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Keeping it Simple: Content Producers
Mix and Match Confusing Revenue Schemes |
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5 September 2006 |
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With a plethora of new services and access models the music
industry is the poster child for publishers gone wild
trying to adapt to changing content distribution patterns.
Experimentation can be great, but many publishers are
poking and prodding spreadsheets rather than users to
understand what's going to result in highly profitable
content services. Publishers need to focus on keeping their
purchasing and access options simple and to do so in an
environment in which users are empowered as distribution
agents as well as suppliers of valued content. |
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This is the year that content
revenue models got messier than ever. Yes, there are still a
handful of ways in which most publishers make money on
licensing content to individuals and institutions: ads,
subscriptions, syndication royalties and paying for individual
items continue to be the dominant forms for those trying to
cash in on content. But the ways in which these models are
being deployed are beginning to blend together like some
content
smoothie, offering content users a sometimes confusing mix
of options for accessing premium content. In the music
industry, for example, one can choose from services like:
- iTunes, which
supports by-the-track payment for premium music
- The
Napster
monthly subscription file-service
- Yahoo's
MusicMatch that provides both subscription and premium
downloads
- Universal Music Group's upcoming
SpiralFrog service
that will allow limited-life downloads for people willing to
experience a 90-second ad during the download
- The
Weed file sharing service that allows free distribution
of tracks which become premium after a few plays - the
revenues from which are shared with the file sharers
- An artist's own Web site where downloads are oftentimes
free or cheap
Experimentation with revenue models can be constructive but
too much variety in how one accesses premium content can be
frustrating when it comes to understanding the inherent value
of a particular type of content as one navigates from one
service to another. Like water flowing down a hillside to seek
its own level, content users tend to gravitate towards the
simplest and most rewarding solutions. This does not mean that
they will choose illicit schemes to access premium content
automatically, but it does mean that licensing schemes that are
devised from the bottom line on out rather than the user
behavior on in tend to result in sub-optimal revenues and
margins.
An interesting example of a service designed around natural
user behavior is the new
BookMooch
book exchange service. Essentially a file sharing service
without the files, BookMooch allows its users to advertise and
send books to others in the BookMooch network based on points
earned for adding inventory and for feedback. If this were the
music industry, of course, cries of copyright violation would
abound. But the simplicity of sending a print copy away from
your own collection and to another person's collection is a
centuries-old model - a model that electronic file-sharing
emulates as a simple way to access content from trusted peers.
Like many early-stage Web services BookMooch doesn't have a
revenue model yet but instead focuses first on servicing user
behaviors properly, knowing that monetizable value points will
evolve naturally from that knowledge.
In business information subscription-based access still
dominates most premium sources, but increasingly complex
enterprise licensing formulas for subscriptions and a decade of
Web use have convinced many senior business executives that
buying the right information at the right time in combination
with media-supported general business information is a simple
and cost-effective way to manage value in content purchasing.
Services such as Hoover's
have combined both ad-supported, subscription-supported and
one-off purchase access for years, now joined by services such
as ECNext's
Manta portal that combines ad-supported business content
with one-off premium report purchases. Subscription services
are responding to these challenges by focusing on user-oriented
integration that makes the value of their services more clear
in the eye of subscribers - and, in many instances, simpler to
purchase.
How does one come up with models that work simply for
increasingly savvy content audiences? Here are a few thoughts
as to how to tune your own revenue models for success:
- Tune the value of distribution to users' expectations.
While content purchasers and users have come to expect global
networks to make distribution simple many publisher revenue
models are based on distribution being a difficult and pricey
affair. If distribution is supposed to be easy, make it so
wherever possible - and enable your users as distribution
agents wherever it seems like the most simple and natural
thing to do. In a networked world, let users be your network
wherever possible to get content in the right context quickly
and effectively.
- Work towards universal rights packaging. If
content is going to flow from "A" to "B" freely while still
ensuring revenues there has to be a more universal way to
manage the rights of licensees to use that content. Left in
the hands of technology companies seeking a proprietary edge
for their own intellectual property, rights management
systems have not flowed from a simple examination of the
needs of users - and have had limited success as a result.
The first big winners in rights management will be the
publishers who decide to heed the call of users and make it
simple to share and use content in any number of packages
with a common license management scheme. I am not holding my
breath for this to happen, but services such as Weed still
hold out hope for better ways of doing business with users.
- Build the connections that users want.
Subscription and ad-supported database services will continue
to do well where they can be engineered to service user needs
very efficiently and effectively, but building margins will
continue to pose problems as the cycle of constant product
development eats up revenues just to keep in place with user
expectations. Examine how your products and services
help your users to have unique connectedness with peers,
experts and markets - and how the efforts of users can be
harvested to increase the contextual value of your content
while holding down production expenses.
The good news is that more publishers are experimenting with
new revenue models and mixes than ever before. But in doing so
they're not likely to invent new payment schemes that will
increase revenues and margins in and of themselves. Keep
experimenting, to be sure, but recognize that the best results
tend to come to those who keep it simple and to look through
the eyes of your audience to see what it is that they really
value in a content service from suppliers and peers. You can
engineer compliance but you cannot engineer gratitude.
-
John Blossom
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