Marketing Expert's Corner
This article written in 2009
When There's No More Print
Sometime around 1995 the high tech world decided that content should be free -- in both senses of the word. The Free Software Foundation was setting the early legal foundation, while Yahoo, Netscape, and Napster were setting the commercial precedents (legal or otherwise) for delivering previously expensive content without charge. It was the fight for eyeballs in the early internet, and like in the early days of AM radio there was a lot of experimentation... with dramatic and unforeseen consequences.
Today, the repercussions of the Digital Millennium Copyright Act on the one side and Google/Gnutella on the other are still playing themselves out. Despite the collective IQ of the high-tech and media industries, everyone is still trying to figure out how to monetize all those eyeballs, and how to build new business models that provide us reliable sources of the stuff we want (like music, investigative journalism, or entertainment) without the things we don't want (like wild pricing or ridiculous contracts). If you sell software, documents, services, or any kind of access to intellectual property, you're selling content: this issue is for you.
If even the porno industry hasn't figured out how to reliably monetize content (witness Larry Flint's appeal for a $5B bailout and the bankruptcy of Penthouse.com), the right answers are not at all obvious.
As I blogged last month, 2009 may well be the year when US newspapers and news magazines finally go out of business. Thanks to the ubiquity of internet connectivity, paper is a lousy medium for delivering news -- there's no advantage to it. By the same argument, there's no reason to stamp CDs any more: for software, databases, books, or music, downloads are the superior medium in every measurable aspect. Terrestrial radio has no point except in a car, and satellite-based radio is teetering on the edge of bankruptcy. Time for something new.
But so far, a lot of the "something news" people have been trying are just retreads of old ideas, with marginal success:
- Advertising - whether in software products, media, or services, using advertising as the revenue model is a tried and true strategy. But unless your audience is really big or very loyal and tightly focused, you can never charge advertisers enough to come close to profitability on this revenue stream alone. However, there are several practices that can improve results by 2 or 3 times, and even more if you consistently use them all together:
- Focus the audience, understanding who they are and why they're looking at your content
- Present only the ads that are relevant to the audience, and do it as un-obnoxiously as you can (it's OK to
be a little intrusive, particularly if the ads are funny)
- Do a great job of interstitials, animated windows and mouse-over links, rather than static banners or
- Give people an easy escape from the ads, particularly when they take over the screen; don't badger
- Change the ads frequently (both the product and the creative)
- Set very high standards for the creative, in the hopes of getting viral effects
- Invest in your advertisers' success, and share the rewards -- use the best ideas from ad networks
- Use eye-tracking software to test ad locations, colors, animations, and yield
- TEFT: do extensive A/B split analysis, testing every F'ing thing about the ad, the call to action, the
payoff, and the user responses.
- Subscriptions are also a well-proven model, particularly if you offer a clever range of pricing options and terms. For example:
- A one-week subscription at a relatively high price for people who need access for a short period;
do not hose subscribers in this model with automatic renewals, as you'll get more complaints than it's
worth (reversing auto-renewal transactions is expensive in both time and reputation)
- At the end of any one-time subscription, auto-email the subscriber with limited-time offers for extending
- A one-month-per-quarter repeating subscription for people who need periodic access but don't want to
pay for full-time; this one should have auto-renewal
- A one year subscription at the lowest per-month price; this one should also have auto-renewal.
- Pay-per-use models work very well for high-value content, particularly if there's an element of timeliness or fashion that can lead to impulse buys. Immediately upon purchase, offer limited-time discounts for an upsell, so that purchasers will consume more of your content than they planned.
- Convert your "flow of content" into a product, for which you charge separately. This model is used most often with news archives (today's article is free, looking at last week's articles is $5 and looking at all articles in the library is $10), and it can be applied to a wide array of "free" content. Your product can include a wider scope or depth of information, better tools, freedom from advertising, better cataloging or indexing, "audience reaction" information (such as reviews of an article, commentary, or blogs on a related topic) or physical media (such as a CD-ROM).
- Offer a "certified safe" version of free content at an extra charge. This works particularly well with free software and song downloads that are rife with bugs, Trojan horses, and viruses. You can't charge much extra for this, but if you make fulfillment completely automated to wring all the costs out of the transaction, you can still get profitability there.
Make it easy to spend money with you
For any type of transaction, you need to make every single step as easy and streamlined as possible. For example:
- For a one-time purchase, do not require customers to create an account with you
- For any repeat purchase, ask them to set up a profile with you so they don't have to re-enter all their information every time they visit
- Offer a variety of payment options, particularly with payment media you haven't considered before such as:
- AMEX, as well as Visa and Master Card
- Google checkout
- Mobile-phone billing
- Prepaid "points" or coupons
- Mileage-plus miles or credit card loyalty points
While each of these alternative payment mechanisms may represent a huge pain in the neck for you, that is the source of their silver linings: your competition probably won't go to the work of setting them up, forming an implicit barrier to entry. And the payoff to your bottom line will scale with each new customer.
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