Paid Model Works Early, But What About the Long Run?

Motley Fool has an interesting analysis of American Greetings, the old-line greeting-card company that’s making a valiant attempt at surviving the digital age. AG took a bold line and made its e-greeting business a paid service, even though many of its competitors offered free online greeting cards. It actually has done quite well with this strategy; after the switch to paid, it fairly quickly climbed to over a million subscribers. (Count my family as one.) But the Fool analysis suggests that AG, despite its initial digital success, “will have an uphill battle to convince users on its sites to pay up for its premium offerings” because companies such as Yahoo! and Amazon continue to provide their site visitors with the ability to send free e-cards. AG made a gamble that competitors wouldn’t be able to sustain the free e-card model. They have, and AG now finds itself in a position where it will need to diversify away from its historical mainstay of greeting cards. Perhaps there are some lessons here about long-term sustainability for media companies plying the paid-content waters? (Thanks to PaidContent.org for the pointer.)