The new publishing business model
The decline of print media has been explored endlessly. Everyone is agreed that the traditional business model is broken. And most people agree that there is no silver bullet which will solve the problems facing publishers in this new environment.
Persisting blindly with print is like...
To summarise the new reality:
- Print circulation is declining across the board, and in many cases will become unsustainable as a mass distribution channel.
- Advertising revenue in the print medium is declining rapidly, and advertising overall is becoming fragmented across many types of properties, including social networks, blogs, aggregators, and other services.
- Content is expensive, but almost no one will pay for it online.
- Publishers are able to freely reach much wider audiences than ever possible before, including new emerging markets, but the competition for eyeballs is fierce.
So the problem is huge; affecting hundreds of publishing companies, and many thousands of employees at those companies. So what can be done? Well, lots of things. And most of them simple, but its the complexity of managing many new and different models that is causing problems (well… and some crazy head-in-the-sand distractions). Even at this stage, many online business models are classed as “experiments” and are therefore not assigned due weight in the organisational plan. This leaves new businesses (like Craigslist, Monster, Facebook, WordPress, etc etc) the opportunity to leapfrog major publishers in specific areas, leading to the slow death-by-a-thousand-cuts that we now see.
Dan Blank of RBI has a good list of potential revenue streams (and he goes into more depth on the relevant options for B2B publications) which is worth reading. To provide a more general approach, I have summarised the main approaches as a framework, and then highlighted the most interesting and effective approaches I have seen. Some are fundamental shifts from the traditional publishing model that are only suitable in some contexts, and some are new revenue streams that are more universally applicable.
It is important to understand that publishers must move away from trying to monetise content, and focus on monetising their audience. This frees the publisher from a one-dimensional paid-content model, which usually won’t work, and from the relience on CPM advertising, which doesn’t seem to be working right now. New publishing business models will almost always combine many revenue streams, but the following is intended as a framework for exploring the possibilities.
A framework for the new publishing business model
Audience revenue drivers
Advertising – the more targeted and engaging the better. Standard formats don’t work best, but do reduce the cost of sales.
Affiliate/CPA – augmenting content with links to relevant products and services on an commission or cost-per-action basis. With the huge coverage of affiliate networks, and startups like Skimlinks (which turns product links into affiliate links), there are always relevant products to which readers can be referred.
Sponsored Content – clearly marked articles, videos, podcasts, and other content forms that are branded. See this post for an overview of the recent growth in sponsored content.
Content revenue drivers
Custom publishing – creating bespoke content for brands, for distribution as sponsored content or on the brand’s site or network. This post presents the case for custom publishing. A timely example is the recent launch of AOL and Sear’s collaboration on Good News Now.
Syndication – charging for republication of content in other formats and on other channels. With the rise of the link economy, this has become less profitable, but there are lots of opportunities. For example, Sunsilk’s microsite in India pulls in MSN India entertainment feeds.
Paid-content – charging users to access certain premium content. This can also include repurposing existing content into new and valuable formats such as ebooks, print, and mobile apps.
Data revenue drivers
Lead generation – connecting brands with users that an expressed or implied interest in the product offered. For a raw example, see Incisive Media’s IThound, which is a portal of premium content for the sole purpose of linking vendors with warm prospects in the technology and finance sectors.
Renting user database – conducting direct mail and email campaigns to the user database on behalf of brands.
Market research – providing anonymised preference and behaviour data for market research purposes. This is especially relevant if detailed and actionable data is being recorded as part of the publishers standard business process.
Advertising data – selling behavioural and other usage data to advertising networks for better targeting. This is only appropriate for very high-volume sites, but I have heard that a couple of advertising networks are working on easy-to-implement solutions which will allow less-trafficked sites to sell-back their data.
Brand revenue drivers
Products – selling iPhone apps, ebooks, market reports, or even physical products that are relevant to the audience. You can see an overview of iPhone apps run by magazines here, and read about a magazine that sells physical products as part of its new business model here.
