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Adding Enough Value To Digital Content To Actually Make Money Presentation

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Transcript

  • 1. Scott Gray
  • 2. Officially change the name of this talk: “Adding enough value to digital content to actually make money.” to “Here’s what I’m thinking”
  • 3. “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
  • 4.
    • In this talk:
    • Argument for getting high (high price = high returns)
    • Suggestions for increasing returns.
    • Example: O’Reilly School of Technology
  • 5. 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
  • 6. Analogy: B to C Online market = Serengeti plain Different body types evolved to take advantage of different opportunities
  • 7. Review of Publishing Business
  • 8. Sales curves for individual books Not such a bad thing: Shows Market saturation
  • 9. Google (free) is forcing publishers hand to digital content
  • 10. Google is a herd of Wildebeest
  • 11. 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
  • 12. Big numbers online!
  • 13. O’Reilly has been out exploring the Serengeti with different species (different kinds of business Models)
  • 14. O’REILLY statistics via Hitbox ROI, conversion ratios, revenue, and traffic analysis.
  • 15. Online Business Models (ways to collect revenue)
    • Advertising
    • E-Commerce (pay per view)
    • Subscriptions (all you can eat)
  • 16. 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.
  • 17. Video Ads (lifted from Nat’s Radar post)
    • 15 cents per video
    • 15 cent cost
    • 67,000,000 downloads per year to get $10M
  • 18. 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
  • 19. Revenue = P*C*N Higher Returns Lower Returns
  • 20. The short head Vs. the long tail for digital content. These graphs Don’t intersect!
  • 21.
    • $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%
  • 22.
    • $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
  • 23. Subscription Model (raises P)
    • Periodical (Make magazine)
      • Physical units
      • lifestyle support
    • All you can eat (Safari)
      • Digital
      • Bigger the better
    • Community
  • 24. Can we go from free to subscription? Sports sites for example
  • 25. 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
  • 26. Most of the nutrient rich food for B to C publishers is up high in the trees.
  • 27. 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
  • 28. Be Patient, it takes a while to grow premium business
  • 29.  
  • 30. Online School offering courses and certificate programs in Information Technology and Systems. In partnership with
  • 31. 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
  • 32. 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)
  • 33.  
  • 34. Good Value @ $5000!
  • 35. How we add value
  • 36. OST is different
    • Constructivism
    • Merging content and tools
    • Focused on Process
    • Restricted to skills that involve building models (Programming, Mathematics, etc.)
  • 37. Growth of a online course series Lack of saturation, and inefficient market
  • 38. Go online, but don’t forget about the giraffes