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Caught up with Bill Dinan after our Directional Media Strategies event last week, where he sat on a panel that I moderated called “Fixing the Yellow Pages Business Model.” Much of the session content centered around pay-per-call models.

The same day, Dinan’s company, Telmetrics, issued a press release titled, “Telmetrics Urges Traditional Media to Move to Performance-Based Revenue Model at The Kelsey Group’s DMS ’09 Conference.”

In our conversation, Dinan made clear that he doesn’t believe the Yellow Pages business is going 100 percent pay per call, but he does believe it will become the largest revenue category, from overwhelmingly subscription today to 70-30 in favor of performance pricing within a few years.

“It will stabilize at that level,” Dinan said. “Subscription pricing will always be there.”

Not everyone agreed. On the same panel, Mike Boyce from R.H. Donnelley was skeptical that pay per call will represent more than 25 percent of RHD’s revenues in the future. He believes most small-business advertisers prefer the stability of subscription pricing, but just want to know their advertising performs.

What is clear to us is that the industry is moving to a model that is more transparent and performance driven. We would expect a mixture of pure PFP, traditional subscription and hybrid models that combine fixed fee and performance guarantees will coexist for some time to come, and the models that drive the best KPIs (ARPA, retention, growth, etc.) will dominate over time.

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