The ongoing discussion of the viability of paid versus free content models for “The New York Times” and Chris Anderson’s new book, “Free,” have again raised the question of whether paid content including newspapers and magazines can survive online. For many publishers, the Internet has commoditized the information their readers want and created distribution and marketing efficiencies that result in lower barriers to entry. Old-line print publishers are struggling with declining print circulation while developing their own online publications.
Five Reasons Customers Pay for Content
With expanded media options, many information formats have become commodities or, at a best, bait to attract prospective readers to your Web site. As a result, many content organizations are looking for creative ways to drive revenues and profitability, especially in light of free alternatives.
Paid content organizations ask: “Are there still audiences left willing to pay for content?” Answer is, it depends on the type of content. For example, experience has shown that many customers are willing to pay for timely financial information and business research but not basic news that’s now viewed as a commodity. Here are the five characteristics of content that encourage readers to pay.
- Information helps make money such as stock information or business support. Many financial sites have stock quotes with a 15-minute delay, while professional investors pay for real-time data.
- Information saves money. For example, most consumers only need a general idea of the weather forecast while the department of highways in New Jersey must know exactly when a snowstorm will start and the severity of the storm since every minute of plowing is expensive.
- Information is specialized and/or hard to find because it’s scarce or difficult to obtain. This applies to many forms of research that are important to only a few, but where those few care a lot. MarketingSherpa collects information about interactive marketing and sells the resulting reports.
- Information aids usage of other products. This includes a diverse set of offerings such as technical support for software, statistics tailored for fantasy sports, or online multiplayer game enhancements.
- Information is enhanced and repackaged for added value. Information services like Hoovers provide business information that is valuable to businesses. Consumer Reports charges for its thorough, professional product reviews while many products have free consumer ratings and comments online.
Five Steps for Analyzing Your Paid Content Offering
Professional content providers need to continually assess their offering to determine if existing opportunities can be better positioned or structured differently as well as to find new opportunities. Here’s a five-step framework to help guide your analysis.
- Offering and internal strengths. Identify which of your existing proprietary products, information, and content providers your customers consider “must have” and/or are willing to pay for. For example, “The New Yorker” extended its expertise in cartoons online with the Cartoonbank that offers a variety of services beyond “traditional content” such as selling expensive prints of cartoons and being a clearing-house for cartoonists’ services.
- Audience. Assess your audience’s needs. Are there are products that you could develop to meet those needs? Consider the type of information and content your readers will pay for. It’s critical that you think broadly about what constitutes a product and how your audience will use it. Remember, it’s about your readers, not what it costs your firm! Additionally, think about how your current information could be extended or merchandised to other niche audiences that you’re not currently reaching effectively. This is particularly important for content sites with more general audiences. The idea is to identify and cater to smaller niche audiences that may be easier to service. For example, “The New Yorker” has created a festival with live events around the writers featured in their magazine.
- Competitors. Think broadly about your competitors because they develop new offerings to help meet their customers’ needs, plus they may be more efficient in doing so. Because the Internet has low barriers to entry, new competitors may arise seemingly out of nowhere. [For more help on this aspect of the analysis, read this column, “What You Can Learn From Your Competitors.
- Analytics. As with any strategic initiative, you should give careful consideration to your analytics. This includes monitoring your audience, marketing, traffic, and brand indicators as well as your revenues and expenses. Where possible, you should consider looking at customer lifetime value to ensure that you’re maximizing your profitability.
- Pricing. It’s critical to approach pricing with care. In my experience, many content providers have a tendency to under price their products. To the extent possible, consider how you can test alternative pricing models and levels to ensure that you’ve maximized your revenue.
Publishers will continue to have difficulties creating profitable business models largely due to new competitors with lower cost structures. But careful assessment of your offering and audience with an understanding of the types of content consumers will pay for can translate to more effective paid content. Remember, every offering doesn’t have to be a home run, but you’ve got to keep coming to bat and swinging at that ball.