Events – running events, meetups, webcasts, unconferences, panels (etc) for the audience. Many B2B publishers have been doing this for years, and given that “real-world” events are holding their value in the digital age, it is worth every publisher looking at this revenue opportunity.
Services – selling related services to the audience. This one really requires publishers to stop thinking like a traditional newspaper or magazine. Le Monde in France allows vetted bloggers to use “yourblog.lemonde.fr” subdomains for around EUR5. A website in Moldova operates in similar way.
Licensing – renting the publishing brand for use on products, events, and services of related companies.
Please let me know any improvements and comments you have on the above. Although I’ve tried to simplify the issues into a framework, I am very aware that every publisher will have to chart its own course, based on the vertical, audience requirements and other factors.
[...] publishers must start monetising their audience, not just their content, we are starting to see a trend where all publications, including consumer publications, value [...]
Segmentation is strength in online publishing. With that, I might add hyperlocal online divisions as a strategy.
Take a consumer fashion/shoe mag called ‘Heelboy’. Why not open Chicago.heelboy.com and Toronto.heelboy.com? Doing so opens up revenue streams all the way down the chain, not to mention richer user data collection opportunities. With the right CMS you should be able to push content across your properties, and the social media aspects are enormous.
On that note, if there’s one thing missing from this list, it’s the mention of helping readers/visitors organize and in doing so monetize them. Impossible? No, The gaming industry is moving towards it by helping players transact and taking a slice of the profits. Why not let a woman sell her Blahniks locally to other shoe mavens? Sounds safer than Craigslist.
Asking readers to pay for content is not going to fly 99% of the time. But sponsored content is a gem.
Frankly, I don’t think you’ll see innovation from traditional publishers. That forest needs to burn down. How many online properties still try to look like print editions for God’s sake!
A new breed of publishers (who were born in the amniotic goodness of the interweb) will fuse social media, craigslist, vertical audiences, segmentation, rich data collection, email marketing, flash, javascript, silverlight, jquery, mobile apps and so on. People from the Gutenberg era don’t think this way, and can’t.
Andrew: a good overview here. I am often surprised at how many media businesses overlook the idea of actually having “products” as a way to establish revenue streams.
We’ll have to chat sometime soon – lots of great ideas.
Thanks.
-Dan
The only thing I would add (I’ve probably missed it!) is strong editorial content. I often say to our teams that migration is all about being the same but different. Of course content needs to be appropriate for the web – not print online. Of course communities need to be identified and nurtured. And of course commerce needs to be generated according to the web’s particular ROI. But what is still the same is the power of great editorial ideas to generate traffic and attract revenue. I could quote particular examples here from some of our websites – if that were not too crass – but needless to say they are the same sort of great editorial ideas that I have grown up with….but different because of the web!
Good points Trevor
John – agreed. Trouble is its so easy to write link-bait content. Some publishers seem to be focusing on making a quick buck by writing content based on Google Trends, or endless Top-10 lists, which certainly does bring an immediate kick, but probably hurts the brand long-term…
Really good post and the comments from Trevor, excellent. Segmentation and the opportunity for sub domains is a very interesting area.
[...] In this excellent post (I’m playing catch up), Andrew over at Idiomag looks at the new publishing business model. [...]
Media publishers of all ilks certainly need to be looking at new models – and go well beyond the advertising-led or subscription models.
True/Slant is one model that’s certainly interesting – and brings together elements of the Le Monde model, branded content and custom publishing. In short, advertisers will be able to maintain content areas within the site – essentially creating content in the same fashion as the site’s paid journalistic contributors.
Offline, I’ve recently written about Monocle magazine as an example of an innovative model that blends many of the ideas above. They’re leveraging the print magazine to generate sales of physical products developed in partnership with boutique firms – sold via the magazine, the mebsite and 3 physical shops.
It’s doubtful that any one business model will provide the ‘silver bullet’, making the case for blended models all the more relevant.
