Paying For It

Yesterday, I wrote that content is expensive, and that there are really only four ways to subsidize content online: ads, subscriptions, marketing writeoffs, and paid delivery channels.

But we’re not really publishers over here in the web content world, so we don’t need to think about this stuff, right?

Eh. If you work in web content, sometime soon, someone’s going to ask you about “premium” content and ads and paywalls and you’re going to have to do better than assuming an optimistic expression and then distracting the client with a cupcake.

Not that I’ve ever done that.

Cupcakes from Saint Cupcake in Portland, OR

LOOK AT MY CUPCAKES. LOOK AT THEM.

When we talk about content strategy, we are, increasingly, talking about a field that goes well beyond editorial calendars, style guides, and some copy. This is wonderful, but if we’re going to stand up and say “Hey YOU with the org chart, we need your attention, because you’re going to be hiring some new people,” we need to be able to talk about the money thing. Not just how we get paid, but how this whole “Day Two Problem” world gets funded.

So. Details.

Ads: Sucking More and Sucking Less

There are plenty of people who can break down banner sizes and text-ad optimization techniques, and I’m not one of them, so I just want to mention two things about ads and content strategy.

  1. Good online ads are relevant and context-sensitive. This is bad news for publishers like The New York Times, which aren’t very good at making cozy, contextually appropriate homes for ads. It’s great for publishers like Nick Denton who build topical blogs with specific audiences that are attractive to advertisers. Likewise, it’s good for sites that are part of the Deck Network, which serves a single, relevant ad per page.
  2. Attention is finite, and ads are attention sinks. For most people, there’s a point past which the benefit of “free” content is outweighed by the obnoxiousness of the surrounding ads, which is when they either leave your site or install an ad blocker.

These two things are related. If you’re running a niche site that attracts an enthusiastic, narrowly focused readership that advertisers want to talk to, you probably won’t need to run bullshit ads that smell like  death.

Acai berry and tooth-whitening ads on the LA times website

Embarrassing scam ads on the LA Times website

Piling on more and larger ads is an equally bad solution. The higher your ad-to-content ratio gets, the less authority you maintain, and the more of your audience you lose—and then you’re less attractive to advertisers, who can in turn demand that you make their ads even bigger. Classic death spiral.

Screencap of the front page of the LA Times website with lots of ads

The front page of the LA Times website, with ads marked in red and navigation in grey

It’s easy to see why this happens, but the end is not going to be pretty. We need to help our clients think about this stuff.

Subscriptions: Friend and Foe

Subscriptions didn’t keep most print publications profitable even when print was doing well—classified and display ads did. Legal databases, academic databases, super-specialized content . . . that’s something a lot of people or institutions will pay for. News? Bloggy or magazine-style content? Not so much.

That’s the conventional wisdom, which seems to be validated by disasters like Newsday‘s acquisition of 35 whole subscribers in its first three months of operating behind a paywall. Jack Shafer provides a nice summary of paid content woes in Slate:, listing the NYT‘s TimesSelect, the LA Times‘s CalendarLive, and Slate itself as publications that tried and failed to make subscriptions work.

The reality is a bit more complicated, though. The Economist notes that despite the disastrous results some publications see with paywalls, others are thriving:

The two most prominent are the Financial Times, which lets web users view just a few articles each month before it asks them for money, and News Corp’s Wall Street Journal, which charges for much business and finance news. The FT says revenues from digital subscribers rose by more than 30% last year. This year the paper expects to generate more from sales of content—including the paper’s print edition—than from advertising. With the help of its online paid subscribers, the Wall Street Journal was the only big American newspaper to report a gain in circulation last year.

So why do some sites die behind paywalls, while others thrive? Shafer thinks he knows:

Not all successful paid sites are alike, but they all share at least one of these attributes: 1) They are so amazing as to be irreplaceable. 2) They are beautifully designed and executed and extremely easy to use. 3) They are stupendously authoritative.

He goes on to list examples like ConsumerReports.org, MLB.TV, CooksIllustrated.com and “genealogical, fantasy sports, gambling, and pornography sites”—a collection that doesn’t entirely support his three-point test for content that people will pay for. The Economist, meanwhile, usefully notes that “There are a great many paid-for newsletters, from the Stockman Grass Farmer to the Gaming Industry Weekly Report.”

So what’s the upshot? People will pay for content that is difficult or impossible to get elsewhere, either because:

  1. the information itself is unique, as with Consumer Reports, Cooks Illustrated, and the Gaming Industry Weekly Report, or
  2. the information is surrounded by obviously and uniquely valuable analysis and context, as with the financial newspapers.

The first is an easy sell; the second is a bitch and a half.

If your content meets either of the above criteria, you’ll also be attractive to advertisers. Funny, that.

Marketing

Most content that professional content strategists work with is subsidized by its function as a marketing or sales tool (which, for me, includes corporate communications, customer service, and PR). There are plenty of exceptions, like interface copy, purely informative content, and intranets, but this category covers most content produced by institutions who don’t consider themselves publishers.

It also subsidizes the blogs and personal of freelancers and other independent artists and craftspeople, the publication of most nonfiction books, magazines like A List Apart, and bucketloads of the awful content designed to confuse and clog search engines.

We already help clients ask the right questions about this: Can I afford to spend X amount of time and money on marketing? If yes, great. If no… Am I sure that’s really true? Am I spending more money doing less effective things? (And if I am sure, what can I afford to do?)

