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McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #1 of 70
The New Rules of Paid Content
Selling digital subscriptions is harder than just slapping up a pay wall. Here’s how to do it right.
New Haven, CT July 16, 2015
Kevin McKean [email protected]
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #2 of 70
Go Taylor Swift!
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #3 of 70
“To Apple, Love Taylor”
"We don't ask you for free iPhones. Please don't ask us to provide you with our music for no compensation …”
– Swift on Tumblr June 21 (with above head) after Apple said it would not pay artists for songs streamed during Apple Music’s three-month free trial period
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #4 of 70
Apple blinked. Now, in fairness … – Taylor was defending music creators, not publishers – and we mostly represent publishers – Taylor has the clout to make things happen …
Source: IFPI Digital Music Report 2015, ifpi.org
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #5 of 70
Still, the flap left some asking …
“[T]he entire news industry … has allowed the idea of news as a no-value commodity to take hold – with a report from Syria or the Federal Reserve as interesting to advertisers as one of the 4M mentions of laundry posted on Facebook each day, or possibly less so.” – Jane Martinson writing in The Guardian’s media blog
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #6 of 70
All of you are …
Who are the Taylor Swifts of journalism?
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #7 of 70
Why • You are working in media at a time when
content* of all types is historically devalued, advertising income is shrinking, the digital ad and platform industries have separated you from your audience and the rules change daily
• Content will never have value unless you say it does – and, fortunately, more and more publishers and editors are doing just that
ӿ Content = a demeaning term adopted for its alliteration with commerce & community; here, content means journalism and other meaningful, timely, lively, accurate and smartly packaged information that speaks directly to people about their interests, needs and fears
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #8 of 70
Nearly every week you hear of another brand rolling out payment for content, including these
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #9 of 70
They’ve got plenty of company
And ordinary people routinely subscribe to digital video, news, sports, games, merchandise & more
Subs are now the fastest growing segment of music industry
Source: IFPI Digital Music Report 2015, ifpi.org
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #10 of 70
What this talk will do
• Highlight the main tools of paid digital content, how they work & when to use them
• Offer a snapshot with specific examples of how the game is played today, with the caveat that the rules keep changing
• Encourage you to rev up your existing digital subscription strategy – or get started now
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #11 of 70
An important source!
This YPC talk is always based on original reporting plus trade news & documents. But this year, it also draws heavily on an article I wrote for the just-out issue of Folio magazine – which, in contrast to my topic, is offered free to those in the industry (see foliomag.com)
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #12 of 70
Rule #1: Choose the right business models
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #13 of 70
Why “models”?
• The word is plural, not singular, because nearly every successful company uses a mix of payment models rather than one-size-fits-all
• Multiple models are needed to accommodate different content types, customers, channels, etc. – even if selling under a single brand
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #14 of 70
Harvard Business Review At HBR, visitors read five articles a month free, or 15 if they register, but tablet editions come only with a $99/month print and digital bundle (there’s also an $89 bundle without tablets)
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #15 of 70
Jim Cramer’s Real Money This title, one of The Street’s suite of paid-access-only financial newsletters, recently started letting visitors read 8 articles a month free if they register – a first for the firm Cramer co-founded in ‘96
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #16 of 70
People, EW & more Time Inc., whose sites were free, started selling a premium People sub with mobile & merchandise a year or so ago, and recently said it would put a paywall on its other titles, starting with Entertainment Weekly
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #17 of 70
The base models
• Hard paywall + subscription
• Soft paywall (inc. meter) + subscription
• One-off sales
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #18 of 70
Early “hard paywall” examples
The first paid titles all used hard paywalls – meaning you had to subscribe to see any story; the WSJ and Consumer Reports still use hard or hard-ish walls
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #19 of 70
Use a hard paywall for …
• Uniqueness: information that is exclusive, first, niche or otherwise sharply differentiated from competitors, especially free competitors
• Frequency of need: may be frequent to sporadic; one item may contain all the value a customer needs
• Purpose: must make or save your money or life • Advertising: may or may not be important to revenue • Market: Often profession-related, such as finance,
business, medicine, law (= expensable or deductible) • Examples: market-moving stock information, new
medical journal report, comparative refrigerator review, exclusive coverage of a trial or hearing
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #20 of 70
The first successful “meter” FT.com, the Web version of the UK’s premier business newspaper, was the first major content site to launched a metered paywall in the mid-2000s; by 2012, FT’s digital circulation had topped print circ
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #21 of 70
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
ARTICLES VIEWED PER MONTH
NU
MB
ER O
F V
ISIT
OR
S
Why meters preserve ads
Setting the paywall at 10 or 15 articles a month, a publisher saves her pageviews (= ad $$) while building new sub revenue
Pay wall set at 10 PVs/month
Typical traffic pattern at an all-free site
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #22 of 70
Use a meter for …
• Uniqueness: same information is often available elsewhere but your version has a unique quality, tone, worldview, humor, depth, savvy, truth
• Frequency of need: constant (daily or nearly); value lies in the stream, not any one particular story
• Purpose: entertain, inform, amuse, motivate, impassion, affirm, etc.
