SUMMARY: News media companies shouldn’t jump straight into creating their next best, most profitable new product. Instead, they must professionalise their company, optimise products and services, monetise core products, then — and only then — mine verticals and create new products.
Publishers the world over are trying to monetise their content and are often jumping on the quickest route to that goal. Simply putting a price tag on something that was once free, however, is not the best way to get a return.
We believe there are two essential steps to take before monetisation can be effective and one further step before a publishing business can really reap the benefits of new markets.
We don’t have to tell you that the future of the traditional media business model looks bleak.With some honourable exceptions, printed circulation and its readership will continue to decline. Advertising revenues will continue their downward progress. Statistics and history show that even when the economy recovers, print advertising simply won’t come back.
Digital views will increase, but digital revenues simply won’t compensate for the losses from print. After five to 10 years of discussions, media houses are largely coming to the conclusion that you don’t just give away your journalism because it happens to be on a digital platform. But the revenues from paid content probably won’t compensate for print losses either.
Simply put, the business model that has worked for hundreds of years doesn’t work in a digital economy. It’s time for a change of plan.
Of course, if you are a giant like Axel Springer, you can shift tack and diversify into areas outside of traditional media. But for most media houses, this isn’t an option.
So how does a media house forge a new business model without abandoning its traditional strengths?
We believe that the answer lies in the brand itself and its connection to customers. Trust in the brand is the tool with which to create business verticals. But this is not something you can just rely on to create new products and services. There is a process of planning and implementation that can be broken down into four steps.
- Professionalise the operation.
This is the process of building the foundations with an integrated platform and technology for platform-agnostic content generation. As much as the technology is important, this step is about getting your workflows sorted and stepping away from a print-centric approach, instead embracing the idea of relevant content for each audience. And yes, the key here is understanding that there is more than one audience.
Step one involves learning the relative strengths of each platform for your audiences and how those audiences work in digital. It is about rethinking the appropriate content, not about “re-purposing” by cutting and pasting from one platform to another.
Some market leading media have finalised this stage and integrated their news operations across digital, but a vast number of publishers have yet to take this step.
- Optimise products and services.
With effective and efficient workflows in place, it’s time to optimise content, which means turning attention towards target groups. That also means thinking about timing and platform choice to optimise content for maximum impact.
For that to work, it’s essential to get beyond the idea of one audience and instead to identify the various groups. There are usually at least five or six audiences interested in different content, different ways to consume, reflecting their different situations in life.
Getting this right means a much closer attention to customer behaviour than is currently the norm in most media organisations.
- Monetise core products.
While this is probably the first thing on your wish list, we believe steps one and two are an absolute pre-condition before you can monetise your content. Without customer orientation and insight, you can’t have the loyalty that is needed if people are willing to pay, whatever the model, and whether that “payment” takes the form of giving out e-mail addresses or a monthly fee.
It may sound like heresy since monetising models are often the thing most discussed, but we believe the monetisation model is less relevant than building new and sustainable customer relations. The foundations are built with steps one and two. The pay-off comes really with step four.
- Mining verticals and creating new businesses.
Many publishers don’t look further than the third step – monetising existing content models. We believe the real gains start when publishers move beyond that and start to tap into new markets with new offerings. Step three is key to that, because if done properly, it adds to the detailed understanding of the consumers. That is the basis for the fourth and most important stage.
The fourth stage is mining the rich vertical markets around specific interests and needs that exist within your customer base. That means building a portfolio of offerings — whether interest specific content, apps, print products, e-shops, memberships and loyalty schemes, events, or others.
In some countries, events have already been established as the third big income stream. In others buying clubs are making headway. The years of discussions about paid content have probably distracted publishers from the real goal here.
To borrow a term from telecoms operators, it’s not about paid content per se. The real aim is optimising revenue per user. We firmly believe it is within the grasp of every publisher with an audience today — and that success is much more likely if you follow a defined strategy of simple steps.