Attempting to Crack the Paid Online Content Code

Publishers, desperate for more revenue, are dusting off pay-to-play online content models. Here are a few things to consider first.

By Bill Mickey
Wednesday, April 29, 2009

---

In today’s economic environment, publishers are leaving no stone unturned in the search for new revenue sources. No surprise then that online paid content is getting some renewed scrutiny. The concept has always bubbled beneath the surface like some nearly regrettable and hard-to-forget decision for those who never leveraged it.

Some suggestions have been offered already, and opinions have veered from practical to ignorant. And as frustrations mount, entities from Google to bloggers are once again getting blamed for mooching off of the hard work of “legitimate” publishers. The AP, for example, is now getting much more serious about tracking and taking action against “misappropriated” content in an effort to recoup “lost” revenues.

Models run the gamut. We’ve heard about Time Inc.’s announced intention to begin experimenting with paid content models, Consumer Reports’ recent blog purchase, The Consumerist, launched a “tip jar” in April, and Steven Brill has resurfaced with Gordon Crovitz, formerly of WSJ.com, and Leo Hindery, a private equity executive, to launch Journalism Online LLC, a company that offers a hosted Web-site content payment solution and consulting services. “We have formed Journalism Online, because we think this is a special moment in time when there is an urgent need for a business model that allows quality journalism to be the beneficiary of the Internet’s efficient delivery mechanism rather than it’s victim,” said Brill in a statement.

However, “quality” does not directly translate to “value” online. Every publisher thinks they have quality content. Yet consumers, depending on who you talk to, have either become used to free online content, or are savvy enough to know that they can Google “bailout” and find any number of free online sources—or both. And then there are the types of content—does entertainment have value? News? Does the content have to show you how to work better or save money? And what about your audience, or the technical back end, for that matter?

To answer these questions and bring the discussion closer to actual publisher concerns, especially from an audience developer’s point of view, AD invited a group of executives to offer their own perspectives on how a paid online content model might work.

Colin Crawford
Founder and CEO
Media 7 Consultancy

If publishers are to successfully charge online, they have to focus on understanding their audience needs in digital environments (both online and mobile). Perhaps, then they can create environments where their audiences are more willing to pay for premium content or willing to register to view specific content or are even willing watch sponsorship advertising prior to accessing the content.

Focus on Audience Value

The emphasis needs to be less on trying to define the business model by the value of the content but by the value of the audience. Engaged, participatory audiences are defensible in a way that most content is not. It’s too easy to “share” the pixels across the Web—legally or otherwise. However, the value of defined audiences, who give up their time to engage in discussion and conversation around a particular subject or product, is much greater that just the raw content value.

Publishers and trade associations need to cease obsessing over the “misappropriation” of their content by Google and others and focus on building new digital revenue models rather than trying to protect legacy business economics that don’t translate to digital.

Researching the needs of audiences will drive success. The goal should be to determine how to deliver appropriate content at the right time and place, within a user interface and environment that takes maximum advantage of each medium. If content is to be sold to users, it has to have a very unique differentiator where the value proposition to the consumer is obvious.

In the next few years, a slew of digital reading devices, such as the Kindle, Sony eReader, Plastic Logic, FirstPaper and many others will emerge. Additionally, smartphones, tablets, thin and light notebooks, netbooks and other devices connected to the Internet will give publishers an opportunity to potentially extend their content.

Media companies need to think strategically how these devices offer different ways for an increasing mobile audience to access and engage with their content.

Digital business models are still struggling to emerge, but what’s clear is that media companies need to focus their talents and energies on testing new business models rather than expecting the new media world to reflect the old one.

Heather Holmes
VP, circulation and
consumer marketing
Technology Review

I’m not convinced that instituting a “charge for content” model will put the brakes on a publisher’s downward revenue slide or allow publishers to regain full control of content distribution. We put ourselves in this online dilemma because in the desire for audience, we’ve traditionally given everything away for free. The Web may not yield the perfect answer. The barriers for entry at the Web level are perilously low. Anyone can post content. The consumer is well versed in this free methodology and, thus, perpetuates the self-defeating model.

Niche publishers are starting to charge for select content. Consumers will likely balk, but if you have created unique content that cannot be found elsewhere and it’s deemed  valuable then you will be able to recognize some paid conversion. Publishers and fulfillment bureaus need to work in close partnership in order to make this a success. There is some industry movement with micropayments. Understanding what the increased back-end fulfillment costs versus anticipated revenue are in a micropayment model is essential.

Defining clear sources, data capture and future touch-points are equally as critical. Is your fulfillment house fully prepared to handle this kind of real-time processing, management and reporting? I’ve found it extremely valuable to have involved our fulfillment provider in all stages of our discussions surrounding charging for content and instantaneous data processing.

