Legacy publishers have historically been beaten to the punch by the more disruptive online-only competition. That competition, as we all know, has fractured into disruptions of all shapes and sizes—from well-funded, venture-backed startups to smaller players, like Andrew Sullivan’s The Dish, which split from The Daily Beast to give a shot at a model that’s solely supported by reader subscriptions—no ads.

Traditional publishers have clearly gotten better at digital innovation, either developing in-house or acquiring their way into it, but many of the online-only content publishers, who have been innovating on the “native ad” front for years now, have already begun branching out into other revenue sources—sources that traditional publishers have already diversified into, primarily events and data subscription services—as display advertising becomes a limited option.

Now, if you’re saying, “eh, big deal,” consider why that’s happening. The value of pageview metrics for content sites that attract, say, five million monthly uniques are hitting a ceiling. Depending on who you talk to, display values are flat or declining, even as the digital advertising market grows. According to the Interactive Advertising Bureau, display/banner advertising is flat in its share of revenue when compared to other digital ad formats such as search, mobile and video.

Additionally, according to IAB, the CPM pricing model has declined from a 46 percent share of revenue in 2005 (against performance and hybrid models) to 31 percent by the second half of 2012.

If online-only publishers feel like that’s an issue, so should mid-market legacy media companies. Additionally, as those online-only publishers diversify into research and market data subscription sales and quick-hit live event series, they’re now cutting into market share on platforms that legacy publishers once thought they were the sole owners of.

Take data subscriptions, for example. Sites like Business Insider and GigaOm are aggressively selling research, both as individual subscription products and at the enterprise level. They’re able to leverage an already robust contributor field who’s been cranking out news and service-oriented copy at a rapid pace to pivot to more research-focused content.

Plus, they’re not simply producing this content and letting it sit there, waiting for customers to find it and buy it. They’re aggressively marketing and sharing pieces of it through the digital channels they’ve grown up in, including social.

And events? It turns out that the buzz sites like these have generated within their markets to pull in big-name sources for their stories has worked remarkably well in building one- and two-day events that attract those same big names as speakers. The events may be modestly produced, and sometimes clunky in execution since online-only publishers are generally new at this format, but their impact in the market is amplified, once again, by their well-practiced expertise in the digital and social channels. And guess what? These events are being scheduled right alongside or on top of traditional publisher events, competing for the same speakers and eating into the same attendee base.

The irony here is online-only publishers, still viewed as ground-breaking market-changers, are confronted with the same problem magazine publishers faced years ago: revenue diversification. Even on the web, when scale can only go so far, the audience becomes a critical revenue source when advertising hits a wall. Nevertheless, it’s instructive for traditional publishers to see what market forces their digital-only colleagues are reacting to on the front lines of the web.

Research Sales

Business Insider recently expanded its data subscription service, Business Insider Intelligence, to include research and analysis on the social media market. Up to now, the service only focused on the mobile space.

Paid access to research has become a major focus for BI. The service doubled the number of paid subs, which go for $299 each, between the third and fourth quarters last year and is just about to pass 2,000 subscribers.

Launched at the beginning of 2012, the research service leverages a small but potentially lucrative slice of the BI audience—site visitors who dug into the occasional data-centric post.

The site may be known for its rapidly produced, provocatively headlined news, but the more analytical stories tended to receive extra attention from a core and consistent group of readers.

“When we publish analytic work on the site—we span a broad range from news to features to some pretty wonky analysis—we don’t attract a huge audience necessarily for those kinds of posts, but boy are they involved with questions and comments,” says Business Insider president and COO Julie Hansen. “It became obvious that there was an audience who was interested in the deeper analytic work, either intellectually or for their jobs.”

Adding on a subscription-based content product is not a new idea for sites like BI, but it’s been a way to hedge against the ups and downs of display and native advertising, and the research content has turned out to be a clever way to link the main, free site and events with the subscription-based product.

For starters, BI uses top-level content from the fee-based reports on the main site as a teaser. “For a long report, we’ll take a portion and put it outside the paywall—a portion of the content that’s substantive enough that it’s perfectly fine standing on it’s own, but it’s obviously part of a much bigger report,” says Hansen. “These reports can be anywhere from five to ten pages, they’re pretty meaty.”

Behind the paywall, subscribers have access to two reports per week, a daily chart and several weekly news stories—plus all the archival content. The mobile research content library now contains about 300 charts, says Hansen.

And it’s not just about the data, format plays a key role. Subscribers also get the data formatted in downloadable PDF and Excel files, or as PowerPoint decks.

“We’ve learned that under certain circumstances decks are the best way to tell a particular story,” notes Hansen. “People find enormous value in the collection of data, and the visualization of data can be powerful. But they’re not a panacea. They don’t always work, sometimes a report is what you need to explain the complicated concepts.”

Beyond that, the research reports, particularly in deck form, can be magnets for subscribers. A 50-60 slide deck, for example, may become the center of a keynote presentation by BI CEO Henry Blodget. That same deck becomes a sought after presentation by attendees and others. In turn it’s repurposed as a slide show on Business Insider with plenty of marketing copy pointing readers to the subscription site.

