Free Versus Paid Is A Misleading Argument For Content Owners Moving Online
The argument about how content owners and creators should make money online seems to always be simplified to free content with advertising versus charging for content via subscription.
This is an extract from a recent interview on PaidContent.org with Rob Grimshaw, the publisher of the FT.com, which is typical of what I mean:
“We’ve done the sums - it’s really difficult to see how an advertising-only business can stack up unless you’ve got enormous volume. If you start doing some simple maths on this thing, it becomes clear what a challenge it is. If you’re aiming to make $50 million a year from your online advertising business, which is not massive, you’re going to need 833 million page impressions per month at CPMs of $5 a time. If they drop to a dollar, you need 4.1 billion. There are hardly any websites that have anywhere near that volume and few can aspire to it - you’re going to need some other way to make money other than adverts.”
His conclusion is that paid subscription for unique content is the only solution.
This is a dangerous and inaccurate over simplification which is damaging one of the most exciting online opportunities.
There Are Dozens Of Ways To Make Money From Online Content
There are literally hundreds of thousands of content creators and owners, big and small, who are like rabbits frozen in the headlights of an oncoming truck because they can’t see how they can make enough money from either free with advertising or paid content with subscription.
The reality is there are dozens of ways of making money from online content which fit between these two extremes and most successful content sites have multiple revenue streams. In a recent article I listed 5 ways for content owners to make money online and there are new techniques being invented all the time.
The real irony is many traditional media businesses, who are coming out with statements similar to the FT quote above, already make money in many different ways in the offline world, yet they appear blind to the same opportunities online.
Let me give you an example. If you take a look at Gardeners World, the excellent BBC Worldwide consumer gardening magazine you will see that it makes money from:
- Charging the cover price on the newsstand
- Selling annual subscriptions
- Display advertising
- Classified advertising
- Paid listings in a supplier directory
- Book sales
- Affiliate or shared revenue deals with a wide range of companies including plant nurseries, travel agents and insurance businesses
- Loyalty members club, with discount deals
- Promoting and running offline events including Gardening World Live
- Events sponsorship
That’s ten revenue streams from the same content!
In the offline world managing this many commercial activities is time consuming and expensive. In the online world all the deals, apart from organising live events, can be automated.
Within a month any content owner, big or small, could be making money from display advertising, text advertising, affiliate deals, selling digital products such as ebooks and charging for subscription without having to negotiate a single deal.
To illustrate how an individual content owner can build a profitable online publishing business I’ll run you through an example. I worked with an author who had written an authoritative guide, with tasting notes, to hundreds of Whiskies from around the world.
Each whiskey entry had a table of information about the distillery (location, when it was established, etc) a brief description of the whiskey and a rating out of a hundred. It then had a much longer description of the particular whiskey based on the author’s knowledge and expertise.
My recommendations to the author were to:
- Publish the whisky overviews, table and rating for free. Sell sponsorship for each category of the site (e.g. the Scottish Whiskey category could be sponsored by one of the big distilleries, the Scottish tourist board, a hotel chain, a whiskey retailer, etc).
- Put the rest of the more detailed information into a premium area and charge a subscription for access. This content would continually be added to by the author including video interviews with industry experts, distillers, whiskey investment experts, etc)
- Do a deal with one of the big online whiskey retailers, like Parkers Whiskey (www.parkerswhiskey.co.uk) to send buyers to their website in exchange for a revenue share. Add a ‘Buy Now’ button to every whisky entry which takes buyers directly to that whiskey on the partner’s site
- Sell the book via the site as a digital download. Create new downloads to sell e.g. “The Investors Guide To Buying Whiskey”
- Identify other potential partners who could be promoted via the site in exchange for a revenue share. E.g. Highland Experience do distillery tours in Scotland.
- Create a distillery and retailer directory with free basic listings and paid enhanced listings
- Create whiskey tasting events around the world and promote them via the site. Arrange sponsors for each event to cover the cost of the whiskey and venue.
Hopefully you can see how a single book combined with the expertise of the author can be turned into a very successful online business with multiple revenue streams.
For larger media organisations the principles are the same its just the size of the opportunity is much bigger.
Unfortunately the content industry continues to gaze at their navels when all around them innovative businesses are making millions from the web. Focusing on what traditional publishers are currently doing online is like following the training program of an athlete who has never won a race! The role models content owners should be studying are businesses who are already making a lot of money online like TheKnot.com, Ryanair and the most successful bloggers.
There has never been a better time to start an online publishing business. Unfortunately many of the individuals and organisations who are best positioned to take advantage of this opportunity will remain fixated by the truck lights until it is too late to make a move.