Will digital content subscriptions follow the cable model?

According to a quick Google search, the typical U.S. household now pays between $80 and $90 per month for the TV component of their cable bill (excluding broadband and phone service). Now compare that to the price of an all-you-can-read digital content subscription service like Next Issue for magazines or Oyster for books. The former is $10-$15/month and the latter is $10/month.

The average person spends a lot more time watching TV than they do reading, so that’s one obvious reason for the significant price difference between cable and e-zines/ebooks. Even though services like Next Issue and Oyster are trying to build large subscriber bases by offering the lowest price possible, I expect those rates will increase significantly in the next few years, especially Oyster’s.

A recent Nielsen report indicates that the typical American household watches the same number of channels today (17) as they watched back in 2008; this, despite the fact that those same households now have access to almost 50% more channels than they did back in 2008. So we’re not really taking advantage of this increased breadth of channels and yet our cable bills are increasing at roughly four times the rate of inflation. Yes, it’s one of the main reasons we all hate our cable providers, but it also proves we’re suckers for the boob tube.

The cable companies say they’re just passing along the higher programming costs from the networks. They also note that networks force them to carry their unpopular channels as part of the package. That drives the price up even higher and, despite the added exposure, the unpopular channels remain unpopular.

Now switch gears and think about Oyster. Today they have one of the Big Five book publishers in their catalog. The other four are presumably waiting on the sidelines for a richer deal. And despite their recent announcement of now having more than 500,000 titles in the service, most consumers will find a lot of holes when only one of the Big Five is available.

How would the model change if they suddenly had all the titles Amazon sells for the Kindle? How much would a consumer be willing to pay for that added breadth? More importantly, would the price have to go up in order for Oyster to offer that added breadth?

Most all-you-can-read ebook services use a pay-for-performance business model: the more a book is read by subscribers, the more revenue that title earns for its publisher/author. What if, like in the cable industry, publishers insisted on getting a portion of the subscriber’s monthly payment regardless of whether any of their books are read?

This drives up the price of subscription, but it also increases the value of the service, especially if it ends up bringing the other Big Five to the table. And to steal another page out of the cable playbook, why couldn’t Oyster offer multiple tiers of pricing based on the content offered? So today’s 500,000 title list remains at $9.95/month, but if the other Big Five titles are included, maybe that subscription option is priced at $19.95/month. 

The little guys might complain that they too should get a fixed minimum amount from each subscriber but I’d argue they’re benefiting from all the additional visibility the larger list creates. After all, unlike the cable TV model, I believe that a broader all-you-can-read model leads to more discovery and consumption of content that wouldn’t otherwise have been read. As an Oyster subscriber I can confirm that this is consistent with my experience; I’m currently reading an Oyster ebook I never would have considered buying from Amazon, for example.

I hope Oyster considers this sort of model to dramatically expand their catalog. And if they do, I’ll be the first to upgrade to the $19.95/month premium subscription.

Bundled vs. a la carte content

Once upon a time when you liked a song and wanted to own it you had to buy the entire album it appeared on. It didn't matter if the other 11 tracks were terrible. You were forced to buy them all.

That all changed in the digital era, of course, and now we can buy tracks individually. Consider that a victory for the a la carte model.

Spotify and a number of other all-you-can-listen-to music streaming services then arrived on the scene, further disrupting the music industry. There was a time when I insisted on owning my music, not renting it. I guess I've evolved though since I can't tell you the last time I bought a track but I know I've listened to Spotify several times in the past week. Advantage, bundled content...or is that just a new, even more liberating way to enjoy a la carte music?

Let's shift the focus to books. Many publishers, myself included, made the mistake of thinking books are like music and we should make them available by the chapter. Oops. That hasn't worked yet and I'm not sure it ever will. It's more accurate for me to say that I don't think it will ever work on a wide variety of genres; some, like cookbooks, lend themselves to it, but the typical book doesn't. Looks like bundled content wins here.

A more appropriate example in the book world would be one of the many all-you-can-read ebook subscription services. They've been moderately successful so far and I think there's a great deal of genre-specific upside here (e.g., broad ebooks subscriptions for sports, history, etc.) Again, bundled content looks like a winner.

