Monetising Digital Platforms & Rights

I went to an excellent 1/2 day session on Monetising Digital Platforms & Rights on Wednesday at Vision & Media. The day was led by two top flight guys in this sector, Justin Judd - director of i-Rights Ltd and formerly ran Granada TV's digital division and Peter Cowley from Spirit Digital Media, who I heard at the Nations & Regions Media conference earlier this year.

These are some notes of things discussed that appealed to me. But it is by no means an accurate record of everything that was discussed!

I Pay, You Pay, Some else Pays
We looked at these 3 business models.
The I Pay obviously isn't a viable long term business model as putting your own money into a business for ever will end up in certain failure, but it may be necessary to get a business going.
You Pay - is where the consumer pays you for a product or service, in this context subscription models are a good example.
Someone else Pays - this is usually some form of sponsorship or advertising funded model which usually means the product or servie is free at the point of use.

The best model is probably the I Pay turning into You Pay. The problem with the Someone else Pays is that to get advertising funding you need proven scale before advertisers will support your product and as a new start up proven scale is hard to come by!

Scarcity is important
You can't make money from anything that is easily available. The music industry has learnt this the hard way and now puts the product out  but makes money from the live experience where they can control the scarcity factor. The news industry is in the process of learning this. A number of newspapers have put most of their content behind a pay wall. The FT may be able to make it stick because they have a niche market in financial related news, but The Times is going to find it harder. The Guardian is producing excellent free content but it still isn't clear how they will make money. The Daily Mail is making a go of the Someone else Pays model by producing news people want,  like celebrity news and gossip, which drives traffic to their site and they get a income form the advertising they can sell on their site because they have 'proven scale'. So simply put don't try and monetise a product which isn't scarce.

You need to understand the digital world.
This includes the scarcity issue because it is largely the digital world that has made things like music and news freely available but also the digital world has produced new routes to the market place. We were given the example of John Locke who was able to publish his book direct to the market without a conventional publisher by producing a digital version of his book using Amazon's Kindle platform and Amazon's site. He sold 1 million copies in 5 months priced at 99 cents, even based on the Amazon business model he still cleared just over 1/3 million dollars, he now has many more titles and has even written a book on how he did it, but remember no publisher, no marketing, but he will have got a major free publicity push from being an early adopter which is another thing you need to understand about the digital world. Being an early adopter brings you scarcity.


So if you can bypass the big guys and get your product or service direct to market and avoid the middle men you can make a good return. Now harness some key middle guys like Amazon or Apple and you can really make some money but you still need a good product!

Strictly Sexual was another example. It was a movie made for $100,000 and distributed through Hulu in the US, so no DVD or broadcast release, direct on line and then have cleared $200,000 already. But again it had to be a good product, with a good story, clever plot and title angle etc and despite the title isn't a porn movie. I haven't seen it because unfortunately Hulu is only available in the US . It is geo-blocked elsewhere just as our iPlayer service is blocked outside the UK.

Facebook Games
Games on Facebook is another example of making money in the digital world and often use the Freemium model. The game is free to download and use, but the free version runs slowly. So you can buy add ons that make the game run  faster and also buy add ons that help you play it. A typical example was one of the more popular games which has been downloaded 7.5 million time. If only 1% buy anything, a typical pickup ratio fror the freemium model, then then 750,000 people pay $5 brings you in a lot of money, to carry on supporting that 99% of your market doesn't pay for. Again it is much easier for the early adopters to make money.

Apps
We were shown some examples of the iTunes App chart and it was interesting to note that there were a number of audio related Apps doing very well in the chart, like Keith Lemon's Mouthboard and also an app called Fonejacker which is an app based on the radio spoof prank phone call model, but people are paying good money to listen to prank phone calls.

The ABCD of media revenue options
A for Advertising - a 'some else pays' model
B for Broadcasting revenues - the traditional broadcaster conmmisions and pays for you to produce a product but you probably won't retain all the rights to. Again 'some one else pays' either through the license fee or advertising revenue.
C for Consumer - this is the 'you pay' model, and includes services that are funded using the subscription model like Sky. One interesting fact is that in the TV world the value of Subscription TV worldwide far out values the value of advert funded TV. So the 'you pay' model is the way to go.
D for Data - this is becoming a fourth business model where you can provide a product free at the point of use but the data you collect has value which you can monetise. The new buzz phrase is 'Data is the new Oil'. This can include data like email addresses, Facebook likes and Twitter followers.

It was interesting that in the discussion of projects people were looking at, Justin & Peter were strongly recommending that a Mountain Sports Film Festival didn't set up and expensive web site to promote and sell the films that were presented at the festival. They were suggesting they use the data to make money.

Who is going beyond the Murdoch paywall 3 months in

I posted about this at the start back in July here and here. Now Peter Preston has written in today's Observer an article about numbers and types of people venturing behind The Times paywall in the first 3 months.

