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Consumer Reports' brand builds Net subscriptions

The longtime trusted source of consumer information has much to learn from established Web strategy, critics say.

Consumer Reports has used its trusted brand to quietly build an online subscription base where others have failed.

But critics are offering a piece of advice to the non-profit, 63-year-old magazine: Drop the online subscriptions and partner with other e-businesses to spread your brand name--which could be as potentially valuable as Amazon's or an eBay's--across the Web.

"Consumer Reports is strong offline, but it shouldn't think that should carry the day online," said Lisa Allen, analyst at Forrester Research. Publishing companies are "truly sitting on a dilemma on the Web," she added. "Online users have shown that they're not interested in paying for online content."

Consumer Reports Online--which launched in November 1997 to provide Web-based information on product recalls, shopping guidance, ratings, recommendations, advice, and message boards--is for now, one exception to that rule.

The site has lured more than 300,000 subscribers, each of whom pays $24.95 per year for full access to the site. That's a significant jump from 180,000 last year, and impressive for an 8 percent to 10 percent online overlap with the offline subscriber base.

That rivals the subscription base of the Wall Street Journal Interactive, which touts itself as the largest paid-circulation site on the Web with more than 300,000 paid subscribers.

Consumer Reports, which has been online in various forms for nearly two decades, is sitting on a brand name loaded with potential--but it must change its thinking to an online business model, said Don DePalma, a principal at Common Sense Advisory, an e-commerce consultancy in Chelmford, Massachusetts.

For one thing, it should drop its subscription rate for those who are already paying for the publication's print version, he said. Then, the company should offer a "per transaction" option available through sites all over the Web, which could be a "tremendous value add," he said.

For example, Autobytel, which markets many different makes of automobiles on its site, could potentially link to Consumer Reports' database, charging visitors $1 per transaction. A customer looking at a Honda Civic, for example, could click on the Consumer Reports link, just as he or she would flip through a dog-eared copy of the magazine at a dealer showroom.

Furniture.com, an online furniture store, could also benefit from a Consumer Reports link, an addition that would not threaten Consumer Reports' policy as a non-profit provider of unbiased product evaluations that doesn't accept advertising dollars.

"This is one of the really powerful brands in terms of consumer rights and education, and it would be valuable for them to try a transactional-based model," DePalma said.

Thomas Falconer, new-media manager for Consumer Reports, said that the company already offers a $2.95 monthly rate to subscribers at the site and that no transaction-based model is in the pipeline.

"That's a real bargain," he said. For $2.95 a month, the customer can download a desired article, as well as access the entire site and chat rooms.

The site is also getting a facelift. Under construction from tomorrow until Monday, the site is getting a system upgrade intended to simplify the online subscription and registration process. A redesign next month will also offer a cleaner-looking home page and expanded message boards and community area, Falconer said. By fall, the company plans to add new content exclusive to the Web site that tackles such topics as how to be a savvy online shopper.

Besides making the site easier to use and adding Web-only content, Allen said Consumer Reports should also consider a per-transaction based business model--and be aware of growing competition on the Net.

"The real problem facing publishers is that their readers have more choices than ever before--and they're free," she said. Web sites such as newly relaunched Deja.com are betting they can turn into every man's version of Consumer Reports. Deja.com's Deja Ratings captures consumer opinions on a wide range of products, services and topics through a scaled voting system that includes product comparisons. Deja.com also provides links to e-commerce retailers and vendors on the site.

"They're the poor man's Consumer Reports," Allen said. The down side? Although visitors can collect many opinions, the information isn't qualified in any way.

Debbie Newman, vice president of marketing for Deja.com, which plans to make money through advertising and links with commerce partners, said she considers Consumer Reports a competitor, though the company is subscription-based and Deja.com is free.

"Yes, there's a competitive aspect, but we're really doing different things," she said. Newman added that "subscription-based services haven't proven to be sustaining."

"I think the jury is still out," she said. "I think [Consumer Reports] offers a service and a value in having lab tests. We're not trying to be that. We're not trying to be self-proclaimed experts."

Forrester projects no pot of gold in subscription models. By 2003, an online e-commerce business model will account for $25.5 billion in online revenue, advertising will reach $17 billion, and subscriptions are expected to account for $5.1 billion, with $125 million of that piece attributed to business archives and adult content.