How about shorter-form written content, like newspapers and magazines? Up to now we've been forced to subscribe to the whole paper or issue. Publishers haven't been willing to let us pick and choose the topics, writers, etc., that we want. I think that will change in the not-too-distant future. I'd love to be able to select my favorite columnists, sports, locations, etc., and create my own custom product. In this space, bundling is the only option today but a la carte looks very promising.

I mention all this because of an article I read recently about how cable TV's pricing model is supposedly unfair. The article's author notes we're forced to pay for a lot of channels we never watch. True, but what happens when that content is unbundled? If ESPN costs every cable customer $5/month does it really remain $5/month if only half the households in an a la carte world sign up for it? Highly unlikely. So in many respects, non-sports fans are helping subsidize my ESPN habit while I'm helping subsidize their Travel and Lifetime channel habits.

You don't have to look any further than Comcast's "triple play" model to see how bundles are often a better financial option than a la carte services.

My point here is that bundling and a la carte shouldn't be considered mutually exclusive. We've seen some areas where both work well while other segments tend to favor one over the other. So why not offer both and let the customer decide? But as a consumer, don't fall into the trap the author of that cable TV pricing article did and assume that adding one magically leads to lower prices.

Content Lessons Learned from NHL GameCenter LIVE

I'm a huge hockey fan and even though I pay Comcast extra for the NHL Network I only get to see a few games a week, most of which don't interest me. I want to see my favorite team, the Pittsburgh Penguins, but they're not on the cable channels frequently enough. I'd like to have access to every Penguins game and the only option for that is NHL's GameCenter LIVE subscription. It costs $169 though and, being a cheapskate, I resisted signing up...till now.

I coughed up $169 over the weekend and I'm glad I did. Now that I've used the service for a few days I've discovered there are a number of lessons GameCenter can teach those of us who manage other types of content:

The ongoing value of the direct sale -- When you sell direct you capture 100% of the transaction. There's no middleman. So now the NHL has a direct relationship with me and I'm no longer some unknown customer with Comcast in the middle. The NHL now has an excellent opportunity to upsell to me, especially since they'll quickly discover my preferences.

Trust your customers -- I was amazed to discover that I could use my GameCenter account on more than one device at the same time. That means I can watch one game on my iPad while another is playing on my computer. I'm assuming this means I'll be able to share my account with my son (who's also a big NHL fan). If so, we could both watch the same or different games simultaneously. That was a very pleasant surprise, btw, as I expected them to lock the second device out. Think of this as the equivalent to a DRM-free ebook. I'm sure the NHL doesn't want me posting my account credentials for anyone to use but their system is loose enough to surprise and delight. I can't wait to watch two games simultaneously (on different devices) when a couple of good ones are on at the same time! Btw, this is how all types of content access should work. But with all the restrictions and limitations we encounter every day in the digital world I was blown away to see how liberal GameCenter's access policies are. This makes me like them and their product even more. Trust is an amazing thing, isn't it? :-)

Make sure your content is available everywhere (including direct!) -- This sounds so obvious but it's so frequently overlooked. Sure, some of the NHL content was available to me via cable but I wanted more. Are you only making your e-content available on the "big" sites? Are those sites reaching all your potential global customers? Probably not. Once again, that's why you need a strong direct sales presence and the ability to serve that content globally.

Make sure it's on every platform -- I can watch games on any of my devices. That includes Mac, Windows, iPad, Android phone, and yes, even my Blackberry Playbook. Are all of your ebooks available in EPUB, mobi and PDF? Those are the key three today and if your content isn't available in all of those formats you're definitely missing some platform opportunities. More importantly, when a customer buys your product do they receive it in all those formats? Unless you're selling it directly as a multi-format product (like we do on oreilly.com) I'll bet the answer to that is no. Don't force your customers to buy mobi today and epub separately tomorrow, for example. That's irritating. Give them all formats in one transaction. This once again underscores the importance of having a strong direct channel. After all, you're probably safe assuming the big e-tailers are only going to offer the format that best suits their needs, not the customer's.

Pricing shouldn't be a race to the bottom -- At first that $169 price tag sounded awfully rich to me. But the more I looked into the service the more I realized it's actually quite reasonable. That's mostly because the NHL is delivering a very high quality product without the limitations found in other services (e.g., MLB's AtBat). All the games I care about are featured and the video is somewhere between standard and high def; pretty remarkable considering it's coming in via wifi. Every ebook doesn't have to be $9.99 or less. Consider your product's overall value proposition before you give in to the pressures of a low-priced solution.

