At the start of the year, I said that I saw two emerging trends - paid communities and cohort-based courses which I've covered in issue #10 of ONE THING. Although I still think that cohort-based courses have legs, I don't think I would say the same for paid communities. In this week's ONE THING, I'll break down my thoughts on paid communities.
Why Are Paid Communities Good Businesses?
- Free communities tend to be very noisy because there's no barrier to entry. A paywall would create a community that's more invested and engaged
- They are also relatively easier and faster to grow, much faster if you already have an audience
- They are fun to run especially if your interest is aligned with your communities' interest
- You basically don't need any money to start. All you need to do is to create a Facebook group, figure out what sort of value you are going to provide to your community and boom you're all set to go
- The best part is you'll have that sweet recurring revenue
- Let's say you have a knack at trading crypto and you already have a good amount of following, you could monetize those following by creating a newsletter or telegram group and post your live trades there
Why I've Change My Mind On Paid Communities?
- I think there are 3 categories of paid communities: content-driven, deal-driven & connection-driven
- Content-driven: Content-driven communities are where people sign up to read your content i.e. tech or photography. Now if you're charging $30/month, you need to be able to provide $30 worth of value to your community every month which is not an easy thing to do
- Deal-driven: Deal-driven communities are communities that help people to make money and this type of paid communities are the most profitable ones. That's because it allows people to make money on the side and people love that. That's why you see most paid communities are stock tip groups and crypto groups
- The problem with these types of paid communities is that once you start to scale, more people will get access to the same information which makes it harder for them to buy the stock before it gets gobbled up
- The amount of money you'll make is directly proportional to the amount of revenue the members will make. Once it gets harder for a member to make money, you'll start to see high churn
- Connection-driven: Connection-driven paid communities are probably the best but most difficult ones to start. They are the ones where people find value in the community itself which often comes from the ideas, generosity, and kindness of other members
- The problem with these type of communities is that the value of the community is largely out of your hands. Hence, you'll need to maintain a level of exclusivity which means you could charge higher but also means that you can't really scale
Although I've changed my mind about paid communities, I still think that it could be a great lifestyle business to own especially if you want to turn your passion into a business.