Today is a good day. Because today is the three year anniversary of Baekdal Plus. Yes, it was three years ago that I decided to do something crazy. I abandoned my old life and became a fulltime writer and analyst.
Not only that, but I did it by asking people to pay for content online. Three years ago, long before newspapers had started doing the same, this was practically unheard of (which quite a lot of people told me at the time).
But today, it's a different story. If we look at the trends and the movement in the world of media, more and more people are experimenting with paid-for content. More are experimenting with the value of content, and it's starting that some of them are even succeeding.
It's hard to even remember how different the world actually was back in 2010. Back then, the simple concept of paying for content was seen as outrageous, and many would turn away before they even had a chance to see what they were paying for.
But today it's different. The conversation has shifted from a question of money to a question of relevance. People still question if something is worth paying for, but back in 2010, people were questioning if they should pay at all.
That's a subtle yet incredibly important difference.
Technically speaking, I'm now cash-flow positive, but just barely. And while the site is growing in subscribers every month, it's happening at a very slow pace. It's still incredibly hard to convince people to pay for something online. And not only to pay, but even to consider paying.
Most of my traffic (89%) comes to the site, sees that it costs money and simply leaves without doing anything else. So we still have a long way to go.
But I have learned so many valuable lessons over the past three years, and since many people are asking me about my site because they want to do the same, I thought I would highlight some of the more important ones.
The biggest mistake I made was to assume that at least part of my traffic was valuable. Before I started Baekdal Plus, I had over one million unique visitors coming to this site. So, if 1% of those subscribed, I would get 10,000 subscribers the first year and make $90,000 per month.
That didn't happen. In fact, after the first three months I only had 29 subscribers in total. That's a conversion rate of 0.0029%. I was in complete shock. With only 29 subscribers, I was earning $260 per month and I was bleeding money fast.
So I started to really look at my traffic, and what became immediately apparent was that the traffic coming to my free articles had almost zero effect on Baekdal Plus. And I learned, the hard way, that traffic isn't traffic.
It all comes down to intent. If people are actively seeking guidance, as in looking for information that they need or help with a difficult question, then they will pay (and become subscribers). Anyone else won't.
After realizing how important this difference was, I started changing my site. And today it's almost exclusively focused on people who seek guidance. The result of this was two things. First, my subscription rate increased, but I also lost 97.2% of my traffic.
The biggest chunk was when I moved Baekdal Design (once an extra section designed to inspire people to innovate) over to 42Concepts. That move alone caused a 75% drop in traffic. But here is the crazy part. It also caused an increase in subscribers.
By taking away 75% of my free traffic, the clearer focus made it easier to convince people about the value of Baekdal Plus.
In other words, freemium doesn't work... at least for my site.
And I have seen this again, and again, and again. Not just on my site, but also on many other sites from other publishers.
It's easy to build traffic. But unless traffic has the right type of intent, it's completely worthless. In fact, after 6 months, none of the previous traffic had any influence on Baekdal Plus. Almost all the people who subscribed after that were people I had no prior contact with.
That's 4 million (absolute) unique visitors, and none of them converted. Instead, all my subscriber growth has come from another group of people. People who had a different and much more specific intent of what they wanted from this site.
Free traffic is basically worthless when it comes to later converting people to subscription based content.
When I started Baekdal Plus, I had made sure that I had enough money in the bank to sustain my existence for about one and a half years. So even if I didn't make any money, I could keep going for 12 months without any problems. And I'm just barely cash-flow positive today, three years later.
Do the math, and you can probably imagine what that is like. Baekdal Plus almost went bankrupt twice, as I used up all my money. If it hadn't been for my consulting business, Baekdal Plus wouldn't be here today.
Today, three years later, it's different. Because today Baekdal Plus is cash-flow positive (again, just barely). So, from now on things are looking up.
But if I hadn't had all the money in the bank when I started, and if I hadn't also worked as a consultant, I wouldn't have been able to make this work.
So when people tell me that they want to do what I did, I remind them that I didn't start from scratch and that I had multiple revenue streams.
