An Online Content Goldmine

There are thousands of sites out there with more than a million page views. But how many can boast of revenues of more than a million dollars per month?

As far as content-based sites go, the most profitable ones are probably those who can charge a fee for the privilege of interactive participation.

The South Beach Diet site is a good example. It has 350,000 subscribers who each pay $5 per week for the privilege of participating in conversations with like-minded dieters and for getting regular updates about diet-related information.

This works out to $90 million a year in revenues; amazing money especially considering there are no inventory or production costs and the marginal costs for each additional subscriber are practically nil.

The South Beach Diet book came out in early 2003 and soon became a big hit. But the publisher had nothing to do with the money-making website. This was created by a different company, Waterfront Media, who pay royalties to the author and help sell more books for the publisher.

Waterfront was not shy with their advertising budget. I recall that back in 2003 and 2004 I saw a lot of South Beach diet ads even though I wasn't visiting any diet-related sites. There was one ad in particular I remember, with a woman's slim waist and a tape measure wrapped around it. I never clicked on the ad but I sure got the impression the South Beach diet must be something very huge and popular. It turns out that during this time Waterfront was buying about half a billion ads per month - and spending about $1 million per month for this type of banner advertising.

The South Beach Diet book stayed on the New York Times best-seller list for at least 24 months, in no small measure due to this massive online advertising campaign.

I've tried to dig up some current information about how the subscription numbers look now - almost three years since the book was released. But Waterfront is a private company, not subject to any disclosure requirements, and I haven't been able to find any news about the company since mid 2004. Perhaps the book and the website have seen their peak earnings and it is all a downhill slide for now.

But it's also possible the website continues to grow and be so lucrative that Waterfront would rather stay under the radar and not publish updated information about their growing subscriber and revenue numbers.

With their growing stable of successful self-help author sites, Waterfront is on to a very lucrative formula for making money with online content and forum participation. It's probably a leading example of what we can expect in the future as the publishing and newspaper industries move more of their activities and money making opportunities online.

For more good examples of money-making models for online content see a recent article at Dot Tactics.

Update March 28th: Waterfront Media has just announced they've received $6 million in a further round of venture capital funding. The press release mentions they are planning to move into television and radio and that they plan to launch a major new 'consumer health initiative' later this year. They note they've had over eleven million people create profiles for themselves on one of their sites.

Look for this company to go public IPO'ing soon...