Last week I talked about rethinking the publishing model to focus less on creating content, and more on creating products that solve reader need and establish the foundation for sustainable revenue. Today, I want to review the many online revenue models that publishers and media companies have at their disposal.
The goals of this exercise:
- To more deeply involve editors in the business, and move away from "filling buckets" with content.
- To better leverage customer data, preference and behavior metrics. To move beyond using metrics as a tool to look backward, and use it to help set strategy.
- To identify revenue models beyond placing ads next to content, with the goal of capturing a lot of eyeballs.
- To understand the common needs of editors and salespeople within a media company, and look for ways they can work more closely, without editors feeling like they are selling their soul.
- To develop products that become essential to customers. In B2B publishing and media, the goals of customers and audience members is not to read an article, but to solve a vexing business problem. How companies serve these needs can take many forms.
To start things off, let’s look at a list of some online business models that media companies have at their disposal. This list comes from Chris Anderson, Fred Wilson, and Michael Rappa.
- CPM ads ("cost per thousand views"; eg: banner ads)
- CPC ads ("cost per click"; eg: Google ads)
- CPA (Cost Per Action, sometimes known as Pay Per Action (PPA) or Cost Per Transaction (CPA); The advertiser pays for each specified action (a purchase, a form submission, and so on) linked to the advertisement.
- Lead generation (you pay for qualified names of potential customers)
- Subscription
- Registration
- Affiliate revenues
- Rental of subscriber lists
- Sale of information (selling data about users–aggregate/statistical or individual–to third parties)
- Research or Audience measurement services
- Licensing of brand (people pay to use a media brand as implied endorsement)
- Licensing of content (syndication)
- Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit)
- Upgraded service/content (ed: aka "freemium")
- Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
- Custom publishing/services/feeds. Similar to the concept of commissions.
- Live events
- Co-branded spin-off
- Cost Per Install (popular with top Facebook apps who can help others get installs)
- E-commerce (selling stuff directly on your website) This can include micro-payments.
- Merchandise/Souvenirs
- Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
- Listings/classifieds (paying a time based amount to list something like a job or real estate on your website)
- Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
- Streaming Audio or Video Advertising
- Marketplace exchanges
- Paid directory services
- In-video product placements
- Donations
Overwhelmed? Me too. So, let’s look at some examples as to how publishers and media companies can leverage combinations of these models. And let’s make this more interesting making them super cool revenue robots!
The main goal here is for editorial teams to be pursuing fewer standalone articles that rely solely on CPM ads, and look to more integrated packages that build many products from a single effort. On the one hand, these products may appeal to the variety of ways that their audience learns and approaches finding solutions to their needs; On the other side of things, these products will help create multiple revenue streams from each individual editorial strategy.
Revenue Robots:
GargantuTron:
Lead-Generation, Registration and Sponsorship, CPM Ads
Let’s say an editorial team creates a series of articles around a single topic. The first revenue stream is CPM ads. Then, how about bundling the series into an eBook or white paper, and selling lead generation against the downloads. Next, create a webcast based on the findings and feedback on the series, which may include a panel discussion and Q&A. The webcast would – ideally – be sponsored. You can also charge a small fee for participants to register. If you can get 500 people to register and charge them $5 each, that’s $2,500, which is just an example of ways to cover the cost of production.
MegaForce2000:
Sponsorship, Subscription, CPM Ads, Data Collection/Sales
Organize a panel of experts to discuss a hot topic or training around a key area. These will be articles and videos, and be sold as a sponsorship opportunity. The feature will be rolled out as a weekly session, as it if is a class curriculum. Access can be granted in two ways: subscription to the entire series for $9.95. Or, access individual sessions for $1.99 each.
As a part of their participation, each panel and registered member will fill out a survey. This data will be used to create a “State of ____ report.” This report will be a big web feature 1 month after the session, and be posted for free on the website. CPM Ads will, of course, flank the article pages. The full data itself can be sold back to the sponsor or added to the site as a download.
UltraZorg:
Registration, Subscription, Sponsorship, Lead Generation, Merchandise, CPM Ads
Extending the idea of a training curriculum, participants can earn credits and a certificate. This is a new system that can be created, ideally partnering with an industry organization, and add to your audience’s career development. There are obvious examples of this in technical fields, but also look at the sheer amount of courses in areas like media on MediaBistro’s courseware. So there is a registration fee for each course, or subscription fee for a series.
Highlights from these courses can be leveraged in articles (CPM ads), webcasts (lead-gen) and in-person events (sponsorships.) In addition, participants can gain exclusive access to course forums. Workbooks can be created and sold as well – adding merchandise sales.
An underlying theme in many of these is to create evergreen content whose shelf life is longer than a news article – with multiple segments that extend the ways you can market it and sell it. Focusing on business needs beyond the cycle of "breaking news" may diminish the reliance on the single revenue model of advertising.
These are, of course, not the only potential revenue streams or ways that media companies can leverage them. But I think that discussing scenarios like these are good exercises for editorial teams to go through.
There are really two sides of this:
- Editorial teams mapping out a product roadmap, not just an editorial calendar. As I discussed last week, getting closer to customers is a critical part of this.
