At the ABM Executive Forum in Chicago, executives from all facets of the b-to-b world are on hand to discuss what’s top of mind for the majority (if not the entirety) of the industry: monetizing content.
Part of the discussion included lessons learned from the consumer side of the business. Kevin McKean, Consumer Reports‘ vice president and editorial director, opened up the conference by discussing the successful paid content model Consumer Reports currently has in place. The magazine has a circulation of 4 million, and the website has 3.3 million subscribers. Combined with other products, these subscriptions bring in $225 million to $230 million in annual revenue for Consumer Reports.
Consumer Reports began to establish its paid content model in 1998. McKean says that about 20 percent of CR’s content remains outside its paywall; this information "doesn’t tell specifics", McKean says. General advice, videos and news items are accessible without payment; while specific, data-rich content like top ten lists, comparative ratings and individual test reports is available exclusively to subscribers.
McKean highlighted several points he deemed as "common wisdom" about paid content that publishers should be weary of. Some of this faulty logic includes:
1. "Information wants to be free": Stewart Brand said this to Steve Wozniak, co-founder of Apple, at the original Hackers’ Conference in 1984, and it’s circulated since. McKean disagrees, saying, "You can charge for content that is truly unique or better; better means really better. This kind of content helps people make money, save money, buy/sell something or offers something useful. It is hard-to-find, actionable information."
2. "Monetize new through old": As McKean points out, the more disruptive a new product is, the less likely it is to develop an immediate revenue stream. Many publishers are bundling digital offerings with print products, and McKean points out that consumers don’t necessarily want all their information available in both print and digital forms; most customers have an access preference. He says, "This strategy is unwise, as you stifle the new before it can find its proper value."
3. "Protect existing products": "Failure to cannibalize your portfolio is one of the worst mistakes companies can make," say McKean.
4. "Sell via microsales": This tactic has long appealed to publishers, selling bits of information to consumers for an extremely low rate. As McKean points out, while these pennies add up for publishers, this purchasing process forces consumer to begin to ration use of content. "This then motivates them to find free alternatives," says McKean.
5. "Settle for good enough": In a time where consumers have endless alternatives, McKean reinforces the danger of producing mediocre content. He cited logic from a previous supervisor, Sports Illustrated editor Gil Rogin, "You’re not fighting for dollars, you’re fighting for attention."
6. "Hard paywalls convert best": This is logic that depends on the publisher, says McKean. Periodicals like Financial Times and now The New York Times are finding success in the metered paywall model. A flexible business model may work best, using options like teaser content and membership offerings to entice consumers to subscribe. At Consumer Reports, a contextual paywall model is used; this kind of paywall details what the content behind the paywall will offer to subscribers. Consumer Reports does this categorically: for its automobile information, electronics, etc.
7. "Apple charges too much": Not surprisingly, McKean agreed with this statement, suggesting publishers would benefit from playing by Apple’s rules in addition to having digital products available through other venue.
When FOLIO: asked what he considered to be a more reasonable revenue split (after all, newsstands often used to take 50 percent of total rev), McKean said an 80/20 split favoring publishers may be a fair model.
"There is a greater user acceptance of traditional and novel web-pay models," says McKean. "Publishers who aren’t charging are losing out."