What has been your early experience with your paid community model?

Overall, we've been very happy with the launch into this new model. Results have exceeded our expectations. As incredible as it may sound, posting volume is higher than it's ever been on a daily basis and our drop-off in unique contributors is much smaller than we forecast. The largest fear you have going into something like this is that you have no idea how well it will actually be received. All the hypothetical "would you pay??" consumer survey questions don't mean much when you flip that switch. In many ways, going to a pay model either validates or invalidates all of the work you've done to date and answers the question "do we create value?" For the first time ever, you can engage in a tangible value for value relationship with your customers. In that regard, we're very pleased.

What other sites did you consider when designing your paid model? Did you consult your community members? Can you say a bit about your strategy?

We've examined the business models of everything from Wall Street Journal Online, Salon and Consumer Reports to 1Wrestling.com, Playboy, and Silicon Investor. We wanted to understand how consumers behaved when presented certain barriers and value propositions. David Talbot at Salon was especially helpful in understanding their move and the effects on their business. We also conducted research with many of our "enthusiast" customers to get a sense of what matters most to them and what they were and weren't willing to pay for.

In terms of strategy, I think we did a few things that helped our program. The first thing we did was to award a bunch of free one-year memberships to some of the most active and most liked members of the community. We knew that charging any fee would not be a popular decision, but having many of the most vocal and influential people on the site already on board made things easier for us. I think those folks were happy that they were being recognized for their past participation, but it also created an effect where this group of folks ended up being the most vocal proponents for people to sign up. In an odd sort of way, they did much of the campaigning for us. We're grateful for that.

I think it also helped us that we recognized that the financial success of the program would likely be dependant on the casual user and lurker, and not just the people posting. I don't want to make too much of this analogy, because many elements don't apply, but the model is a bit like the movies or theater. The people who should be paid are the ones creating the content, and the viewers/appreciators of that content should pay for the tickets to the show. Now, only a small percentage of the "stars" were compensated with free accounts in our model, but keeping those great contributors in the community was a key element in ensuring that others signed up.

Your community offers your direct financial benefit (through the paid model) and indirect financial benefit (user loyalty, advertising elsewhere on the site...). What is the relative size of these two benefits?

I won't speak directly to the numbers, but will say that we consider the Fool Community to be an important part of who we are as a company, from a brand perspective as well as a financial one. You're correct that the people who participate in community are generally more loyal and valuable then people who do not, at least in our case. It's in our best interests to carefully foster the relationship with these folks.

What longer term challenges and opportunities are you seeing with respect to community?

The long-term challenge is to continually bring in new members. Communities thrive on new blood, new ideas, new faces. With the pay model, we now have every incentive in the world to bring in as many new members to our community as possible. That hasn't always been the case. The largest opportunity is simply that we're now hell-bent and focused as a company on building the community out. We have a defined platform in what will always be a sweet spot of people's interest, money. Our challenge is to make that relevant to the people who are not currently familiar with the benefits a community provides, and in particular the Fool Community. Alas, that's always been everyone's collective challenge, eh?

David can be reached at davidf(at)fool.com.