Paid Delivery Channels: The New Hotness

The iPad isn’t going to “save publishing,” but the sale of delivery channels via iPhone and iPad applications may be the proof of concept the industry needs to develop a paid delivery model.

At our SXSW panel earlier this month, I mentioned that the iPhone/iPad app frenzy may be useful primarily as a way of training users to expect to pay for convenience. Yesterday, Slate‘s Jacob Weisberg—who certainly knows a lot more about the business of publishing than I do—gave an interview about Slate‘s iPhone app and the notion of training users to fork over money:

My philosophy about this is we want to keep the content free but people to pay for the convenience of delivery in mobile forms…. I think it makes a lot of sense but I also think it’s very important that we train users at an early stage to expect to pay for mobile.

This is important.

Of course, paid channels are  easy to get wrong. The same principles of good publishing and design elsewhere on the web—give users what they want, don’t make them think, make your design both functional and beautiful, plan for long-term maintenance—hold true in the development of successful mobile applications.

We should be helping our clients ignore the hype, focus on those parts of the model that make sense for them, and make smart choices about integrating paid delivery channels into their immediate and long-term plans.

Next week on Incisive: The next big challenge—making it simple.

12 thoughts on “Paying For It

  1. Pingback: Tweets that mention Paying For It : Incisive.nu -- Topsy.com

  2. Great summation, but I think your excellent gloss in these past two posts skates by a few key revenue options, including events, education and licensing writ large.

    We are living through a flurry of such experiments right now (leaping to mind are the Guardian Club and a more narrow, fussy Times equivalent: http://www.niemanlab.org/2009/08/newspapers-find-a-new-way-to-monetize-their-journalists/ ). Once you start looking, you realize they are everywhere. I’m indexing them here: http://predicate-llc.com/category/blog-content-topic/business-strategy/

    But licensing is the biggest of all, and the ways in which content gets packaged and syndicated (branded editorial, sure, but data as well) is expanding rapidly. There are those who argue that packaging trumps content (as if they were truly separable). In the near future, I see CSes routinely auditing for the inbound and outbound portability of content for other customers and platforms. It’s a natural extension of the way we plan for multiple delivery mechanisms like mobile today. All of which will shine a bright light on those, like our colleague Paul Ford, expert at content modeling.

  3. @Jeff: Fixed!

    Syndication’s a fascinating world, for sure. I’ll be very interested to see how it plays out for organizations that aren’t media companies — and for media companies who must compete against high-quality free content.

    Education and events can be good sources of revenue, but seem more like spinoffs than part of a content model, which is why I didn’t get into examples like An Event Apart (which was built on ALA and book deals). So much of that is about establishing credibility through content, and I think that’s all part of the “marketing” category.

    In any case, there are indeed a lot of experiments flying around. I’m mostly just surprised by how many of them are, at the core, only slight variations on the models we’ve already seen in print and broadcast. I’m not seeing much real innovation — but that’s not necessarily a bad thing.

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  5. I value good content and I am aware of the cost to provide it. I am also conscious that rewards should go to those that have built up their personal expertise, knowledge and skills and have something to say or show. As opposed to the second hand army that regurgitate without analysis or critical thought stuff that is already out there.

    The modern digital world should be an opportunity for more of the reward to go directly to those that create stuff than has happened in the past. The music industry as an example. My worry is that there is a determined effort to bring the old business models into the digital world. The models where the creator is as much a source of profit as the user and it is the shareholders and owners who get the majority of any profit. Is it going to be ‘land grab’ time where areas get fenced off so the cattle barons can get rich off the meat?

    Is there any data on how much reward creators get from the buy me a beer or coffee contribution options? Or even the shareware authors who publish software? Will we as consumers throw a big enough coin in the hat? I do in the real world if there’s a good busker. Why not in the digital?

    The potential audience per article could be a thousand. Up to hundreds of thousands if it’s exceptional. Fifty cents a view?

    Come on developers, we need a one click penny in a hat mechanism to revolutionise digital trade.

    The down side is we’ll be tracked even more than we already are. Sigh.

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  7. I’d like to add that the paywall model works well in the examples you cited not only because they have good and/or unique content, but also because those companies have a specialty audience.

    In finance, in particular, depending on where you work, the WSJ (US) or FT (int’l) is required reading. So yes, good content, but very often paid for by your employer. The ‘paid for’ part is key.

    Consumer reports sells their content like many software as a service companies do today, that is, they give away lots of free content, but subscribers get the premium data (which they do a good job of promoting with “cr” buttons).

    It’s also not expensive, and they do a surprisingly good job of creating community.

    I completely agree with your assessment, but thought worth adding that packaging and knowing your audience is a key to success.

  8. Bud is right about the specialty audience point, because it’s a very important link. But more so than whether the fee is paid by an employer or not, I think the key factor goes back to what Jacob Weisberg was talking about users expecting to pay.

    In the financial industry whether it’s WSJ, FT or industry research the end user is used to having to pay for content. The same may be true for the legal profession as they’re used to paying for LexisNexis and court documents from PACER.

    So getting users to pay for content when they’re not used to having to do that is where the uphill battle is and why these sudden paywalls have been so unsuccessful. Imagine what would happen if Facebook started requiring a $10 subscription or Gmail charged $0.01 per email. We’re used to free. So now we have to find a way to reintroduce fees.

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