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Wednesday, February 25, 2009

Online Publishing Business Models: Where Publishers Should Look For New Revenues

Traditional media publishers have no clue as to how they are going to make revenues from online distribution and many of them, are quickly drying up their last reserves. As a matter of fact, as content media expert John Blossom reports in this article, many potential growth markets for online content have not yet been leveraged only due to a lack of truly inventive approaches to revenue generation.

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Photo credit: Andrea Danti

Be it news, databases, entertainment or any other form of media, the winners will be those that can meter out the value of their content production to facilitate on-demand aggregation far more efficiently than they have to date.

Instead of investing zillions of money in new publishing technologies, online publishers need to focus on the aggregation and distribution of targeted content, satisfying precise on-demand requests from their audiences.

"Media companies have under-invested in online revenue generation and are now faced with the uncomfortable duty of trying to think their way out of both an ad recession and an idea recession."

 

Dead Business Models Walking: Will Major Media Companies Survive the Bust?

by John Blossom



Intro

For years major media companies have tried to finesse their transition into online markets. They've made investments in portals and ad-serving systems. They've built up online communities and search engine optimization schemes to maximize revenues from engaged audiences.

In fact, publishers have done a lot of good things to make a stronger transition to online revenues. Yet in spite of these efforts, one thing that they haven't done is to prepare for the day when they'd have to rely on online media to carry their bottom lines. It appears that this day has come. And most publishers aren't ready. By a long shot.

Where do we start? The highly leveraged newspaper deals of the past few years that were based on fantasy projections of "cash cow" revenues? As formerly solid mid-market papers such as the Seattle Post-Intelligencer are prepared for sale (and possibly going online only), as major papers such as the Chicago Tribune abandon broadsheet sales on newsstands in favor of a truncated tabloid edition, as television producers wrestle with online portals that threaten to take the steam out of broadcast and cable deals, as music companies stumble into another year of falling CD sales and wrestling matches with social media playlist aggregators, as... well, you get the picture, I assume.

 



The Importance of Online Revenues

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Nobody has a real clue as to how they are going to get robust revenues from online distribution and many old channels of distribution are drying up quickly in a slow economy. In trying to keep old cash cows alive, the potential growth markets for online content have been stunted from a lack of truly inventive approaches to revenue generation.

Online display ads? Spare inventory is running at half the rates of last year. Online subscription? It works for The Wall Street Journal and plenty of enterprise services, but few others have been willing to risk the lack of exposure to search engines and social media. In the meantime, media organizations eager to trim staffs after consolidation deals are left with less and less editorial staff to generate attention-getting content.

The presumption that online revenues for traditional media properties would ramp up at a pace that would offset declines in revenues from traditional outlets is essentially false. Media companies have under-invested in online revenue generation and are now faced with the uncomfortable duty of trying to think their way out of both an ad recession and an idea recession.

This is not to say that there aren't bright exceptions to this rule - many great brands continue to thrive, albeit on a slimmer slice of revenues and market attention than before - but there is a fundamental revenue gap that is not going to close any time soon for many publishers. David Carr highlighted this in his recent New York Times article, mentioning with only part of his tongue in his cheek that publishers should take advantage of oversized iPods expected this fall to facilitate pay-as-you-go downloads of content.

Carr is on to one essential point: ads on their own properties can't pull the full freight for most publishers in their traditional media, and neither should they pull the full freight in online media.

 



Content Aggregation and Production

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The main problem, though, is that media producers seem to be searching continually for some magic-bullet device portal that will solve their problems and recreate, at one level or another, the "walled gardens" that they had relied upon for revenue generation in the past. These artificial scarcity plays, though, generally strike audiences as, well, artificial, and rarely float on their own without exceptional features and content from a broad spectrum of sources. Even then, the next great portal or platform comes along and the game is off.

Will the revenue gap ever close to the satisfaction of today's publishers and media producers? Probably not.