Fleet Street is gagging to discover whether Mr M has shot himself in the foot. Interim answer, from the heavyweight Nielsen company: foot still attached to leg. They reckon that total unique monthly UK visitors to the Times site went down from 3,096,000 to 1,782,000 when the wall went up, and that only 362,000 – about 20% – ventured on to pages beyond the wall. You can weave webs of relative triumph or disaster from all this. The good news for News International is that those who vaulted the wall were a bit older, richer and more dedicated to scanning the site carefully. They are the "engaged readers" advertisers admire – as opposed to the click-by-night trade who never stop to buy anything. The bad news is that a few hundred thousand unique visitors sounds pretty puny compared with the 20 million or so the Times was claiming before the wall went up. If you want a guess in the fog, 362,000 "engaged" UK readers was broadly what the Mail (a believer in a web without walls) found a year or so ago when it took a 30m unique visitor monthly total and whittled away overseas callers and click-by-nighters. By those lights, the Times's great wall isn't a flop, nor yet a necessarily a glowing path to future riches. But there's something worthwhile left to work with, so start counting the ads.

Back in July I compared the two models, the paywall from The Times and the traffic driven site from The Mail. Well 3 months on into the Murdoch paywall and it seems that both models are producing about the same number of engaged users.

More on the paywall issue

There are two interesting articles in The Observer on The Guardian web site relating to newspapers and paywalls. The first from David Teather reports the drop in users of The Times web site since the pay wall went up...

The Times newspaper's website has lost two‑thirds of its audience following the implementation of a paywall, according to data published yesterday – a dramatic decline, but not as steep as many had forecast.

But David reports there may have been reasons for this...

The drop may have been softened by an introductory charge of £1 for the first 30 days. Murdoch aims to charge £1 per day for access to the site or £2 for a week. According to Experian Hitwise, which monitors internet traffic, the biggest drop in audience came in the five weeks ahead of the paywall going up, when visitors were asked to register their details. The site lost 58% during that period and the decline has only been modest since the wall went up.

The second article by Peter Preston reports that whilst The Times might be loosing on line readers The Daily Mail is doing very well the increasing traffic appears to be bringing in the ad revenue....

Take the Mail in print. Around 1.9 million punters buying a copy every day, which means 4,881,000 readers scanning their favourite sheet each morning. And online, the growth from nothing much four years ago to 40,500,000 unique browsers a month is verging on the phenomenal: up 72% year on year. Through 2009, the Telegraph and the Guardian were two close competitors – sometimes ahead, often very near to, the Mail. Not now. Both still have good growth of their own, but Associated's electronic baby – 16 million unique browsers in the UK, 26.3 million in the rest of the world – begins to hint at a different league.

He reports that The Mail is doing some things differently, firstly....

Unlike its rivals, the Mail shuns newsroom integration and runs online operations totally separately, which means that costings and revenue are separate, too.

and secondly....

There is no rule that says online papers must play print's little brother. On the contrary, the most successful ones are more like inspired riffs on a print theme. Nor is there a rule that says big print sellers carry the same clout when they transfer to screen. 

So it seems that The Mail is doing things differently and is driving traffic to its on line site to an extent that the on line product could be about to turn a profit soon. But at what cost....

Look at those yards of celebrity gossip and pictures on the site; this isn't the Mail we know (and don't much love). This is a different beast that somehow doesn't count because it fights unfair.

So offer gossip and celeb pictures for free and watch the traffic come in.  It is a sad reflection on our society that to get the traffic to the on line version of a newspaper,  increase the amount of gossip and celeb pictures and you can soon turn a profit from advertising alone.

The Guardian's response to The Times' pay wall.

This has got to be a brilliant response to The Times putting the final bricks in their pay wall......

And a very warm welcome to all our readers from The Times. We're very sorry you awoke to find you could no longer read your newspaper online without a credit card and we feel your pain.

They continue to make their introductions.....

To many of you, much of our website may seem a bit unfamiliar. We're not going to try to hide the fact that on certain – make that all – issues we tend to be the teensiest bit liberal.
But don't let that scare you. We don't bite. Very hard. And we do have a few of our very own Tories writing for us, though apparently they don't like being called Tories so I'm not allowed to say who they are as they have friends in very high places and could get me fired.

And this bit I love especially as I am no fan of the Murdoch dynasty.....

There will of course be a few very noticeable differences. We don't always write about Rupert Murdoch in the way the North Korean media reports Kim Jong-il and we have occasionally made a critical remark about Sky and News International. You may however find it refreshing that we do also criticise the Guardian Media Group when they step out of line.

Lets hope the new readers, and their traffic, will help to put back the losses they suffered last year.

Is Google about to sell us a Newspass?

Roy Greenslade in The Guardian today has reported a story about Google potentially providing a 'one click' payment system for content....

For their part, publishers will be able to designate what type of payment they want to accept, including subscriptions and micropayments. People who find content from participating publishers in Google search will see a paywall icon next to that content and be able to purchase access directly from there by using Google's Checkout platform.

Read the full article here on The Guardian's web site

In the light of various business models that are coming to the fore something like this, that makes it easy to buy the bits of content as you need it,rather than having to take out a raft of subscriptions is a good idea, because for paid content to work it has to be this kind of model or for it to be included in our mobile device package.