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  • 1. 1
  • 2. PATHS TO PAID EXPERIENCE and other EVOLVING REVENUE FRAMEWORKS Owen R. Youngman, Knight Professor of Digital Media Strategy 10.18.2010
  • 3. THERE IS MONEY TO BE MADE. I have evidence. 3
  • 4. KP_A1R95IWNUSV28F - Digital Publisher Payment Reports - Monthly Subscriptions Reporting Net Revenue Revenue Share ASIN Title Price period subscriptions share Amount 11/1/2009 - The next B002ACPHLB $0.99 2 30.00% $0.60 12/1/2009 miracle Year 2009 $3.60 THERE IS MONEY TO BE MADE. I have evidence. 4
  • 5. A SETTLED MATTER? At Google, I could hardly interest anyone in the question [of whether customers will ever pay for online news]. The reaction was: Of course people will end up paying in some form–why even talk about it? James Fallows, “How to Save the News,” The Atlantic, June 2010
  • 6. A SETTLED MATTER? “Content has always been monetized across a broad spectrum. You could buy a journal for a $1,000 subscription price and an audience of 1,000. Or you could pick up a paper that is given out free on the Metro . . . They have different business models, and the same principle will apply on the Internet.” – Nikesh Arora, Google James Fallows, “How to Save the News,” The Atlantic, June 2010
  • 7. GOOGLE’S VIEW, GOOGLE’S VISION Pillars of an online business model: Ideas driving Google’s work: • Distribution: getting news to more • The solution it knows it will find: the people, and more people to news sites idea that there can be a solution • Engagement: making presentation • The problem it knows it can’t solve: more interested, varied, involving the disruption still ahead • Monetization: converting these • Another problem that goes well larger, more committed audiences to beyond its ambitions: the public function revenue (through fees and ads) of news, in its broadest sense James Fallows, “How to Save the News,” The Atlantic, June 2010 7
  • 8. ONE PLACE TO LOOK Source: “Newspaper economics offline and online,” Hal Varian (Google 8 chief economist), 3/9/2010
  • 9. BUT THERE’S THIS ISSUE’: ‘THE INTERNET IS A COPY MACHINE’ • When copies are super-abundant, their price approaches $0.00. • When copies are super-abundant, stuff that can’t be copied becomes scarce and valuable. • When copies are free, you need to sell things that cannot be copied. • So what can’t be copied? Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 9
  • 10. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This explains hardcovers, and now e-books) Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 10
  • 11. IMMEDIACY 11
  • 12. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This explains hardcovers, and now e-books) • Personalization: A result of an ongoing conversation with a user. • Interpretation: The software is free. The manual is not. Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 12
  • 13. 730,000 uniques looking for world news 25% to 30% visit 15X or more 10% to 15% visit 100X per month This year’s model: $2.95 a month, aiming for the passionate few INTERPRETATION 13
  • 14. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This explains hardcovers, and now e-books) • Personalization: A result of an ongoing conversation with a user. • Interpretation: The software is free. The manual is not. • Authenticity: Knowing what we stand for is worth something. Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 14
  • 15. There's no such thing as a bad question — but there are bad answers. Activate your FREE TRIAL to Britannica Online Premium and get answers you can trust.  5 Reasons to Activate Your NO-RISK FREE TRIAL Today: 1.) It will not cost you anything: With your FREE TRIAL, you will receive full access to everything Britannica Online Premium has to offer with absolutely NO COST TO YOU. 2.) It is comprehensive: Over 120,000 articles, thousands of images and videos, and over 300,000 articles from respected magazines and journals. 3.) It is information you can trust: Our expert contributors have won more than 90 Nobel prizes, and include authors, university professors, commentators, museum curators, scientists, and other experts chosen for their field expertise. 4.) It will save you time: Stop skipping between search results! Britannica organizes relevant results from a single, reliable source. It makes finding answers to your questions easy. 5.) It can help the whole family: From grade schoolers to professionals, Britannica Online Premium has the information, tools, and resources to satisfy your work and your family.   If you decide not to cancel your subscription, your service will continue for just $69.95/yr (Save $1,325.05 off the print Encyclopædia Britannica). AUTHENTICITY 15
