Mail Online, the U.K.'s most visited newspaper site according to Paid Content, is changing its policy about subscriptions to its iPhone application. Up until now there has been a fee for subscription--new users could read in-app stories free for 60 days before having to pay either £4.99 for four months or £8.99 for 12 months. The difference now is there's another option: with the likely objective of wanting to maintain and broaden readership and wanting to keep advertising placement on digital handhelds, Mail Online is currently experimenting with a free version of the iPhone application. The difference in these two options is one comes with advertising and one comes without.

Guess which one is which.

The 60-day trial period will remain the same for both subscription versions, without advertising, after which time subscribers will be offered a payment choice. The purchased subscription gets you the version of in-app stories without advertising (same as the trial version), the free subscription is a lifetime of content with advertising introduced. According to Paid Content, Mail Online editorial will remain the same in both versions; it's the introduction of advertising that makes the difference.

This business strategy brings up some interesting questions. Obviously, the editorial content holds the subscription value, and advertising is seen to diminish that value, as based on the assigning of payment for the ad-free subscriptions. This is a credit to Mail Online editorial, but is also a kind of backslap to advertising in concept, as well as to the site's actual advertisers.

Traditionally advertising accompanied editorial on the page, with the idea that people might look at it if it's near something of genuine interest. Mail Online's new iPhone subscription structure kind of throws that idea out the window ... or rather acknowledges it to the point of potential self-sabotage. By not offering advertising in the paid-for version, this reduces advertising placement and user impressions.

Perhaps the "saving grace" of this structure lies in the attractiveness of a free subscription, and the wager that its freeness will lure more iPhone readers. But since no advertising will run on paid subscriptions, perhaps this means the free version will become overcrowded with advertising. If this is the case, the value of the free subscription will then heavily diminish. The only way around this is to pay the subscription ... or to stop reading Mail Online on your iPhone.

Paid Content wagers that perhaps subscription sales haven't been going so well. But if advertising does not crowd the free version (meaning the rate of advertising is tolerable), then maybe it's not necessary to pay for a subscription. If this is the case, advertisers would get more impressions but paid subscriptions would fall. Paid Content also wonders at whether Mail Online has more confidence in its advertising.... Hmmm. Not sure about that. This decision actually comes after Apple announced it would take 30 percent of all subscription-related transactions processed inside applications. Perhaps the decision then is a kind of default solution.

If anything, this experiment will reveal what users want. However, there is also what Mail Online wants (or financially needs), and this may be the real determinant of success or failure. Inevitably within this new subscription structure a decision will arise as to either supporting advertising sales or supporting subscription sales, but not both because they are currently pitted against each other-- a problem that may need further analysis.

On the web, Mail Online vows to remain free with advertising.

Sources: Paid Content, Mail Online