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Paid Content Business Models for Publishers

  |  February 1, 2011   |  Comments   |  

If your company is making readers pay for content, here are four ways on how to generate revenue and keep your loyal audience.

Your company has made the decision to move to a paid content model, maybe as a complement to your advertising business, maybe as a sole revenue stream.

You have answered all the important questions:

1.  What will be the impact on advertising revenue, if any?

2.  Who are your target content customers? Who will pay for your online content offering?

3.  What are the 'ingredients' in your online content product? What features/services do buyers receive?

a.  Content access only?

b.  Rights to share? Comment?

c.  Other premium services?

So what business model for your paid content should you use? There is basically a continuum from purchase/rental to membership club to access control to simple donation. Each seems to work best for different mixes of audience, content type, and advertising market.

Purchase/Rental

Purchase/rental is the most successful online model today thanks to Apple's iTunes and Amazon's Kindle. You provide the content in a format that relies on a proprietary technology – iPhone, Kindle, or some kind of digital rights management (DRM) technology. The technology creates scarcity, which justifies the need to pay. The success of the iTunes and Kindle stores has led many traditional publishers to believe that this is the answer to their online subscription predicament. By repackaging online/offline content for these subscription platforms, publishers are hoping that some part of their traditional circulation businesses will reemerge in a digital form. But after less than a year's experience on the iPad many publishers are seeing issue subscription volume fall from the initial launch. For many users, the curiosity value of the newspaper/magazine app has waned and other content more uniquely suited to the platform has caught their attention.

Membership

Next, there is the membership club, like Quintessentially.com or Yoga Journal's Benefits Plus. This approach lends itself to certain types of features content, like personal shopping, personal finance, and enthusiast content, like yoga or cooking. Think of membership clubs as a way to leverage a content brand into services that people value enough to pay for. The nuance of this approach is supplementing the content with targeted services that are harder to share and easier for the user to value. For many publishers, two obstacles exist. First is the traditional divide between advertisers and editorial. The second is the ability to refocus your marketing/advertising team. In many ways their success will be the result of targeting advertisers who are the most relevant to your target audience, not just the ones willing to pay. The products and services of the 'advertiser' become as important to this model as the content at serving the audience.

Access Control

Option three is access control. Pioneered by The Financial Times, this model allows the publisher to control the number of pages that are given to an individual user for free within a given period of time. Essentially, access controls target subscribers based on intensity of use. Heavy users pay. By managing the number of pages that are allowed for free, the publisher can balance advertising inventory versus subscription revenue. Most examples allow the content to be shared relatively freely. One way to think about the access control model is as a sophisticated donation model, targeting only the heavy user with the "donation" message. The user then has to determine whether the time and effort required to leap the paywall is greater than the amount of the requested 'donation'.

Donation

The final version is donation. Sites like Bay Citizen and Texas Tribune have made donations an important part of their fundraising efforts. Why donations and not access controls? The decision is often driven by the size of the publisher. Smaller publishers with limited resources to analyse audience behaviour and to implement complex subscription platforms rely on the simpler technology to generate revenue. A little code from Google Checkout or Paypal, some smart fundraising language, and the donation platform is in place. With companies like Journalism Online investing to streamline the analytics and technology needed to implement access controls, smaller publishers can be expected to also choose access controls as a complement to donations in the future.

Underlying all of these models is the importance of understanding the uniqueness of your content and your target audience. Traditional publishers who try to repurpose their content for a particular model will probably be disappointed. Publishers who don't take the time to understand their 'loyal audience' and why they are loyal will again probably be disappointed. The last best word on implementing a paid content model is know your content and know why it is valued by your best customers. Without that, a me-too purchase or access control implementation is likely to fall short of expectations.

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ABOUT THE AUTHOR

Ross Settles

Ross Settles is an International Committee for Journalists Knight Fellow. He currently works with the leading Malaysian news site, MalaysiaKini, to develop sustainable models for online journalism in Southeast Asia. Most recently, Settles managed online business operations for Hong Kong's South China Morning Post. Prior to SCMP, he directed marketing and business development efforts for Knight Ridder Digital, the online subsidiary of what was once the second largest U.S. newspaper publisher. During his tenure at Knight Ridder, Settles led efforts to invest in and implement strategies using new online technologies: social networking (Tribe Networks), vertical search (ShopLocal), news search and aggregation (Topix). Settles worked closely with local news and business operations to develop new business and distribution models for these new investments. He also held leadership positions at technology media company Red Herring Communications, The Baltimore Sun, and the Open Society Institute-funded Open Media Research Institute in Prague. Settles has spent a decade in China and East Asia. He speaks, reads and writes Mandarin Chinese. Settles holds an MBA from the University of Chicago and a BA in East Asian studies from Princeton University.

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