How can magazines make money online? The short answer is:
Stop being defined by the word "magazine."
Here’s the long answer:
2010 is a world where communication, distribution and audience behavior have changed drastically from when magazines, newspapers and media companies were first founded.
For those who have thrived in past decades via print ad revenue alone, there is something missing in how they port their products online. David Heinemeier Hansson describes the problem like this:
What is that magic thing? Simple:
Let’s take a look at what that means for a media company.
Selling Information vs Selling Solutions
When a media company defines their product as a "magazine" or a "newspaper," that puts inherent limits on its form, function and how customers define their expectations on its value, use and price. It locks you into an ad-revenue model that matches reach to advertiser need. For most, that is no longer sustainable as ad-revenue is just one revenue stream. There needs to be others.
What if the core pieces of what a media company provides are remixed, repackaged, rebranded and targeted to different audience segments? This will be different for consumer media than business media, so I’ll focus on just the latter, because that’s the one I like most!
Let’s face it, for the most part, magazines are not well packaged to make money online if they strictly follow their old model of matching eyeballs to advertisers. Advertising is fragmenting – as is reader attention and the realization that banner blindness exists, especially in sophisticated business markets. And just to add one more challenge, even in business media, there is a commodification of information that the web exposes so much more clearly than the print world did.
It is hard to put a price tag on something vague like ‘expertise’ or ‘information.’ It asks potential customers to work too hard to understand how the value of what is being offered will have targeted and direct affects on their goals. Likewise, it is unclear how much effort it will require of themselves to make the connection.
But when you sell something specific – a PRODUCT – then what is being offered becomes much more clear. Some examples of this could be: course, webinar, white paper, data service, etc. Even here, you need to be careful. Giving people access to a repository of 3,000 articles and reports is not as valuable as giving them a ten step program and direct access to an expert who will lead them through it. One offers potential, the other offers a more direct solution, with specific time-frames and take-aways.
Why Paid Content Works
For most media brands – like a magazine – a model like this would be a combination of familiar tactics with paid content. This is the freemium model at work. Here is an example from outside of media:
Over the winter break, I decided to properly learn how to play guitar. While I had been in bands during and after college, it was more an exercise in making weird noises than proper technique and skills. So, I turned to YouTube and was amazed at the number of lessons available, and how helpful they were.
One YouTube contributor jumped out at me, the brand Next Level Guitar. As I began learning from their many free videos, I became more interested in their paid products available on NextLevelGuitar.com. Here are some of their free & paid products:
- 498 videos on YouTube
- 700+ free videos on NextLevelGuitar.com
- Free eBook
- $29 monthly subscription to in-depth online video courses
- DVD’s of the courses, at varying price points
This is a phenomenal model, and similar to the inbound marketing techniques that Hubspot evangelizes. Be useful to your potential customers and have them coming to you. Also keep in mind that YouTube is the world’s second biggest search engine, so being active on here becomes a core marketing channel for their products.
If Next Level Guitar was a local business, I likely would not have considered paying to access its teachers under the single vague benefit of "pay us to access our expertise." But when the knowledge is definted by specific 10 minute video segments, and I can clearly see the value before I make an investment, suddenly it becomes a viable option.
Let’s model out a VERY conservative look at what Next Level Guitar could be earning from these efforts. They recorded about 700 videos, and I believe they did so in their home with a regular consumer video camera and other supplies. On the low end, this is what they could be earning from that content:
- $174,000 per year in monthly subscription revenue. 500 premium users were online last night, so I just multiplied that out by $29 per month. Likely, their active subscriber base is more than 500 folks, but I’m working with what I know.
- $20,000 per year in DVD’s. This is assuming that they sell just 20 DVD packages per month at varying price points.
It should be noted that Next Level Guitar consists of only two people. Likely, you can easily double or triple the amounts listed above and reasonably expect it to be more accurate. That’s about $400,000 – $600,000 per year. Keep in mind that much of this is PASSIVE income. They don’t have to sit there each day and teach you guitar, the 700 videos do that over and over again. They could be at the beach for most of the day.
For many B2B media brands, this is a model that can help them grow differentiated sustainable revenue streams. Imagine this mixed with print revenue, online ad revenue, event revenue, lead-generation revenue, etc. Differentiated sustainable revenue streams. That must be hard to say three times really fast:
Differentiated sustainable revenue streams.
Differentiated sustainable revenue streams.
Differentiated sustainable revenue streams.
"The lyrics are gibberish intended to sound like English"… Celentano’s rationale for the song was that, after releasing albums about ecology and social issues, "having just recorded an album of songs that meant something, I wanted to do something that meant nothing."
How many singers do this without realizing it, using well-known formulas that are popular. It sounds meaningful and authentic, but is really gibberish.
How many businesses do this? Modeling strategies and tactics based on what they feel they should be doing – what others are doing – what their markets "value" – what sounds right and seems of the moment – BUT IS COMPLETELY WRONG, offering no business value and no value to their customers.
Bandwagons vs Pivot Points
Following the constant online debate on the future of magazines & newspapers is sometimes frustrating. Mostly, I am always surprised at how infrequently the loss of classified ad revenue is mentioned when discussing how the future of newspapers & journalism can be more like the past.
So trends appear in the echo chamber on a weekly basis, as media brands wait for a bandwagon to jump on. But:
Here’s a trend that never goes away:
Focusing on critical needs and passions of your customers and target audience.
What is the path for this? Research. Knowing your market, knowing your customers and providing remarkable products that serve their needs and passions. Second, align your products to a framework that serves these needs, and creates revenue streams. Forget about the competition – focus on the customer. Build something that affects their lives and their business in profound ways. Stop looking forwards to technology like the Apple Tablet or Kindle or mobile. Those are merely a means to an end. Focus on the needs that keep your customers up at night, and how to provide solutions to those needs.
The Future is Unwritten
There is a scene at the end of the last season Mad Men that aptly describes the state of media and publishing in 2010. The episode tales place at the end of 1963, as the world shifts in a dramatic way from the last remnants of the 1950′s culture to a brave new world of the mid 1960′s and beyond.
Two businessmen are about to abandon a successful ad agency which they helped run in order to start a new one that they will own. As they look at the plush offices they are leaving, one says to the other:
"How long do you think it will take us to be in a place like this again?"
And the other responds back:
"I never saw myself working in a place like this."
The first man (Roger Sterling) represents the old ways of doing things – someone born into wealth who inherited a successful ad agency. He never had to earn his place in the world. The second man (Don Draper) is a truly self-made man, including his name. His goal is not to rest on laurels, not to create something vanilla, but to create something new, unique and meaningful; To not be afraid of what there is to lose, but focus on what their is to gain.
Those in media in publishing can’t look back at the pre-internet era and think "how can we get back there?" You have to forget that. Forget who you thought your competition was. Forget what you created before and the value you thought it had. Forget what you think you know about your customer’s behaviors and needs. Because that is not a place you want to be.
And the final scene of the episode, our protagonist steps out of a cab, having been transported from the secure life he knew with a high-powered job and stable family. He walks out into the street towards his new home – a short-term apartment lease – and the challenge of creating a new business from scratch. All the while, Roy Orbison’s "Shahdaroba" plays in the background as he sings: "The future is much better than the past."
This is where media needs to be today: in the street, talking to customers, learning what people need now, how people behave now, and considering what they will need to meet their goals. And then, of course, finding ways to provide those solutions.
If 2009 looked like 1929, then 2010 can look like 1964. What does that mean? Consider this: In February 1964, the Beatles landed in America. Nothing has been the same since.