Content Connections Interview with Roland Elgey

Content connections2 Roland Elgey is a former colleague (and boss) of mine who is currently President of a publishing services company called Content Connections.  This is an operation that offers a number of different services and I asked Roland if he'd lay them out for us in a blog interview.  Here's what he had to say:

JW: What is Content Connections business model and overall vision?

RE: We are an Arizona-based technology-based publishing services company with a proven methodology for both testing and developing various categories of content and identifying and creating an audience for the product. Hence our tagline: creating content that connects. We have been in business for seven years and our management team and key people have extensive publishing industry experience in college and trade.

Over the years we created a suite of proprietary online publishing tools focused in the following areas: Concept and Content Development, Audience Analysis, Competition Market Research and Comparative Analysis Primary and Secondary Market Research, Community Building, Market Development and Market Seeding/ Promotions. Yes, phew! We work very hard during the summer months as it’s too hot to go outside.

Our core business for many years has been college and educational publishing, but we have expanded our services to encompass trade, reference and K-12 publishers. We work directly with many authors on behalf of the publisher and along the way have encountered authors, prospective authors and professionals in other industries that write content  who've wanted to engage with us individually. To meet these needs, we have created our AuthorBound program which will offer authors direct access to our tools.

In terms of the future, we see social media and social networking becoming an increasingly important extension of what we do for clients. Our business is really about relationship building at any stage of the publishing timeline, and social media tools enable us to help authors exploit their networks, develop viral marketing strategies and build a community of stakeholders in the product. Our Dynamic Author Page is the first of our social media enabled tools that provides a solution for content creators as they pursue these endeavors.

JW: The audience analysis service you offer is intriguing.  Most publishers probably feel they can figure this out on their own.  What are some of the success stories you’re able to share from this service?

RE: I'll preface my examples by emphasizing that audience analysis is really the first step in building relationships and becoming close to the customer. Many of our projects result in us touching a reviewer or participant multiple times and truly developing that relationship. Three examples of success stories I like to recall are: firstly, a publisher was launching an innovative, co-branded, four color series in their market segments. The initial audience reaction to many of the proposed elements of the series was not overwhelmingly positive but as we continued to engage them via a series of online and live activities, the participants became highly involved -- stakeholders or co-producers -- and helped redefine and tweak the series concepts and key features. The initiative has been highly successful for the publisher.

Secondly, we worked with a major medical publisher from market entry proposal through concept to execution and  competitive positioning and market seeding over three years to help build a major franchise in the segment. By the time the products were published, a community had been created around the author brand by multiple market touches.

Thirdly, we partnered with a major technology company to profile a channel and community that had been designated as a strategic growth area and helped identify the breadth and nature of the content that would be appealing to this segment. I have to add, sometimes success can be categorized as providing feedback to an author or publisher that the idea or concept will not work in its present shape or form.

We have recommended next step actions that initially can be painful for the client but do represent the wisdom of the crowd and can result in future market validation if corrective action is taken.

JW: Your AuthorBound service is one that’s near and dear to my heart, particularly since I spend a lot of time blogging about the importance of author platform, companion websites, etc.  What are the key ingredients to this service that help set it apart from the other options available to authors and publishers?

RE: We do not position ourselves as a quick fix solution to guaranteed publication if you follow Steps One, Two and Three. I know we’re not alone in that but there’s a lot of over-promising out there as you know. Our company has created not only a suite of tools and services to solicit and aggregate market feedback, but developed an underlying collaborative product development methodology we call the Access model.

Access stands for: Audience, Concept, Execution, Competition, Sales Viability and Social Networking. We work with the author along all or any stages of the Publishing Timeline to validate content at every stage, seed the market and create an ongoing community around the author/ product. We are not aware of any option that offers these components. We do not position ourselves as an agent, editor, designer, marketing or P.R. service or publisher. However, it’s pretty compelling for an author to present a proposal to a publisher or agent that showcases how their concept and sample content has been validated by a meaningful number of qualified reviewers, many of whom were prime potential buyers.

JW: Content Connections also offers marketing seeding and market development services.  How important and relevant are these in this age of e-marketing?

