Q: You’re selling subscriptions to financial newsletters via your StockStudy.com and Newsletterz.com sites. These are both sites that other Web sites can brand as parts of their own through your private labeling program. How did that come about and how’s it working?

Phillips: About 60 newsletters contribute articles on daily or weekly basis to the StockStudy site. I began building it three years ago because I wanted to track my portfolio my way and at the time there were only two portfolio managers online. Now there are thousands out there today. I realized the key wasn’t building the best financial site because every time you finished programming, somebody would come out with something better. It was no win situation.

But I kept on getting calls from other companies saying ‘We’d like to have our own stock site.’ So that’s where co-branding idea came where our users users believe they are on other web sites. We realized we didn’t need to be #1 destination site on web. We’d just have to have a whole bunch of affiliates running our branded sites as their own and we’d grow. Now we have over 600 partners branding this site as their own, more than of whom 100 are radio stations. And I expect that to grow.

I added in the publications to enhance the content of the site about 18 months ago. People can view back issues, trial different offers, etc. When we invented Newsletterz.com, we were just having fun, we didn’t even know about newsletters.com!

Q: Are newsletter subscription sales a big part of your revenue stream?

Phillips: No, in fact I have doubts about the Newsletters.com business plan. We know how many newsletter subs we are selling….

You see, a lot of people who subscribe to these financial newsletters are offline type people. That’s why TheStreet.com is having trouble selling their content. We’re not expecting a lot of sales from this. We just think it’s great added content and it gives exposure to publishers without much work.

We’re forwarding subscription enquiries on to the publishers and don’t charge them for that. Full subscription sales are transmitted directly to publisher. Our system reroutes them directly to their subscription departments.

We do make a small amount from trial sales. We allow people to pick 10 newsletters for a month or five for three months for $14.95-$34.95. The newsletter writers fulfill these trials for free so we make a little money. But really the whole point of the deals for us was just to get content for the site.

Q: What do you mean when you say financial newsletter subscribers are offline people?

Phillips: There are definitely two types of people. Your number of people on the Web who are willing to pay for subscriptions is much lower because there’s so much free information on the web. So, I think for time being we’re seeing less and less people willing to pay.

However I think many people don’t realize it’s a true possibility that markets won’t do well in future. As soon as they wake up one day and see they lost 30-40% of their money they may be willing to pay again! Every online brokerage firm these days is pushing you to be your own boss, be your own trader. When the market goes the other way, a lot of people may call their broker again -- but I could be wrong.

In general if you’re marketing online for a print version, you’ll do better via direct mail. If you’re selling online recommendations you’d better give them something online.

Q: Ok, if you’re not making money from selling subscriptions, what is your business model?

Phillips: It’s predominantly based on advertising. Sponsors with joint ventures brand out the site, plus their sales online brokers sell across this. We sell very targeted advertising across a very large network of sites. Some of our radio station partners sell sponsorship packages with on-air ads included.

The radio stations aren’t just excited about running the site, it’s also a very sticky application for them. Imagine if they can pull 10,000 listeners to check their portfolios with their branded financial section. People will visit frequently. Every station wants one!

Q: When you acquired ClickSmart, you began to sell a large quantity of books online through their relationships with big consumer magazine publishers. How does this work?

Phillips: ClickSmart works with more than 200 magazine publishers. For example, when Readers Digest print version has book review it says ‘you can visit us online to buy this book or call this 800# to get a copy now.” ClickSmart powers that for the publishers.

The magazines are excited about it. We have Hearst, Primedia Special Interest, Conde Nast, Childrens Television WorkShop and others under agreement to handle their book reviews or extra ad space, selling books, music and videos. We also have agreements with about 50 television stations.

Q: When that Reader’s Digest reader orders a book through this service, is it fulfilled in Readers Digest packaging and can Reader’s Digest do inserts for cross-sales within the packages?

Phillips: Yes, ClickSmart can handle special fulfillment. You can do your own inserts publicizing subscription specials, renewal offers … anything you want.

Lots of the magazines expressed an interest in having their own book club. With ClickSmart, you pick the books we’ll print the inserts and you can set up your own book club! It’s much easier than setting up your own thing by yourself. We have a full range of a million and a half books to choose from.

Q: You also offer a private-label ISP service. Why would a magazine want to offer their readers ISP services? That seems kinda far fetched.

Phillips: You have to realize, it’s not just about selling things, it’s about making your site stickier. Most offline media companies’ Web sites are hit and miss. Nobody goes back, there’s nothing there. If Readers Digest offered their subscribers ISP services at a low price -- $13.95 a month -- then their homepage becomes a true gateway.

Our partners look at ecommerce as a way to make lots of money, but it really shouldn’t be looked at that way. Imagine, if you can aggregate the same number of site visitors that you have subscribing to your offline magazine, you can make some real money on your Web site from advertisers. But you have to have the traffic to do this.

Say your magazine is called Blue Sky. Your ISP service will be Blue Sky.com -- the entire portal is branded out for you. We’ll handle the billing and customer service. You’ll get a portal, plus you’re the locked in start-up page for your customers. People will start at your home page day after day. We’re charging Blue Sky $13.95 per customer. You can charge whatever you’d like. We have people who charge their customers only $5.95 per month or let their clients have free Internet access because they spend so much money with them!

Q: Who in the media industry are you looking to partner with next?

Phillips: One of our weakest areas that we haven’t targeted but we have to target is newspapers. We’re doing a bigger push into these groups.

We’ve seen a lot of newspapers do deals where there’s a branded front end that then sends their traffic to go shop at a bunch of affiliate sites. As soon as you hit ‘Books’ it opens another browser and sends you at Amazon. We’re not an affiliate middleman that way. You can simply use our 800#s and our privately labeled ecommerce site section to fulfill your orders.

Q: What percent of your orders from mentions in print publications ceom through the 800 number versus the Web site?

Phillips: Currently in the magazine environment, the fulfillment tends to go 80% phone and 20% Web. However for radio (we’ve done specials for stations) it runs much closer to 50/50%. So it depends on the medium.

Q: And it’s changing?

Phillips: And it’s changing.