I recently got into a discussion about Angie's List, and why I don't advertise my DJ company there. Angie's list is kind of like an online phone book where you can find local services. It's not that I think brides don't go there to find wedding DJs, maybe some do. It's just that I don't like the fact that they charge their users a subscription fee in order to see the reviews. I simply don't believe in their business model, so I don't support them. The world is moving on to new and exciting business models, and Angie's List is slowing the progress of humanity! Okay, maybe that's taking it too far, but I still wish Angie would go away.
Charging the user is the complete opposite of what should be happening. That's how they tried to make the Internet work in the early 2000's. Newspapers and other content providers tried to charge a subscription fee in order to view their content. This seemed intuitive to the newspaper companies because that's how their paper model worked. You pay, they deliver content. But to apply this concept to an online business completely ignores the key advantage of the Internet, it's a two way street! You can be much more successful by creating an online community of content consumers, then charge businesses to engage the community you've built. The key word is engagement.
Many of the major success stories in recent years have been based on the community business model. Ever heard of a little company called Google? How popular do you think they would be if they were subscription based? After all, they spend a lot of money creating cloud based applications and search algorithms. Don't they deserve a subscription fee from you? What about Facebook? They've really created something of value for you, shouldn't you pay for it? Of course not!
In order to support their subscription model, Angie's List bombards all the major cities with very expensive TV and radio ads. Not a day goes by that I don't see or hear at least a few of their ads. Yet, the best estimate of their revenue is somewhere between $20 and $50 million. That can't possibly cover all the commercials they buy.
To put that in perspective, let's look at a modern business model, Craig's List. I think everyone knows that Craig's List is a website for free classified ads. These days, many of us have probably browsed the help wanted section on Craig's List. On Craig's List, you can post a classified ad for free, and the world can read it for free. So how do they make their money? While most classified ads are free on Craig's List, they charge to post help wanted ads, and adult services ads. I don't know what a "massage therapist" pays for an ad, but a business can expect to pay from $25 to $75 per job posting, depending on what city the job is listed in. Craig's List is a private company, so their financial info is not readily available. However, several sources, including this article in the New York Times estimate Craig's List's revenue to be around $100 million. Have you ever seen a Craig's List commercial? No, and you probably never will. Angie's list spends millions upon millions in advertising to build a subscription base, yet they do half as well as a company that doesn't need to advertise. Out with the old, I say.