Great comment Mark – thanks for pointing out Monocle – I hadn’t noticed they were doing that. Very interesting
I feel publishers should aim to monetarise the engagement rather than either content or audience. That engagement comes from what you get (the content) and how you get it (the experience). In publishing, the former is all too frequently available elsewhere for free unless a strong house style or editorial approach puts such a distinctive flavour on the content as to make it unique. Such it the role of niche publishing to offer content that is so specific that it is not available elsewhere.
However, experience offers ready opportunity to create uniqueness and thus monetarisable value in the perception of the audience. As humans, we do this all the time – on one hand dynamically adapting how we talk to one another to get our point across or persuade and on the other “valuing” each experience in terms of pleasure of the interaction and the quantity, quality and reliability of what was gained. The challenge is to create a similar experience through the published medium. More thought required.
Excellent post! I have to agree with David. Engagement is one possible way for Publishers. I have been working on a model/framework that in it’s simplest form is trying to tap into Engagement. At this point it’s very primitive, but I think it’s a start. Reason why I think Engagement is the way, is because Engagement is what links both – Audiences and Content.
Measuring Engagement is an extremely difficult task, but there are ways to come up with Proxies based on each Publisher’s specifics and requirements. If you can prove how Engagement affects visitor behavior, than you have a model that can allow you sell Audiences based on their Engagement Index as well sell Content based it’s Engagement Index.
Slava – interesting point.
But the issue with new ways of measuring performance is that you need a substantial amount of advertisers to buy into it (and therefore spend time and money deviating from their normal ad buy process). So it would probably be more effective to extend your measurement of engagement all the way to reader action (PPC, CPA, CPE etc) – which is something that advertisers do pay for.
Andrew,
Yes. You are correct. You have to tie Content Engagement to Audience Engagement to complete the loop and to make that content engagement model even more actionable/profitable for yourself and for your advertisers. In fact, audience engagement by acquisition channels is a very natural extension to content engagement framework. Acquisition channels in this case can be segmented by sources/mediums/creatives/keywords, as you have already described above. Without this extension, that whole model is useless.
Think about it, you just determined what pieces of content, types of content and/or editors (or whatever else dimensions you have per content piece in your CMS) draw the most engagement from your users. And so now your 2 questions are going to be: well, where are those most engaged users coming from and how can I get more of them! This is given you already proved that Engagement = Value for Advertisers. To prove Engagement = Value for Advertisers you create 2 visitor profiles: profile_1 that are Engaged, and profile_2 – disengaged and compare them against your bottom-line metrics site metrics and advertiser metrics…
I’m working on a presentation for the eMetrics summit in DC, Oct 19-22, specifically on this topic. Do you want to weigh in on it? I can send you a raw draft. Once I have it that is
Interesting points. Slava – I have emailed you directly to discuss.
Re your note about segmenting and analysing by differing levels of user engagement:
This is something I have hands-on experience with. We segmented by the source of the user sign-up (ad campaign/promotion partnership/traffic referral etc), looked at the engagement of each segment over the following month, and having identifed our most valuable source of traffic (not by volume, but by actual VALUE – persistent engagement with content as reflected by advertising revenue) we could focus accordingly.
Some more datamining thoughts are at: http://idioplatform.com/2009/06/the-goldmine-of-reader-data/
This post and site in general are bloody awesome for someone like me from a non-publishing background who is thinking about launching an online title.
Can anyone point me to explanation of the whole engagement theory – got a bit lost.
Thanks heaps!
Mark
I read your piece including the link to the PSFK article which trumpets 10 great ways Monocle has developed sponsored content in a particular issue. With view to the latter it amazes me publishers aren’t already doing this!!!! Seems pretty fundamental to me. What would be even better would be to better match sponsors and content for greater brand synergies – for example why does The Clean Energy Co. or whatever sponsor Tyler’s blog/podcast? (Unless it’s to do with environmentalism)
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