• Advertising: an important source of current revenue • Market: consumer or newsy content, including news
about a profession or business that accompanies a hard paywalled site
• Examples: news, entertainment, sports, etc.
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #23 of 70
Use one-off sales for …
• Uniqueness: information that is published infrequently and is either 1) exclusive or 2) comprehensive, reliable, highly focused and, though possible to get elsewhere (even free), takes work to do so
• Frequency of need: any (daily to rarely) • Purpose: often statistical or data source or ranking • Advertising: may or may not be currently important • Market: often profession- or business-related • Examples: annual industry compendia, premium
versions of rankings, online courses, videos of high-value events, special commemorative issues
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #24 of 70
Note that the meter and other soft paywalls are variations of the “freemium” model that is so beloved by the app & illegal narcotic industries; you offer free samples to get people hooked, then demand payment for better stuff or just more
Screen grabs from the 253rd episode of South Park, “Freemium Isn’t Free,” available on Hulu, which itself uses a freemium model to upsell people to $8/month subscriptions
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #25 of 70
What’s not on this list
• Micropayments, or any other system where people pay per article they read
• Pundits love this, but it’s a bad business model
Per-use costs force people to *think* about how much they use, so they conserve to save money (or trees or whatever); that’s why we yell at our kids to turn off lights to save pennies on electricity
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #26 of 70
Rule #2: Don’t alienate existing readers
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #27 of 70
Let’s get real
• OK, you cannot charge for content in any fashion without alienating people – we all would rather read for free
– That’s why a meter works best for news – it’s less infuriating than a hard paywall for existing readers
• But when adding a hard paywall to a formerly free site, most publishers create new forms of high-value content to justify the purchase
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #28 of 70
Slate “We had a pay wall briefly in the late 1990s that was seen as a failure because not many people signed up. That left some scars when it came time to get serious about asking readers to pay.”
– David Stern, director of product development
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #29 of 70
Slate Plus Solution: a premium site with exclusive new content – often backstories, etc. related to the main site but different from it – for $5/month or $50/year; revenue is “meaningful but not business-changing”
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #30 of 70
Politico Pro The politics-focused website has been all free since its 2007 launch by two former Washington Post reporters, but introduced this new, separate paid service in 2011
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #31 of 70
Investment vs. return
• At launch, Pro had 30 edit staffers and three verticals
• Now there are 100 people covering 14 verticals, plus 60 in sales and business
• Pro now makes up 50% of all revenue – i.e., it basically doubled what Politico earns
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #32 of 70
“If a reporter gets a document or a tip … [he/she] taps out a 250-word e-mail alert – often on a mobile phone – so the news reaches subscribers in minutes.” – Martin Kady II, Pro Editorial Director
“We didn’t want to take what was free and make it paid. We wanted to keep Politico the same while introducing new content on Pro that people would pay for.” – Roy Schwartz, Chief Revenue Officer
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #33 of 70
Lessons of alienation
• Creating new content is conceptually tough and money-, labor- & time-intensive
• Works only if the content is good, totally on-brand and serves a new & real need
– If just “more of same,” use a meter
• But if you have a free site with lots of ad revenue, and must use a hard paywall, it’s the only sure way to preserve that inventory
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #34 of 70
Rule #3: Consider group sales
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #35 of 70
Go where the money is
• Of the previous two examples, by far the largest revenue producer is Politico Pro
• That’s partly a function of their different purposes & target customers
• Slate Plus is sold to individuals for private use, whereas Politico Pro is sold to groups of professionals to help them do their jobs
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #36 of 70
Why group sales Pro’s 1,800 customers include government agencies, legislative staffs, businesses, lobbying firms, consultants and others pay who from $10K to $300+K/year – explaining why Pro has grown so fast.
The same principle is driving a shift to group sales at many professional pubs, including those covering medicine, law, finance, etc.
