If there’s one thing media bigwigs agreed on in hours of discussion at the paidContent conference in New York on Friday, it’s that to make a profit from media you shouldn’t ask whether or not to charge for it. Instead you should ask when to charge and when not to, and you should consider e-commerce, events, apps and anything else that can add to your revenue stream.
Devin Wenig, CEO of Thomson Reuters’ Markets Division, summed up the sentiment when he told an interviewer on stage that Reuters.com, now ad-supported, will in the coming months include a mix of advertising and paid services, “just like, I suspect, just about everyone you’re going to talk to for the next day.”
He was just about right. Advertising execs, the publisher of The New York Times, entrepreneurs, journalists and many others talked about mixed, or “hybrid,” revenue streams. They seemed eager to point out all the different ways they’re earning money through unconventional means.
KC Estenson, CNN.com senior vice president and general manager, noted that CNN’s iPhone app costs $1.99. (The app is ranked 66th in the iTunes store as of this writing.) The app itself has a second revenue stream: It carries ads, which has spurred some complaints among customers in the iTunes store.
New York Times Company publisher and CEO Arthur Sulzberger Jr., in a discussion about the company’s plan to limit free access to its online content beginning next year, noted how much money the Times has made selling wine through its wine club and by selling “distance learning” with a partner company. “We have permission from many New York Times loyalists to do many things,” Sulzberger said. Interviewer Staci Kramer of paidContent noted that she paid for an app that lets her do the Times’ crossword puzzles on her phone.
An audience member at the Times session said the U.K.’s Guardian newspaper made some 20 percent of its online revenue from e-commerce. Jeff Price, president and publisher of Sporting News, announced that in April, the company would start charging $2.99 per month for content “across all devices.”
And an executive from the Financial Times said money earned from advertising on FT.com increased after the site went to a metered model, charging for access after a user looks at a certain number of stories in a month. (I have seen cases in which limiting access to a page has allowed publishers to charge higher rate for ads because the audience was considered more “qualified” and less random.)
“It is all about hybrid models,” said Amanda Richman, executive vice president and digital managing director of media buying agency MediaVest USA. “Not one vs. the other, but multiple streams, and what works, based on audience insights and research.”
Finally coming around
I found it gratifying to see media execs talking this way, though surprising that it took them so long to get here.
The mixed model has been the rule in business-to-business media for decades. A publisher attracts a loyal customer base in a targeted niche and services them in several ways, continually gathering information on customers and constantly tweaking the mix of subscriptions, events, publications, databases, advertising, reference books and anything else.
This can work beautifully:
- The publisher becomes less beholden to advertisers and to swings in the ad market and economy.
- Subscription revenues tend to be more consistent through downturns.
- Income from subscriptions and events is realized before one has to deliver the goods. The publisher can use the money to finance ventures and avoids having to raise capital or spend money getting advertisers to pay on time.
- And the publisher can use the data willingly provided by customers to further cement, advertise to and “upsell” a loyal following. Through it all, customers give feedback that leads to new products and services and can create still more revenue streams.
Steven Brill, co-founder of Journalism Online (which I wrote about here), argued that all news and information companies these days need to behave like they’re in the B2B market — a field in which he has a lot of experience as the founder of American Lawyer magazine.
“Online, everybody is, in effect, a trade publisher,” Brill said in response to a question from Poynter’s Bill Mitchell. “They have to be tightly focused on what [their community] would see as valuable. I’m sure we have 1,000 people who in this room who would — God forbid we had to pay for Poynter Online — would pay for it. Those people would find value in that.”
As to the right mix for your individual publication, TV show, movie, blog network, social media presence or whatever else you may produce, it depends on what you do and what your community is telling you. “It’s the traditional angst and creative process,” Brill said, “followed by research and everything else that determines what everyone does.”
Not, of course, that it’s easy or that success is guaranteed. The executives at the conference also seemed unified in agreeing that there are multiple avenues to revenue.
They also agreed that revenue does not necessarily equal profit, or that all these offshoot streams can sustain the business today. But they said it’s crucial to keep trying to get it right and expressed hope they would find ways to make it work.
“There is no magic formula,” Estenson said. “If there were, we’d all do the same things and be rich.”