How publishers are monetizing digital content

One of the most interesting, albeit relatively unnoticed pieces of news to break in the publishing world over the past few weeks has been the New York Times’ announcement it will introduced a “metered” pay model on its mobile app, uniformly restricting content to non-subscribers in a way to drive subscription uptake. While this isn’t much of a paradigm shift literally speaking (it is essentially a mirroring of what the NYT are doing on their browser-based site), it’s important because it reflects another new development in the effort to monetize tablet-based content, and exemplifies the malleability of this particular aspect of digital publishing at this present time.

It’s not something exclusive to newspaper publishing groups either. Publishers across all verticals, from small local tourism guides to large international magazines, are grappling with the vexing question of “how do we turn the traction behind mobile digital media into a healthier bottom-line”?

Publishers have attempted to answer this question in the realm of a bewildering array of rather diverse payment (and non-payment) models, the most broad vertical distinction in terms of monetization methods naturally falls between magazines and books. For the purposes of clarity we’ll give a few of the most prominent ones a broad treatment, and give you an idea of what we, as a company, expect to emerge in the future.

Ad-supported models

Unsurprisingly, free “at the point of use” models of varying kinds predominate across the digital publishing landscape. Most of these models are ad-supported and, this being their own revenue channel, benefit hugely from good analytics packages (this is where micro-level analytics data can really affect a publisher’s bottom line). In the long run, we’d expect to see free, ad-supported models continue to predominate to a degree, but as this is a market still in its infancy, and experiencing growing pains, for a large number of purely ad-supported publications to move over to a payment model of some kind once it becomes clear they can’t carve out enough of a market to make a free model sustainable in the long run. Olympus Magazine is a particularly good example of how a brand can augment its own image through free, ad-supported content.

A point of some relevance to underscore all this is the mounting positive evidence suggesting in-app advertising is more effective and lucrative than web-based advertising, to the point where some analysts are even touting ad-supported books as a possible future development, though many others are highly sceptical. It’s certainly an area with a lot of possible traction, but the intimate nature of a pure reading experience may be ill-suited for invasive advertising, driving down possible revenue.

Subscription-based models

As stated in the introduction, magazines and newspapers with a significant print-readership are increasingly erecting paywalls for web-browsers, and this is reflected in the apps they have produced. Subscription-models of varying kinds have been developed, with a range of diversity that could take several thousand words to describe, but for the purposes of brevity; they tend to either sit on their own, separate from any associated print-subscription, or one aspect of the media (print or digital) acts as a kind of supplementary adder of value to the other.

This particular model is where it gets more technical in terms of microeconomics and business, as it is about gauging what the average consumer in a publisher’s targeted demographic is prepared to pay, to what degree the emerging digital product should be differentiated from the traditional print product and so on. Provided a publisher with an existing print-subscription base can find their mark on these points, they’ll manage to migrate existing print-readers over alongside capturing newer markets in the process.

Naturally, revenue-sharing models with any digital vendor are an area where subscription-based models can come under a lot of stress, as any success is essentially penalized in the long run by long term contracts.

Micro-transaction models

Perhaps the most interesting (and indeed controversial) way of monetizing digital content has been in the book publishing space, or more specifically, in the realm of educational textbooks. Here a plethora of payment options have emerged. “Rental” models targeting students who only need ownership for a term or two, micro-transactions for only the particular chapters that are of necessity and so on.

This is probably the space in which we are seeing the more innovative use of the technology to create new methods of payment, and it’s a sector where there’s a considerable amount of buzz and excitement but publishers must address consumer concerns over rising prices first.

Conclusion

The relatively chaotic nature of these embryonic mobile marketplaces means that clear standards for how book and magazine publishers should proceed are some years away. That’s not to say there isn’t room for success, but that there isn’t the firm data to make broad conclusions about which way a company should go. However, speaking very broadly, if in-app advertising revenues continue to outperform expectations, we could see free content become more widespread. In the case of large print-edition magazines and newspapers however, the paywalls won’t be coming down anytime soon, as these efforts have been fairly fruitful.

Functionally speaking, publishers must however have access to the kinds of tools, like subscriber management facilities, that enable them to monetize their content in the aforementioned bespoke way, and we’re happy to provide that through our own software.

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