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #37 of 70
How it works There’s no “subscribe” button at The Deal, an M&A-focused site owned by The Street; you fill out a “prequalification” form so a sales person can call to talk about a site license
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #38 of 70
“These enterprise subscriptions are highly negotiated deals with long sales cycles. We have eight feet-on-the-street salespeople in the Americas, and six in London, who develop custom solutions for large clients, plus 10 phone reps who sell to other firms.”
– Elisabeth DeMarse, Chairman and CEO of The Street, where revenues (excluding acquisitions) are up 25% since the company began to emphasize group subscription growth in 2012
Group sales are labor-intensive
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #39 of 70
Why does this matter to me?
• Group sales work for titles that serve industries where up-to-date information is critical, there is significant money, and current sources are lacking
• But the opportunities are not always obvious.
– Would you have guessed five years ago that a broad political news site like Politico could pull it off?
• Point is, examine your titles & industry with fresh eyes for opportunity; group sales really work
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #40 of 70
Rule #4: Supercharge your customer analytics
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #41 of 70
But I have good analytics
• Granted, every publisher has some form of smart, customer-data-driven marketing – but with digital subs, the need becomes urgent
– Only when you know your subscribers on an individual basis can you sell effectively to them – and charge high CPMs to advertisers
• That’s why smart titles pubs use integrated marketing that tracks every aspect of their customers’ history & behavior to tune pitches
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #42 of 70
Harvard Business Review, for example,
tracks current and past HBR customers
plus registrants to learn their purchase
history, reading habits, webinar signups and so forth. The next step , says
Sarah McConville, VP marketing, is to add social media data “so we know if you are sharing for us.”
HBR’s marketing
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #43 of 70
Not-for-profits can do this too
The Arts tab of KQED, the SF-area public TV station, draws only a few percent of all visitors – but they donate at a higher rate than other visitors, so KQED wants regular personal contact with these people
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #44 of 70
Bring in the middleware
For the Arts section, KQED partnered with SF-based startup Eureka King to coordinate its traffic, email & marketing systems to triple email signups
Conceptual diagram by
EurekaKing.com
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #45 of 70
Remember the “funnel”? • In the classic model, marketers talk about a
subscription funnel – Lots of people see the promotion, a smaller number
click, an even smaller number choose “Buy,” an even smaller number enter their credit card, etc.
– But how many people show up at a non-profit website and donate immediately? Not many
• That’s why Tim Olson, VP for Digital Media and Education, prefers to talk about a “rainbow of engagement” that recruits KQED donors
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #46 of 70
Rainbow of engagment “The rainbow is similar to the funnel but the engagement is gradual. First, on the right, we target people at the point in their lives when they need us, we let them sample, opt into an email newsletter, maybe persuade them to attend an event. Eventually, on the far left, some will donate and a few be- come lifelong sustaining members. That’s the same as for the New York Times, Salon, or anybody else.”
Tim Olson, KQED
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #47 of 70
How KQED hopes to get there
Conceptual diagram by Tim Olson, KQED
This layer is not fully built yet, but would link inputs & outputs to drive engagement
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #48 of 70
Lessons of analytics
• The evolving digital ecosystem has robbed publishers of the value of their audience
– Every ad network knows your customers better than you, since they see them across thousands of sites
• But yours is the brand they know & trust
• To win, you need to exploit that advantage to forge a bond and lead visitors through a journey of engagement in which financial support (donation or subscription) is a natural part
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #49 of 70
Rule #5: Exploit the network effect
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #50 of 70
Paid content for networks
• All digital publishers cross-promote across titles, but publishers with multiple related titles have a special advantage when it comes to driving subscribers
• ALM – the top U.S. legal publisher offers an excellent example …
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #51 of 70
ALM’s network of law publications
NATIONAL & ALWAYS FREE Law Technology News Corporate Counsel NATIONAL & ALWAYS PAID Supreme Court Briefs AmLaw Litigation Daily
NATIONAL @ 5 ITEMS/MONTH American Lawyer National Law Journal REGIONAL @ 5 ITEMS/MONTH Connecticut Law Tribune New York Law Journal Texas Lawyer Delaware Biz Court Insider Asian Lawyer New Jersey Law Journal & many others
Free
Premium
Metered
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #52 of 70
Article is blacked out and 5-article policy explained
When you click on your 1st article, a pop-up explains the payment policy
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #53 of 70
What happens next
• Even if you visit a different ALM title, the system keeps track of your number of stories
