
offering. It had a lot of good offline counterparts, there are
a number of puzzle magazines and print newsletters," says Pizey.

Realizing that puzzle content is fairly evergreen, uclick began
by creating a vast archived library of past items that had run on
the syndicated network. It included more than 7,000 crosswords,
card games, jigsaws, jumbles, etc. from more than 70 sources.

Then they gave it a brand name to appeal to the true puzzle
fanatic, "The Puzzle Society".

The puzzle fan demographic is mostly 35+ and highly educated, so
uclick tested a slightly higher-than-average annual pricing model
for a consumer site, of $29.95 per year/$3.95 month-to-month.

Along with access to the site, subscribers would also get a
quarterly PDF newsletter (they are sent an announcement via email
and must click through to download the PDF). Pizey hoped this
would keep site loyalty high by serving as a reminder of the
great content it contained.

Because expectations were so low, uclick kept marketing costs
minimal. They sent an announcement to members of their house
list from a no-cost Web site they had been running for years.

Then Pizey began lobbying all Web sites uclick syndicated puzzles
to in order to get them to market the subscription offer as well.

"Most people have pretty good puzzle traffic and they don't want
to lose it. So we said, why not just market the paid product to
your free users and convert a small percent of the real
enthusiasts?"

Each site would continue to get the new puzzles at their
regular price that their visitors could view at no cost. However,
in addition, they could generate revenues by offering their
puzzle-page visitors a co-branded subscription to the Society.

Partner sites could even sell ads on the subscription site
pageviews their visitors generated, as long as the ads were not
too interruptive (no Flash, no audio, no pops, etc.).

After watching Puzzle Society results for six months last year,
the uclick team decided to go ahead and build a subscription
offering for their comics archives as well.

"We have to come up a strategy for comics that was very different
from puzzles," says Pizey. The ability to play around in a past
comics library just was not hugely appealing to most consumers.

"We've been serving comics on the Web for years, so we knew in
the past the ways to make money from comics online was to force
visitors to take more clicks to get to them, because you wanted
them to see ads. You get in the way of them reading their
favorite comic a bit. They hate that!"

uclick's new subscription site, My Comics Page, was designed
and promoted as a service. They were not selling the content
itself so much as they were selling really easy access to it.

"The subscription is based on the ability to build your comics
page the way you want it, in the order you want it, not the way
a newspaper editor designed it. You can view your page online or
we'll email it to you."

After reviewing expected server costs, uclick set pricing as low
as they possibly could, at $9.95 per year, to compensate for the
fact that it is so easy to get the content at no cost elsewhere.

At that price, it was not worth doing a month-to-month offer, so
instead uclick tested an upsell: Offering a printed copy of a
Calvin & Hobbes collection book published by a sister company for
an additional $5.00 to "cover shipping and handling." (The book
alone sells for $12.95 in stores.)

Fulfillment is decidedly low-tech for now. "Every Tuesday
everybody here stuffs books into envelopes and prints off labels
and sends them out."

Marketing the service was easier than the Puzzle Society because
uclick already had a couple of million unique visitors per month
to its original no-cost comics site at ucomics.com. They kept
the no-cost site going, but added promotions for My Comics Page,
and reduced the amount of no-cost content to just 30-days of
archives.

uComics also had a permission email list of about 600,000 names.
These were visitors who had requested that up to 10 different
comics of their choice be emailed to them daily at no cost.

Pizey made a radical change for this, while sending email is
pretty cheap, it is not cheap enough. He had alerts sent to
the list over a six-week period telling everyone they would lose
their service unless they re-subscribed to their choice of just
one single comic per day at no cost, or an unlimited number of
comics from the paid service.

"We weren't scared to purge email addresses. It was making so
little money. It was a fair gamble."

My Comics Page launched in September 2002. Pizey had a few
affiliates marketing offers as well, but decided not to ramp up
co-marketing partners until he saw how well the site did.



RESULTS

More than 10,000 people switched to the paid My Comics Page offer immediately in September, and more join daily. The
combined total of paids from both projects is now "a little over
25,000," says Pizey. Not too shabby for test project that even
he had little faith in initially.

Encouraged by these results, they have invested in a new back-end
system to manage paid accounts. They are revamping both sites this
summer to increase conversions; and, they are proactively reaching
out to a wide variety of marketing partners.

Subscriptions are currently about 30% of uclick's total revenues.
Pizey expects that percent to grow rapidly because syndication
revenues are still not remotely a high growth area.

More data:

- The average newspaper partner converts 1-2% of unique puzzle
page visitors to buyers. However, Pizey notes that they could do
better if they focused some marketing effort on it.

"It's frustrating. The problem is most of these sites are not
good promoters. There's a lot of room for improvement. We really
have to hold hands. One of the best sites is The Daily News
because they're such a promotion machine."

- 60-70% of Puzzle Society members log in daily to play (an
astonishingly high figure which bodes well for renewals).

- However, just 25% log in to read the PDF Quarterly even though
it's very well written.

- After price testing, Pizey lowered the Society's price to
$19.95 per year, but left the $3.95 month-to-month where it was.

- 25% take the month-to-month option, and the average lifetime of
a month-to-month is about five months. Pizey is now working on
tactics to convert more of these to annuals once they start.

- Roughly a quarter of My Comics Page subscribers take the higher
$14.95 option for the book plus membership. Next Pizey is going
to test offering a choice of books.

- About 700-800 people per day still sign up for the no-cost
single comic email offer at ucomics.com. Of these, Pizey
ultimately converts a stunningly high 7% to paid memberships,
proving that paid offers to newbies can convert better than
offers to your old list.

- Of the 600,000 no-cost email subscribers who were emailed that
"register again or lose your service" note over six weeks late
last summer, 450,000 returned to the site to join again.

- Online publicity works wonders. One mention on SlashDot about
My Comics Page when the service added Bloom County wound up
starting a big discussion thread. "We picked up a couple of
thousand subscribers just from that."

In the end, why should the online publishing world get excited
about a paid subscription test that is generated under half a
million in sales?

Pizey answers, "This is not an overnight thing. It's going to
take several years to build a revenue stream that probably anyone
would pay attention to. That's just the nature of subscriptions. They take a while to build those numbers. But, the whole
thing is an annuity. And the income bump that first year of
renewals is really nice."

http://www.upuzzles.com
http://www.mycomicspage.com
http://www.ucomics.com