I'm an introvert, and I'm proud of that because it allows me to focus in a different way. And I have no problem working alone. In fact, I enjoy it. But starting Baekdal Plus by myself was a mistake. You need someone to share your adventure with. You need someone to discuss things with. Someone to share the worries with.
And while my family and friends have been a great help, it's not the same thing.
You need a business partner. Someone who has as much of a stake in the company that you do. Your family and friends can support you (and many did in the most wonderful way), but they don't share the financial risk.
Sitting alone one late evening, going over your analytics and financial data to find out how to get more subscribers is not fun.
Another thing that has been very important is my ability to code. I have posted about this before, but it's worth repeating.
I learned how to code back in 1996, and it has been a great help. I'm not saying that you should be the one coding things. But if you know how to code, you suddenly gain a level of insight into how the digital world works that you otherwise wouldn't have.
Ever wondered why many digital projects end up costing so much money? It's because the managers writing the specs have no idea how to code. Their instructions include things that are in direct conflict with each other. This in turn forces your developers to make hugely complicated and expensive workarounds.
If you know how to code, you will come up with a solution that achieves the same results without the conflicts.
The same is true for choosing your platforms and services. If you know how to code, you can easily spot when something doesn't seem right. For instance, if a web agency wants you to pay them $10,000 for a 'news module' that is basically just a place to post articles, you know that this could be done for only $200 with 2 database tables and three pages.
The reason why Baekdal Plus works the way it does, with its sharable paygate and fancy subscription management, is because I know how to code.
And it also helps me write articles when, for instance, I'm analyzing the Facebook newsfeed. Knowing how to code is a really critical element. How does Facebook know what you look at to calculate 'reach' in the newsfeed? Well, the answer is that they don't. They have no idea what posts you look at. They only know how many posts were fetched from the server.
When you go to Facebook, they will fetch 6 posts by default. Then as you scroll down it will automatically fetch another 8, and then another 8.
The way reach is measured on Facebook is how many posts are fetched. And every single one of these posts gets 'one reach' whether you actually looked at them or not. If you only see the top 9 posts, all 14 fetched posts are counted as reach.
This is something you would only know if you know how to code.
I know this sounds geeky. But, knowing how to code has been so incredibly important for me in both building Baekdal Plus, but also in understanding and writing about the changes that are happening in the world of media. It gives me a level of insight that allow me to solve things from a different perspective.
It's also why big disruptive companies like Google, Facebook and Twitter have become so big. How important do you think it is that Mark Zuckerberg knows how to code when he is deciding on the future direction of Facebook?
And one of the main reason why the traditional media industry is so bad at digital, is not because they are stupid. It's simply because they don't know what they could really do. Instead they only focus on the non-coding solutions. Like taking a print newspaper and turning it into an almost identical iPad newspaper.
They don't know how to code, so they don't know the potential of their data.
Another thing that I learned with Baekdal Plus is just how big a difference there is between brands and publishers (which I've written several Plus reports about). A brand, with a webshop, gets a substantial part of their sales from people with a very short conversion path, as we see in this study from Google.
This almost never happens to subscription based media. People don't just subscribe to a site on the first visit. It takes months to build up enough interest to get people to subscribe.
So as a subscription-based media, your most important metric is 'repeat visitor behavior'. I have emphasized 'behavior' because it's not enough that they are coming back. It's how they behave when they come back.
This behavior then results in momentum that first entices people to subscribe and later causes other people to come to the site as well (this is why I'm so obsessed with frictionless sharing).
The problem I have on Baekdal Plus is that my volume of repeat visitors is so low that I never build up enough momentum to get things moving. And this is why my growth rates have been so low for the past three years.
I simply don't have the necessary volume of engaged repeat visitors to build momentum.
There are two ways to solve this:
"Oh", you say, "just do Facebook promoted posts!"
Well, that's exactly the problem. Those ads might work well for some brands, but they are targeted at exactly the wrong type of intent. People don't turn to Facebook to solve problems. They turn to Facebook when they need a break.