– On article #3, you get a popup reminder
– On article #5 from any combination of titles, a final challenge asks you to subscribe
• Thanks to network cross-sells, digital revenue went up 85% after the first elements of this system launched in 2013
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #54 of 70
Latest: a practice-focused system
Law.com now also divides content into five “practice areas” that sell for $25/month each or $99/month for unlimited for access to all
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #55 of 70
Lessons of networks
• Sure, ALM is special and its content serves a well-paid profession
• But any publisher with a network – or even just a presence in multiple channels (mobile, video, social etc.) – can use a similar strategy to boost sales across his/her network
• The trick is getting your network to function like one, not like a series of isolated islands
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #56 of 70
Rule #6: Do it the easy way
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #57 of 70
Payment systems can be simple
• Pioneers like the FT and NYT built their own metered systems at huge cost (NYT reportedly spent $25M, WSJ over $30M)
• Some still choose custom solutions, but for most
pubs, off-the-shelf is fine
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #58 of 70
Some off-the-shelf vendors
Founded 2009; NY & London offices; recently bought by Piano; leading provider for news
Founded 2011; NY & London offices; chosen by Slate & Time Inc., among others
Founded 2011; LA-based; “hundreds” of clients
All are easy to install (typically just javascript or a server plug-in), offer multiple charging models, and handle all user interface and billing; they typically take a 10-20% revenue share
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #59 of 70
Other options
The Hearst-owned CRM provider offers a range of
paid-content options
Its XML extraction enables publishing across multiple platforms without extra production work
This one-price-covers all vendor offers an electronic newsstand in which readers pay $10 or $15 per month to read a range of titles
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #60 of 70
Lessons of payment vendors
• Choosing one is like buying shoes for a 5-year-old: anything you select will pinch in a year
• So find a solution that gives you room to grow without locking you in
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #61 of 70
Rule #7: Deliver value beyond content
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #62 of 70
Going beyond content
• One key lesson from every publisher: to sell digital subscriptions, you must offer more than just words on a virtual page.
– Slate Plus, for example, has only two exclusive stories/day – vs 50-60 on main site – but members get event discounts, special podcasts, extra prominence for their comments, etc.
– HBR just launched a “Visual Library” with graphic downloads and slide-deck versions of articles
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #63 of 70
Beyond content For wary investment banking customers, The Street offers behind-the-firewall integration so no one can snoop on what they are reading
At MIT Technology Review, subscribers get the annual sci-fi
compendium for free
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #64 of 70
Hey, anyone up for ribs? Texas Monthly’s BBQ Club offers discounts from partners & early tickets to food events, which are valuable since TM’s Annual BBQ Festival has sold out in as little as five minutes in recent years
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #65 of 70
Rule #8: Bundle to boost what’s profitable
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #66 of 70
Yes, you’ve always bundled … … but paid content gives you an extra lever to adjust to drive buyers into the mix of products that maximizes your profit and growth
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #67 of 70
NY Times pricing in July 2013 … Type Yearly cost after
intro period Comments
Web + smartphone $195
Web + tablet $260
All digital $455
Weekend + all digital $432
Daily + all digital $660
This disparity helped boost weekend subs
Core digital strategy
= includes print
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #68 of 70
NY Times pricing in July 2014 … Type Yearly cost after
intro period Comments
NYT Opinion $78 Enables lower priced entry
NYT Now $104 (ditto)
Web + smartphone $195
Web + tablet $260
All digital $455
NYT Premier (+$120) More from loyal customers
Weekend + all digital $452 Raised ~5%
Daily + all digital $693 Raised ~5%
Core digital strategy
= includes print
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #69 of 70
… and today Type Yearly cost after
intro period Comments
NYT Opinion $78
NYT Now $104 Made FREE after May 2015
Web + smartphone $195
Web + tablet $260
All digital $455
NYT Premier (+$120)
Weekend + all digital $479 Raised ~5%
Daily + all digital $728 Raised ~5%
Core digital strategy
The heart of the digital sub model is unchanged, so it’s probably working, but Times is going for ads or reach with NYT Now, and covering physical costs in print
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #70 of 70
Lessons of bundling
• Free content has no value to a bundle
• But once you assert that content has value, it can be used to drive business to any channel
– We just saw how NYT used it to push Sunday circ
– Paid digital subs become a perk that can help sell events, annuals, new titles, “gift subs” with renewals, and whatever else you offer
• Paid sites have value, even if few people pay
McKean: Six New Rules for Getting Paid for Your Content Yale Publishing Course, July 2015 Slide #71 of 70
Thank you! Questions? Kevin McKean [email protected]
New Haven, CT July 16, 2015