  • 16. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This • Accessibility: Anywhere, any time, explains hardcovers, and now e-books) always on a user’s terms. • Personalization: A result of an ongoing conversation with a user. • Interpretation: The software is free. The manual is not. • Authenticity: Knowing what we stand for is worth something. Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 16
  • 17. Shine from Yahoo! with Easy tricks for dressing “thin” Most popular stories Work and money Fashion and beauty Healthy living Get a $5 Suave coupon SUAVENOMICS ‘It’s obvious that in 5 or 10 years, most news will be consumed on an electronic device of some sort. Something that is mobile and personal . . . Imagine an iPod or Kindle smart enough to show you stories that are incremental to a story it showed you yesterday.’ ACCESSIBILITY – Eric Schmidt, quoted by Fallows
  • 18. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This • Accessibility: Anywhere, any time, explains hardcovers, and now e-books) always on a user’s terms. • Personalization: A result of an • Embodiment: 90% of life is just ongoing conversation with a user. showing up.... • Interpretation: The software is free. The manual is not. • Authenticity: Knowing what we stand for is worth something. Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 18
  • 19. EMBODIMENT 19
  • 20. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This • Accessibility: Anywhere, any time, explains hardcovers, and now e-books) always on a user’s terms. • Personalization: A result of an • Embodiment: 90% of life is just ongoing conversation with a user. showing up.... • Interpretation: The software is free. • Patronage: Some want to pay The manual is not. creators. Especially reasonable ones. • Authenticity: Knowing what we stand for is worth something. Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 20
  • 21. PATRONAGE 21
  • 22. PAID EXPERIENCE, NOT PAID CONTENT • Immediacy: Some want it now. (This • Accessibility: Anywhere, any time, explains hardcovers, and now e-books) always on a user’s terms. • Personalization: A result of an • Embodiment: 90% of life is just ongoing conversation with a user. showing up.... • Interpretation: The software is free. • Patronage: Some want to pay The manual is not. creators. Especially reasonable ones. • Authenticity: Knowing what we • Findability: There’stoo much in the stand for is worth something. long tail. Who shows me what’s good? Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008) 22
  • 23. 4 POSSIBLE AREAS FOR LOCAL NEWS • Paid content and paid • Partnerships: User-focused alliances experience: Products and services with community groups, foundations, that go beyond providing access to advertisers, and governments. news behind a wall. “Sustaining local news is not just about revenue.” • Advertising: As supply swamps demand, a focus on less user • New ventures: “If you’re going to interruption and more user service. be in the news business, you need to be in another business, too.” Bill Mitchell, “Clues in the Rubble,” February 2010 (Shorenstein Center on the Press, Politics and Public Policy) http://www.hks.harvard.edu/presspol/publications/papers/discussion_papers/d56_mitchell.pdf 23
  • 24. SOME ‘IDEAS TO TRY IN 2010’ • Paid experience: Something • Crowdfunding: Spot.us? pegged to a local passion. Mobile app? • Crowdsourcing: This is about lower • Ad ideas: Dynamic information costs. Can the users report stories, not delivery, not banner ads (MinnPost)? just comment on them? • Partnerships: With a competitor, an • Content aggregation: Curating advertiser, a government agency? local news from many sources? • New ventures: A community event • Donations: Is there a way to ask the on a topic in the news; sponsorship?. passionate few (Kachingle.com) Bill Mitchell, “Clues in the Rubble,” February 2010 24
  • 25. A TRANSITIONAL SCORECARD Opportunity Likely revenue, % overall Fit, impact on users, reach? Fit, impact with values? Long-term learning potential Advertising Behavioral targeting Advertiser-provided content User fees Memberships Metered use Foundation help Direct subsidies News services Government help Policy changes Direct subsidies Crowdfunding Donations Story funding Partnerships With competitors With users With universities With government With foundations Related businesses Mobile apps Information services Events Bill Mitchell, “Clues in the Rubble,” February 2010 25