It might be the right people (if targeted the right way), but it's the wrong time and place.
I need to advertise my reports on more business-centric sites. Like adage.com for brand executives, or sites where newspaper editors get their industry specific news. And these sites are still based on the old banner ads, with high CPM costs.
I can't afford that. So I'm choosing option 1... to have a whole lot of patience.
It's no secret that one of the biggest challenges online is the payment itself. It has to be frictionless, and look very professional. I'm using PayPal.
Paypal is not the right choice, but it was the best I could do. There are many truly stunning payment startups out there that I would have loved to use instead, but for a subscription-based magazine like mine, I need 100% assured reliability.
The problem with these payment startups is that if they go out of business (as most startups do), I lose all my subscribers. I would have to tell each individual subscriber that my payment provider has gone out of business, and 'please subscribe again using this other service'.
I'm sure many of my loyal readers would do that, but it's a risk that I cannot take.
At the other end of the scale is the more professional payment services. Like the one GigaOm uses for GigaOm Pro. These are wonderful services, and can be implemented and managed just the way I need them.
They also cost a lot of money.
PayPal has a lot of flaws, but it's the best solution at the moment. It's well-known. It's mostly global. It works well with my bank (in Denmark). It's easy to integrate. It's somewhat easy to pay, and it's relatively automated.
But, the downside is that people have to create a Paypal account to use it, otherwise Paypal can't charge the subscription fee on a monthly basis for Baekdal Plus. That turns quite a lot of people away, especially outside North America and Northern Europe.
It's not perfect, but it's the best solution for now.
One day I want to build my own completely frictionless payment system where you can subscribe directly from each article. No setup, no nothing. Just enter your name, password, email, and credit card info... and click - you are done!
Paypal does have one big advantage though, which is security. I actually don't have any payment information on my site. It's all stored on Paypal's servers. So even if my server was hacked, your payment and personal information would be completely safe. The only thing I store on my server is your name, email and password (in an encrypted format, of course).
Finally, I want to address the question that everyone keeps asking. How many subscribers do I actually have? Well, kind of...
Back in 2011, I kept telling people how many subscribers I had, but I realized that people have a weird sense of proportions.
If you compare my subscribers to the 676,000 subscribers of the New York Times, I look rather smallish. But the New York Times is an internationally recognized newspaper, with a 162 year history, a massive amount of reach, a super strong level of brand awareness, and a huge and loyal group of existing print subscribers.
Baekdal Plus is known by a tiny group of media people. Sure, within this group I'm somewhat famous, but... you get the point.
What I found was every time I told people how many subscribers I had, people would compare me to well-established media sites and think "Oh, only so few?"
So let me just say this instead. If you were to compare my number of subscribers to that of other media sites, per employee, I'm doing better than pretty much all of them, including the NYT. And I also do much better than most, if you compare my digital subscription revenue per employee to other media companies.
To me that is a much more valuable way to look at it.
Also remember, that I didn't create Baekdal Plus to become a big media company. I created it because I wanted to focus my life on something of value. I was tired of working from 9-5 on something I didn't believe in.
I'm so happy knowing I now spend every single day thinking of how I can help you be smarter. That's what Baekdal Plus is all about. Every one of my Plus reports is about helping you understand the future of media from a smarter perspective.
Sure, I would love to grow Baekdal Plus to 2-3x the size it is today, and I would love to be able to hire 1 or 2 smart people to work with. That would make Baekdal Plus even better for you as a subscriber.
But I don't want it to be big. I want it to be focused and valuable. The place you turn to when you really need to know more.
To those of you wanting to do what I am doing, I can highly recommend it. Living your dream is the hardest work of all. Living your dream will be the most frustrating and agonizing experience you can have. It will make you cry. It will make you angry. It will make you give up, and the stress will almost kill you.
But it's also the most rewarding and happy thing you can ever do. And it's more than worth the hardship.
My dream has just begun. A dream to not just sell average products to average people, but instead wake up every morning to find ways to create value for my subscribers.
Here is to another
3 30 years :)
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