RE: I'll clarify that we do not offer more traditional online or direct marketing or sales services. Having said that, the world is changing and we believe market development begins at the proposal review stage and continues on through the publication of the product to the new edition or revision cycle. Online feedback tools and new social media applications enable us to exploit new ways of communicating, collaborating, educating, entertaining and engaging our audience.  This may be a new definition of sales and marketing but, in our opinion, is equally effective in influencing purchase and adoption behavior.

Examples of change: many trade publishers are looking at more creative ways to develop new channels and identify potential customers as bookstores become more selective in their product range. College publishers are similarly investigating new ways to differentiate products in increasingly competitive markets by both developing authors as the brand and getting closer than ever to their audience throughout the product development process.

JW: Can you tell us about one or two of the more novel e-marketing campaigns that Content Connections has been involved with?

RE: I referred to our Dynamic Author Page earlier. We are working with a  couple of internationally recognized political figures  and their publisher on a new product venture utilizing this social media and networking tool.

The Dynamic Author Page is updated in iterations corresponding to where the product is on the timeline; in this case proof of concept and testing sample content.   The DAP, as we call it, allows visitors and reviewers to provide feedback on the concept and other material, and access videos, blogs, podcasts and other neat stuff regularly produced and updated by the authors. There are links to several of our tools and a host of social media applications that plug into the framework, including communication vehicles such as Twitter and Skype. Unlike the traditional promotional site, the DAP is a living tool that helps foster a vibrant and active community around the product by providing an engaging experience for visitors.

Another fun campaign involved students. Instructors regularly bemoan the lack of motivation of students. We worked with the publisher to create a video contest whereby participating instructors asked groups of their students to create a video based around some component or case study in their business course. The winners won prizes, the videos were posted on YouTube and the winners featured as part of the product package as a class activity. It was a cool project and everyone got involved and invested. The book will pick up new adoptions and word spread among the students.

Lastly, I have to mention  that our founder and CEO is writing a book with Lon Safko for John Wiley called the Social Media Bible. We have, not surprisingly, been asked to assist with market development and creating a community around the product. We're going to have some real fun on this campaign. Maybe you'll ask me back to talk about it!

JW: I look forward to reading the book and I'll definitely plan for a follow-up interview once it's published.

The Game, by Ken Dryden

The game As a hockey fan growing up in the late '60's and early '70's, Ken Dryden was one of my heroes.  The Canadiens seemed to always win the Stanley Cup in those years and Dryden was the goalie to watch in the '70's.  The Game chronicles the latter stage of his career and provides a great deal of insight into the NHL, the Canadiens and, of course, Dryden himself.

My favorite part of this book is when he takes the time to drill down deeper into the quirky personalities of certain teammates.  When you think of the Canadiens of the '70's, players like Guy Lafleur, Larry Robinson, Bob Gainey, Guy Lapointe, Steve Shutt, and of course, coach Scotty Bowman come to mind.  Dryden devotes much of The Game to coverage of teammates, coaches and even trainers, all written in the cerebral style he was known for throughout his career.

Any true hockey fan will want to read this book, regardless of how much or little you know about Dryden and Canadiens history.  Perhaps the most disappointing aspect of the NHL today is where it stands after the 2004-05 lockout.  Although Dryden didn't touch on this in The Game, he offered these prescient thoughts towards the end of the book (and his NHL career):
Expansion and the WHA behind it, it will be a time to turn inward, to put its (the NHL's) unwieldy house in order.  Like an aging adolescent having grown too fast, it will get reacquainted with its parts, get them in hand, and do something with them.  It will be a time for realism, and stability, for chastened hopes and dreams deferred--except one.  Off ice, the whispered word will be "cable."  But it will represent a more modest dream this time, and more realizable, if the promised bonanza is only for some.  It is time for a deep breath, a pause, a time to return the game to the ice.  For that is the real tragedy of the 1970s, and the real opportunity for the 1980s.  It is on the ice that its next great challenge lies.
Gee, he could have written much of that in the last 3 years and it would have been just as applicable.  The league is on the rebound but the first two games of the Stanley Cup Finals, the ultimate hockey championship, are relegated to the Versus network.  Ugh.  I even had to bite the bullet and sign up for Versus network service yesterday so that I could watch games 1 and 2, featuring my beloved Pittsburgh Penguins against the evil Detroit Red Wings.

How sad is that?  The Stanley Cup Finals start out on some third-tier cable network.  Maybe it's time to toss Gary Bettman out as NHL commissioner and replace him with someone like Ken Dryden...