- Editorial teams working more closely with their sales teams to come up with these ideas, and ensure that the sales dept has this information with enough time to test the market, and ideally, sell these products.
The goal is not to question the work of what has been done at your organization. The goal is to consider what it will look like in the very near future. Newspapers and magazines are shutting down at a rapid pace. Advertisers have more options than ever, and can directly reach their target audience without intermediaries like media. Your audience is becoming increasingly sophisticated in finding ways to server their business needs – they are no longer wed to a single source for content, information or business solutions.
Finding the business model that will support the future of publishing and media will not be easy. But it all starts with a simple question: what do your customers and audience members need in order to grow their business?
What you are suggesting, in my opinion, doesn't make any sense and in all probability the company's staffing levels are to small to sustain such an operation on a weekly basis and deliver the regular news in a timely fashion.
What you are suggesting is essentially a digital version of what news magazines like Time and Newsweek have always done. Major editorial projects constructed around a single topic. The difference is these publications have staff dedicated to creating such a project, while others filled the rest of the magazine with what the readers were expecting to see each week.
A magazine like TWICE has a readership that expects to see a daily dose of breaking news from the CE industry. If we stop delivering that product in order to work on gigantic projects on a regular basis then our daily visits and page views will disappear along with whatever advertising dollars we gain from the site. I know this for a fact because we recently just completed such an integrated project and it consumed so much time and effort that the staffers involved posted fewer stories were posted to the site.
I do agree that we have to investigate different methods to generate revenue, but it has to be done with an eye kept on our current capabilities.
Great post. This is going to be required reading for my team. The goal in my mind is to convert content to malleable formats in order to shape it into micro-content (remember that terms of art from a couple of years back?) suitable for value-added products and services. And, yes, perhaps even include lightweight DMR or controlled channel access to boot. I disagree with Doug that the media investment required will be a cost adder. In fact, I would argue that backlist content can be monetized based on brand (read: trust) alone.
Doug – thanks for your comment, good points. The main point I am making here is that a sustainable future for B2B publishers and media companies needs to be built by looking first at customer/audience need, as well as advertiser need.
If we start by looking at existing products and capabilities of media companies in order to map out the future, we will likely not find sustainable revenue streams that are eluding us.
Every month, I hear of more newspapers & magazines closing their doors. No doubt, they were “essential” to segments of their industries, but that doesn't mean there was a sustainable revenue model to support it.
I am not really looking at models like Time or Newsweek at all. For one, they are B2C, which is far less interesting to me than B2B. Second, they are both really struggling – not exactly the model for another 100 years of serving their readers.
Anyhow – thanks so much for sharing your experience – this is not a simple conversation, and the answers will not be easy. Enjoy your weekend.
-Dan
Thanks – glad you found this useful. The question that always gets me is: “if you were to launch a media company today, would it look like the current model that magazine and newspaper companies use?” There are various ways to phrase that question, but the answer is always the same: “No.”
The real challenge for existing companies is not whether they should change. Most are, and doing so with a great deal of passion and positivity. But “how fast” and just plain “how” are the key metrics here.
Anyhow – thanks for your comment. Have a great weekend.
-Dan
Feels a bit like we are one hand clapping here .. but I think there is real opportunity in paid content distribution. Our experience is limited to recipe content, but I think it makes a clean example. Recipes are the atoms or cookbooks. Makes perfect sense to unbundle them but there are a number of licensing issues (no photo licenses, rights limited to the entire collection not the elements). All surmountable issues but they involve cultural changes.
The key issue is that people want to build recipe collections as a series of atoms and they are willing to pay to build that collection. It is more convenient and makes it accessible ( especially with http://mydemy.com ). But the consumer and the industry are working at cross-purposes. Publishers are wedded to the impression-based advertising model, so allowing consumers to “clip” content costs them web traffic (read: google juice) to the site in their minds. We have offered payments per recipe and embedded advertising within our recipe atom structure, but this is still a very large shift. Consumers, on the other hand, want to collect recipes and are willing to pay for it. Allowing them to clip and save structured (read: linked), branded content is the ideal structure in my mind.
We have some conversations ongoing in the industry, but the major paradigm example, the e-book, still makes the entire cookbook model the only one that has traction. Change is normally incremental, so we are sticking with it and making headway.
A bit long-winded but I have time to kill flying back from Hong Kong today. I hope that adding our experience to the conversation makes a contribution toward a sustainable business for content. But in my opinion, chasing traffic is not much of a model in a vertical: it never gets big enough to matter. Content needs to be sold, and, in our experience, consumers are willing to pay. DRM is a bad word, but DRM that makes content more convenient to collect and share adds value for publishers and consumers alike. There. I said it!
These are good ideas. If I were to launch a media company today, I would focus on building a community, online and face to face. Get people together and make it easier for them to stay in touch after the event with blogs, Twitter etc. How would I make money? Charge a membership fee. Maybe what I am really describing is something like TED.com — that could be the media company of the future
Jim – Good ideas. Though, the marketplace is getting crowded, TED stands out for so many reasons. Also – its more than 20 years old, I believe – yet 99.99% of people only learned about it in the past 3 years. Have a nice evening!
-Dan