“It’s the three-legged stool of our business model. The ad side is the biggest by far, but the other two—events and content sales—are working in concert with it in a very cool way,” adds Hansen.

As for how the business model will continue to change in the coming years, Hansen takes a wait-and-see approach—noting that focus, for a company that’s still young, is a priority.

“That’s a very iterative thing around here. We’re certainly not beholden to an annual budgeting process the way I was in my corporate life, but we’re constantly questioning. It took us a while to get the research product off the ground—there was a lot of trial and error, we had a few different editors over the last couple years, and it took us a while to find the right team, including the right person to handle the marketing side of it. Now that we have the right people in place it’s just really humming along. It gives us a lot of enthusiasm for launching more stuff. We’ve tried other things, too. We’ve tried e-commerce. Everyone was hot and bothered to do flash sales and we tried it and it wasn’t an abject failure, but we realized it wasn’t the best use of our resources. We’re constantly trying to leave no stone unturned. That said, we’re only five years old, we’re still a startup, so focus is the most important thing we can do.”

Being Realistic About Scale

GigaOM, which started as a blog in 2006 focusing on tech and tech news, now attracts about 6 million unique visitors each month. Yet CEO Paul Walborsky is realistic about how big that audience will ultimately get, the pageviews it will generate and what that means for revenue growth, particularly on the advertising side. 

“As we were building the business, we came to the realization that a company that focuses on a vertical market is not going to be a hundred million unique visitors publication,” he says. “Our growth will never be the growth of big media companies. Pageviews grow exponentially, but advertising only grows with GDP. Put those together and ad revenues are limited. Given those limitations—never reaching 100 million uniques and declining ad rates—we need to do more than ad revenues. What we’re building is not pageviews, we’re building long-term relationships with the audience.”

Does that mean it’s time to go analog? Not necessarily. A natural extension for GigaOM, says Walborsky, was to create events that targeted 10 to 15 percent of the site’s market as an opportunity to continue the conversation face to face. “They’re one or two-day events, we try to keep them at VP and C-level,” he says.

The events began in 2008, GigaOM now produces six. But again, scale became an issue. The company could only produce so many events, attracting so many attendees, it was time once again to diversify.

“We again looked at what we could do,” says Walborsky. “How else could we make money? We thought the market research space had not changed that much, production and sales had stayed the same. We tried to create a different model where we lowered the cost of  production and take our 6 million readers, and convert them to subscribers. We did that in 2008-2009. We sold subscriptions for $300 and got tens of thousands of users.”

Shortly after launching the research operation, GigaOM discovered that larger companies like Adobe and Microsoft were buying subscriptions, which lead to a more concentrated sales push for enterprise-level subscriptions.

GigaOM’s research group now has a team of 200 vetted, independent analysts that generate the content.

It sounds simple because it is. Revenue comes from ad sales first and then the audience is monetized through event ticket sales and research subscriptions—the three-legged stool. And like Business Insider, which experimented with e-commerce and flash sales, ultimately returning to focus on what works best within the context and size of its audience, GigaOM takes a deliberate approach to revenue growth.

Walborsky says that by the end of 2013, research content sales will account for more than 55 percent of revenue, with the rest coming from events and advertising. Revenue, he says, is in the “tens of millions” and GigaOM is profitable.

Experimenting with Content Models

On the content side, digital publishers are also playing with new methods of format and interactivity—with new opportunities largely afforded by HTML5.

Chicago-based music site Pitchfork, which also started as a blog, has been gradually expanding from its base of album reviews and news into video, long-form journalism and dynamic, interactive music streaming features.

The site is profitable and has not taken any venture funding since launching in the mid 90s. It also produces two music festivals in Chicago and Paris and has been growing audience at a rate of 30 percent, attracting close to 4 million monthly uniques.

“The web offers a lot of advantages over print in terms of interactivity,” says founder Ryan Schreiber. “We started out with Pitchfork.TV, our first foray into video. It offers a different means of covering articles. Sometimes we’re just capturing sessions, in other instances we have documentaries, and so it’s been really fun to experiment with that.”

More recently, the site has been experimenting with longer-form journalism through visually dynamic feature stories that become a full-browser experience. “I felt that with the right team and the right perspective we could publish magazine-style features on the web and give them nicer glossy layouts,” says Schreiber. “When HTML5 came out and became more available it allowed us to do those more simply and intuitively and take that format to another level.”

A third new feature, called Advance, takes the streaming album format one step further—creating an opportunity for the listener to also experience the band’s album art. A music fan site at heart, Schreiber says Pitchfork is aiming to bring back the lost art of album art.  “We  came up with this idea for having a full browser, graphically intense layout and recreating the experience of album artwork online while listening to it. Album art is sort of a lost art, even though everyone still makes it.”

From a content perspective, Schreiber says it’s all about packaging and driving toward deeper engagement with the audience—without losing a standard navigational structure. “What we’re trying to work toward is a layout that will allow people to engage with us a little bit more—adding more graphic components than we have in the past without losing people in terms of the structure.”