Do membership fees work?

Are newsletters spam?

[roldar]

I'm considering building a site that would offer web space for a specialized purpose - similar to blogs.

I have identified that there are many people who want this service, but I'm not sure what the best way is to go about capitalizing on the idea.

I've narrowed it down to either charging a very small fee (~$0.50 / month) or making the service free. Adwords are out of the question for this service. The amount of transfer and web space per account would be very miniscule, making the fees essentially pure profit. However, I've got this nagging feeling that people really hate paying for anything. I would guess only a small fraction of interested people would actually pay.

So I'm left in the planning stage with two choices as I see it:

1) Offer the service for free and quickly build a huge customer base, then send out newsletters with affiliate marketing links in them. I could also put a donate button on there but my guess is that it wouldn't bring in anything.

2) Charge the fee, settle for a small customer base.

Either way I go I'll probably beef the site up with content and put adwords on it, but I don't think the profits from that alone will make it worth my while. It's not a big money topic, and most people probably wouldn't even look at the content.

I realize it's impossible to say with certainty which is the best way, but do any of you with experience running a service-providing website have any advice to offer?

Are newsletters spam? If people are using my free service do I have to give them an opt-out on the newsletter in order to comply with the can spam act?

[Hunter]

I would Offer the service for free and send out newsletters with affiliate links in them. At least once a month, at most once a week.

After you build up your list, consider adding services for anyone that is willing to pay a fee and keep all the others on for free. Consider running a poll to see what extra services people would like or be willing to pay for.

Always include an opt-out in the newsletters.

[ControlEngineer]

Are newsletters spam? If people are using my free service do I have to give them an opt-out on the newsletter in order to comply with the can spam act?

If the newsletter is sent to people who did not knowingly opt-in, it is spam. (although perhaps not covered by the CAN-SPAM act)

Any newsletter should always include an easy to use opt-out whether the law requires it or not.