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.

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.

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.

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.

One of the ideas that kept pecking at my brain while I was prepping for our SXSW publishing panel was this: Content isn’t free. If it’s good, it’s very expensive to make. We can subsidize its production and maintenance in any number of ways, but we have to start being honest—with ourselves, our clients, and sometimes our readers—about its true cost. And when I said something to that effect on the panel, a nearly audible roar of agreement popped up in my Twitter feed.

This is something we need to talk about.

Why Content Isn’t Cheap

Round about the time Amazon freaked out and ostracized Macmillan, a lot of people—many of them Kindle owners—started asking why they should have to pay more than a couple of bucks for their ebooks. After all, there are no printing, storage, or distribution costs for ebooks, so aren’t publishers just being greedy?

A bunch of authors and small publishers—many of them suffering sales losses from Amazon’s tantrum—stepped up and explained why books cost money.

These posts are worth your time, so pop those suckers open in a tab, but here’s the upshot: it takes a village to make a book. Authors, agents, editors, copyeditors, proofreaders, book designers, production leads, compositors, cover designers, project managers, sales teams, marketing departments, and so on. I won’t even get started on the resources required to publish a daily newspaper.

Online publishing also requires resources: planning, big doses of both creativity and disciplined analysis, writing, editing, design, project management, production, ad sales, and so on. It doesn’t usually require a separate person for each of those tasks, but it still tends to be a lot of work—more than most readers and clients tend to imagine.

Paying for It

Many organizations are beginning to realize that they need to include content planning, production, and maintenance in their budgets as well as in their project schedules. (Well…production, at least. And sometimes planning. We’re still working on it.)

But this is really a core part of the argument that people like Kristina and Jeffrey have been making: you have to plan for content, and you have to figure out to pay for it—not just immediately, but over the long term.

Most of us have worked for clients who loved the idea of “fresh” content, but had no idea what it would cost; many of us are also connected with publishing and media outfits that need to find a way to keep the lights on. We need to help our clients figure out how to pay for the content they need, and how to match their content plans with the realities of their budgets.

The right content strategy is the one that meets organizational communication needs, supports good relationships, and fits into the organization’s business model. Some clients may be able to change their business model or organizational structure to suit their communication needs, but many won’t. Some will need to find ways to publish more content; others will realize they should be doing much less. Either way, cost matters, and as content people, we should be able to talk about it.

Luckily for those of us who didn’t go to business school, there are really only a few ways to subsidize online content. Standing around waiting for an electronic media messiah hasn’t worked out very well for most print periodicals, so let’s consider the world we actually live in.

How to Make Money on the Internets

Most of the content on the web as we know it is subsidized by:

• Ads. Both reader-friendly ads, like the Deck network and less objectionable text ads, and hostile ads, like the tasteless diet aid/crappy video game/teeth whitening visual spam that even major newspapers have begun to run. Ad-supported content isn’t really free, even to the reader. If it were, web users wouldn’t be installing ad blockers. More on that in the next segment.
• Subscription/Paid Access. Paywalls, usually ringing only part of a site’s content, force readers to pay for content in actual currency or to gain access through institutions who buy group licenses. The Wall Street Journal uses the individual subscription model, while the Oxford English Dictionary and databases like JSTOR and Lexis-Nexis rely on the group-license model. Some sites will try micropayments, though I’m not especially sanguine about that, myself.
• Marketing. A lot of “free” content is subsidized by its function as a marketing tool for the content producers or the people who pay them. Many, many blogs work this way. A List Apart now runs small ads, but long before it did, it worked as a marketing channel, establishing the expertise and credibility of its publishers and writers. Most non-fiction books are also subsidized by their value as marketing tools: they don’t pay well enough to be worth the effort for royalties alone. Most commercial content strategy work deals with this kind of content.
• Paid Delivery Channels (The New Hotness). The paid iPhone app is a way of getting people to cough up money for content that they normally wouldn’t dream of paying for so they can receive it in a convenient way. Kinda like how we used to pay for newspaper delivery instead of going to the library to read the paper for free. (Spoiler: there is nothing new under the publishing sun.) We’re going to see a lot more of this in the nearish future as publishers realize that the race to free has resulted in a pileup of bleeding, sad people with no income.

That leaves a single category—content created out of love—that isn’t subsidized by anything but the individual’s desire to create, communicate, and be part of a community. For a couple of years, this is how most blogs and personal sites worked. It’s still the force behind most of the content on Flickr, Tumblr, YouTube, Facebook, Twitter, and all the other companies that have figured out how to make money by acting as content hosts and facilitators.

It’s also my favorite part of the internet, but unless your client is a content facilitator or aggregator, it’s not going to help pay the bills.

Part two: Let’s think about each of these methods of subsidizing content and how they relate to our work as content and editorial strategists.

Further Reading