Technology Review’s focus in this discussion has been on preserving and protecting the subscription and subscriber. At the end of the day, quality content is expensive to create. And, the economy is squeezing all of us into taking action. We have an opportunity to change the model with the emergence of new mobile technologies such as iPhone, e-Ink, and various e-readers. These new distribution channels are fee-based. But more than that, they have much higher barriers for entry. They are not allowing “just anyone” to post content. They are specific. The iPhone could be viewed as the first salvo in this area. When you create a need or a drive for it, then you can charge for it. Mobile technologies are training consumers to purchase. And consumers will pay for content if there is a proven value.

Audience reaction to these new channels, however, very much depends on how publishers behave in aggregate. It might be extremely difficult to make this work if a large number of publishers and suppliers are not on board.

Abraham Langer
VP, digital media, audience development
1105 Media

The short history of the Internet is littered with failed models that have tried to charge for content. Forget about putting all of your site content behind a paid wall, people rarely pay for what they previously received for free or for what they can get for free from another source. For b-to-b publishers in particular, this creates a difficult dilemma as we have never charged for content. To succeed in the online paid content world, b-to-b publishers need to think beyond the types of content they currently produce to more exotic iterations of reader interest. Below are two examples of content-based products that may be able to drive revenue in your market.

Rich Data Products

Find areas within your market that are characterized by large volumes of unorganized data that are generally cumbersome to find or access. By consolidating and organizing this data into an easily accessible and navigable online interface, you can bring to market a rich-data product that your audience would be willing to pay for. This standalone or subscription-based product could be anything from product specifications or comparisons to market RFPs or contract availability.

Interactive Proprietary Research

Propriety research actually plays to our strength as publishers (even though we don’t recognize it sometimes). The reality is that we have spent years cultivating a targeted audience that can serve as the perfect research pool. By conducting proprietary research within this audience, you can create individual or subscription-based products that give users access to strong quantitative data that speaks to your market’s activity and trends. Providing dynamic access to this data through the Web that allows readers to run their own segmentation and analysis can provide further value to the product. Best of all, both your readers and advertisers may be willing to pay for the results.

Alec Dann
General manager, business media online
Hanley Wood

Charging for content can work for publishers if it has a high value. For example, Bloomberg provides timely market-moving news, the Journal of Light Construction, jlconline.com, provides detailed how-to information on construction best-practices and Thompson Publishing provides insights on regulatory issues that impact professionals in healthcare, energy, human resources and other businesses impacted by government.

Publishers who want to charge for more general information and news face three issues: Do readers value the content enough to pay for it when they may be able to find it elsewhere? How will reduced circulation impact advertising? Plenty of paid publications need advertising to be profitable. And finally, do they understand how to build paid circulation? Doing that successfully often requires new skill sets and marketing budgets to support growth.

Joe Pulizzi
Founder and chief content officer
Junta42

It’s understandable how many might think that “paid content” is the next salvation for publishers. After all, both television and newspapers were once free, and now are paid (for the most part). So, the question begs whether paid content can work for traditional publishers via the Web.

We Already Know It Works
First, paid models are already working. Marketingprofs (Marketingprofs.com) have showed that their “freemium” model is very successful, and new publishers such as Brian Clark have succeeded by packaging content through Teachingsells.com.

Try Packaging It
People will pay for content, but don’t expect them to pay for just anything. It has to be content plus something. The content needs to be packaged in such a way that is different, saves time, saves money, let’s them work more productively, and so on. Where most publishers get this wrong is that they expect people to pay for content just like it was presented in the magazine. Outside of the WSJ, there are not too many examples of this. Publishers need to do something with it. Package a training course, create a new software as a service tool with the content, make it incredibly accessible (i.e., an iPhone application), transform the content into data that a company can use to grow their business, etc. Packaged content will prosper, and people will pay for it.

So, I believe that all publishers need to consider “paid packages of content,” but I do not believe they should just charge for their content as it is. I can probably find that for free in other places anyway. Give me something that is unique and truly helpful, and I’ll pay for that in a second. It’s not a huge stretch, but it has to be done if you want success with that model.

Focus on the Model

At this point, we’re beyond the argument of whether online content should or shouldn’t work in a paid model.

Jeff Jarvis, a media consultant, journalism professor and blogger at Buzzmachine.com, has called for, via his blog, an aggregation of proposals, models and opinions on online paid content. But, says Jarvis, the key is focusing on constructing models that work, not getting bogged down by philosophy. Interestingly, his comments boil down to two key points, the model, and, importantly for you, the audience.

“At the end of the day, what we’re trying to do is make hard, unemotional business judgments. The question, very simply, is how more money can be made.

“The other question, then, is how much journalism the market will pay for? What kind of journalism will it support? ”