Adding Enough Value To Digital Content To Actually Make Money Presentation

Scott Gray

Officially change the name of this talk: “Adding enough value to digital content to actually make money.” to “Here’s what I’m thinking”

“I want my movies to make a lot of money because I want to make more movies” – Steven Spielberg “ It’s easy to make money if all you want to do is make money” – Citizen Kane

In this talk:

Argument for getting high (high price = high returns)

Suggestions for increasing returns.

Example: O’Reilly School of Technology

O’Reilly is at the Forefront of publishing

Walking the walk on digital publishing.

Experiments in every facet

Trying many different business models

Measure everything

Analogy: B to C Online market = Serengeti plain Different body types evolved to take advantage of different opportunities

Review of Publishing Business

Sales curves for individual books Not such a bad thing: Shows Market saturation

Google (free) is forcing publishers hand to digital content

Google is a herd of Wildebeest

Arguments for digital content

It’s what users want.

Users consume smaller chunks.

Higher profit margin (no printing and shipping)

Faster to market.

Remix and mash up inventory.

Compete with Google

Big numbers online!

O’Reilly has been out exploring the Serengeti with different species (different kinds of business Models)

O’REILLY statistics via Hitbox ROI, conversion ratios, revenue, and traffic analysis.

Online Business Models (ways to collect revenue)

Advertising

E-Commerce (pay per view)

Subscriptions (all you can eat)

Advertising (lifted from Tim)

At the $5 CPM level achieved by demographically targeted sites, you need 166 million page views/month. (2 billion/yr.)

At the $1 CPM level achieved by most general sites, you need 4 billion page views/month.

At the $20 CPM level achieved by highly targeted sites, you still need 40 million page views/month. (480,000,000 pg views/yr)

Building a $10 million dollar division.

Video Ads (lifted from Nat’s Radar post)

15 cents per video

15 cent cost

67,000,000 downloads per year to get $10M

Revenue = P*C*N P = Price C = Conversion Rate N = Number of Visitors E-Commerce C = is virtually the same, and independent of P N = is less for High P

Revenue = P*C*N Higher Returns Lower Returns

The short head Vs. the long tail for digital content. These graphs Don’t intersect!

$4.00 @ 1% needs 250 million visits/yr

$10 @ 1% needs 100,000,000 visits/yr

$30 @ 1% needs 34,000,000 visits/yr

Let’s do some Math ( Goal $10M) Suppose you’re conversion rate on your own site is 1%

$400 @ .5% needs 5 million visits/yr

$750 @ .5% needs 2.7 million visits/yr

$1250 @ .5% needs 1.6 visits/yr (our conferences do about 1% actually)

$10,000 @ .1% needs only needs 1,000,000

Visitors to make $100,000,000 (online accredited schools)

Let’s do some math (Goal $10M) suppose it’s half (.5%) for higher priced products

Subscription Model (raises P)

Periodical (Make magazine)

Physical units

lifestyle support

All you can eat (Safari)

Digital

Bigger the better

Community

Can we go from free to subscription? Sports sites for example

Other Advantages of premium online

Increases customer acquisition power

Marketing Power

Adwords (90% bid between .05 and $1.00)

Advertizing in general

Affiliate programs

Higher ROI

Most of the nutrient rich food for B to C publishers is up high in the trees.

Ways to increase P (premium business)

Charge More (IDC, O’Reilly Reports)

Add a combination of other products and services (Conferences, OST)

Subscriptions (Safari, Make)

P*C*N

Be Patient, it takes a while to grow premium business

Online School offering courses and certificate programs in Information Technology and Systems. In partnership with

E-Learning Market

Training

Courseware

Subscription

Commodity

Canned Instructor or helpdesk

HR chooses

Schools

Courses

Certificate and Degree programs

Premium

Personal Instructor

Students chooses

Higher ed (b to b)

3 rd party Courseware

Restricted Pedagogically

Instructors choose

Some examples of how different the business models are: Skillsoft – 6,000,000 users @ $40/user (hr managers choose) Capella – 16,000 users @ $16,000/user. (end users choose)

Good Value @ $5000!

How we add value

OST is different