Back in March, following the demise of the Rocky Mountain News, three Colorado businessmen announced they were teaming up with former RMN journos to launch a new venture INDenver Times, a new online news site covering the local community. The launch date was set for April 23--assuming, they said, that 50,000 readers had subscribed by then. They needed the $3 million that would come from the $60 per annum subscriptions to fund the business.
Last week, the Denver Post reported that the three businessmen were abandoning the project. Among the disappointments: Only 3,000 people had signed up so far.
Perhaps this was a surprise to the INDenver Times team. But it wouldn't have surprised anyone in Silicon Valley. You see, the group's business plan violated one of the fundamental tenets of online innovation: You don't charge people first, and then deliver the product. Just the opposite: As anyone who's watched the evolution of Facebook, Twitter, and innumberable software products (online and desktop) knows: You give the goods away first. Then you charge.
The reason is twofold:
-- By putting your product out there for free, you get people to use it. And it's in watching real people use it that you learn what works and what doesn't. You then use this information to refine the product and ultimately produce something really excellent that you never could have figured out had you done all your development behind closed doors.
-- In the course of doing this, your users develop an attachment to your product, one they eventually are willing to pay for.
Together, this approach allows you develop two things you need in order to charge: A really excellent product and consumer demand for it.
The lesson is instructive for anyone considering a journalism experiment: You're going to have to find a subscription-less way to fund the project, at least for the first few years.