Smart publishers know now much technology has passed their brands by and how much technology has enabled other brands to sweep into their audience's mindshare, but it's an uphill battle. They are up against billions of dollars invested in new publishing technologies that have not benefited their own products before benefiting the content produced by Content Nation and by any number of professionally-oriented startups that have their own take on content aggregation and production.

Latest example: The Printed Blog, a startup that is launching a twice-daily free newspaper in Chicago based on content aggregated from popular local blogs. Even print itself is not a barrier for technology that can aggregate attractive content sourced from anywhere.

 



Examples of Business Models for Publishers

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OK, enough of the doom and gloom, where's the good news? The good news is that there are business and payment model options for publishers to explore to make better use of their key publishing assets:



Micropayments

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Micropayments are not regarded highly in many circles, but they're a logical extension of existing business models such as newsstands (a quarter for the New York Post at the train station? Essentially a micropayment.) and can be implemented more effectively using technologies such as Attributor that track use but don't necessarily limit distribution.

A widespread embeddable micropayment system would enable publishers to expose limited content through viral distribution and still enable direct revenues on a transparent "I'll try anything once" impulse buying system that monitors access passively. It may turn out to be only a few cents per view - something along the line of messaging units on mobile phones - but it could create a fundamental offset in revenues that could begin to build a bottom floor for revenues that keep the doors open.

 

Agnostic Aggregation

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The most successful plays in online publishing are far more willing to treat anyone's content as potentially interesting content for their audiences. This may frustrate traditional journalists at times, but since there are fewer of them making a decent living these days to be aghast at the idea of their content being beside an independent blogger, perhaps it's not such an unthinkable thing in the long run (yes, there are probably guild / union issues, but realistically it will happen).

Having spent years trying to define technology that would enable aggregation to be controlled along the lines of traditional media business development, perhaps media companies can invest a little more heavily in aggregation plays that do not require top-heavy approaches to aggregation.

 

Focus on Talent Support

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With all of the talented journalists and media producers out there, you would think that someone would decide to recognize that the trend is towards "the talent" powering publications as independents and focus more on getting their content in the best channels possible.

If it's important for a journalist to be able to follow a particular story independent of daily publishing pressures, then why not make it easier for journalists to do so with high-visibility distribution on a wider variety of channels?

Exclusive access to specific editorial teams no longer seems to pay the bills, anyway. I think that we're likely to see a content bidding system emerge not unlike that used for online ads which will allow independent journalists to sell off the rights to their work to key media outlets on an on-demand basis.

If making money in publishing is about getting the right content in front of the audience at the right time, why not make it easier for both the content producers and the content distributors to optimize the content side as efficiently as they do the ad side?



Whatever way you look at it, today's publishing environment has put the spotlight on The New Aggregation that I presaged several years ago and has forced publishers to think about specific assets that they have and to use them more effectively as individual components that can serve markets in a variety of ways - not just through their traditional branded outlets in traditional ways.

Be it news, databases, entertainment or any other form of media, the winners will be those that can meter out the value of their content production to facilitate on-demand aggregation far more efficiently than they have to date.

The brand isn't the bundle - the brand is the ability to bundle what's most important today.




Originally written by John Blossom for Shore and first published on January 13, 2009 as "Dead Business Models Walking: Will Major Media Companies Survive the Bust?".




About the author
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John Blossom's career spans more than twenty years of marketing, research, product management and development in advanced information and media venues, including major financial publishers and financial services companies, as well as earlier experience in broadcast media. Mr. Blossom founded Shore Communications Inc. in 1997, specializing in research and advisory services and strategic marketing consulting for publishers and consumers of content services.




Photo credits:

The Importance of Online Revenues -3dfoto

Content Aggregation and Production - mipan
Examples of Business Models for Publishers - picpics
Micropayments - Aleksey Poprugin
Agnostic Aggregation - Andrzej Włodarczyk
Focus on Talent Support -Chad McDermott

John Blossom -
Reference: Shore [ Read more ]
 
 
 
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posted by Daniele Bazzano on Wednesday, February 25 2009, updated on Thursday, July 7 2011


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