Dealing with a Changing Revenue Model

This article in Publisher's Weekly highlights an issue most people don't want to talk about: The online revenue model is considerably different from the print model we've all come to know and love.  The Time, Inc. example shows that "while a subscriber to a print publication generates about $118 for Time annually, online users generate only $5."  So Time loses about 96% of its revenue base going from print to online.  How many media operations can survive on 4% of their current revenue levels?

The answer to that question is, of course, "none."  But that 96% erosion rate shouldn't be considered a fait accompli.  Countless websites have pressured traditional content publishers by providing customers with a more attractive value proposition.  That's just a fancy way of saying that a lot of websites are providing content for little to no cost to the consumer.  It's no different than when a new Walmart opens up and forces existing retailers to rethink their strategy.

This is far from a hopeless battle though.  Existing publishers and other content providers can not only survive this shift, the smart ones will find ways to grow significantly as a result of it.  How?  I can think of (at least) six tactics that should be employed:

1. Look beyond the current touch points you have with your customers and work to establish new ones.
2. Take lots of small risks rather than a small number of big risks.
3. Start building new income streams with your content, even if the revenue and margin levels aren't what you're accustomed to.
4. Spend more time and resources tapping into and leverage existing communities and less time trying to create new ones of your own.
5. Do what you do best and outsource the rest.
6. Think "video."

I'll expand on each of these in follow-up posts in the coming days.

Comments

[Rafael Sidi]

Joe, I agree with yours points. It would really take some courageous and visionary leadership in publishing speciallay STM to do the third point. What's your perspective on micro-content revenue? Regards Rafael

[Joe Wikert]

Hi Rafael. Yes, I tend to believe all of those points require some degree of courage, especially as they might jeopardize your existing revenue streams. As far as micro-content is concerned, I think it will evolve into a very viable opportunity. The trick is getting your customers to see the value. With so much free content out there already one could argue that Google is already serving up all the micro-content anyone needs. You've just got to work on differentiating your offering from all the competition, including free content. That probably includes adding products and services that go beyond what you see today.

[Ty Graham]

All those CPM gods need to wake up to alternatives because soon, everyone will get blipd!