The Fortune in the Follow Up:
Mining the Gold Within Your Subscriber List

"Some of the biggest challenges in relationships come from the fact that most people enter a relationship in order to get something: they're trying to find someone who's going to make them feel good. In reality, the only way a relationship will last is if you see your relationship as a place that you go to give, and not a place that you go to take.”
- Anthony Robbins, American Advisor to Leaders

From the Desk of:
Fernando Ceballos; Los Angeles, CA.

Dear Bootcamper,

As you continue up through your marketing career these expressions will become very familiar:

"The Fortune is in the Follow Up"

"The Money is in the List"

Don't dismiss or misunderstand these expressions as money grubbing rhetoric. The reason you are creating a list is to create a long term asset held together by strong and mutually benefitial relationships.

What Google™, YouTube™ & MySpace™ Taught Us

When you ask the average business novice how they imagine money is made on the internet, they will probably have a picture of an Ebay home business, or setting up an online store and watch the sales roll in.

But the fact of the matter is that the most valuable thing you can create online is not a retail website necessarily. The most valuable asset you can create is a subscriber base.

Case Study 1: MySpace

In 2005, Rubert Murdoch purchased Intermix Media, which owns MySpace.com for $770 Million.

Why?

MySpace was losing money hand over fist in the beginning.

Struggling to keep up with bandwidth demands of it's rapidly growing subscribers.

Their service was free, so they don't directly make any money from subscribers.

And the ad revenue came nowhere close to covering their operating expenses.

Paying $770 Million to possibly lose more money didn't seem to make sense to many business "experts" at the time.

Case Study 2: YouTube.com

In 2006, Google paid $1.65 Billion for YouTube.com -- a company that was less than 2 years old.

YouTube.com was spending $1 Million per month on bandwidth alone.

They had spent over $16 Million dollars in development without any profit.

It's advertising revenue was slim compared to their expenses.

Paying $1.65 Billion to lose at least $1 Million per month doesn't seem like a great investment.

Case Study 3: Facebook.com

Facebook founder Mark Zuckerberg in 2006 turned down a $750 Million offer from Yahoo!. He says he won't consider anything less than $2 Billion.

The only revenue model it currently has is advertising and the purchasing of "gifts" for fellow subscribers.

Profitable? Not even close. They recently requested $25 Million in Venture Capitla (1)

So why would he expect $2 Billion for his site?

Case Study 4: Amway & Microsoft

Here's one I bet you didn't expect...

Back when MLM giant Amway's old offline model started to stagnate in the late 90's after enjoying rapid growth earlier in the decade, Microsoft approached the Amway executives about creating a derivative online business model.

Nine Months later, Quixtar.com was launched and in it's first 200 days raked in $250 Million in sales, despite serious technical snaffus at launch.

Currently, it generates well over $1 Billion in sales per year with a fast growing network of Independent Business Owners and customers (their subscriber base).

Profitable? Yes indeed. What did Quixtar have right off the bat, that the others didn't despite the baggage of the Amway legacy?

The Value of a Subscriber Base

If you look at valuable online businesses, you'll notice a common thread. They have ways to...

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