Cover Story: Making Content Pay
Few things have received more buzz in publishing recently than the notion that publishers need to start charging for content online. While this conversation has proven to be somewhat cyclical in the years since the advent of the Web, ebbing and flowing with the relative success of bringing in ad revenue, there is growing evidence that the twin factors of changing consumer perceptions (iTunes and, more recently, Rupert Murdoch have put paying for digital content firmly on the public's radar screen) and sheer economic necessity may finally have forced publishers to abandon the idea that their product can be supported solely through advertising, no matter how targeted those campaigns may be.
"While online ads are growing, the rich get richer, as it were," Scientific American's Bruce Brandfon notes of the current situation. "Google's share grows, Yahoo's share grows … massive sites get bigger, and the little individual sites are left picking up the crumbs." Unwilling to pad the offerings of search engine giants and content aggregators with little to show in return, a variety of publishers are charging for some or all of their online content. The strategy does entail risks, as page views can initially fall dramatically, but the industry is banking on consumers once again getting used to the idea that valuable content is worth paying for.
Content behind paywall: Exclusive research, how-tos and case studies related to marketing
Rate structure: Basic (free), Pro (subscription plan costs $279 annually), supplemental paid content and events
Thanks to the Web, anyone can be a "publisher"—and this can be great if you're looking for live updates on breaking news or a variety of opinions on the best way to grow orchids. For the business-to-business community, however, time spent swimming through oceans of content online is money, and quality, trusted content is something professionals are increasingly willing to pay for. This is the view behind MarketingProfs' approach to offering useful content to marketers online, whether it be webinars, articles, blogs, case study collections, training or research. "We offer our subscribers a guide to what matters in marketing—a beacon of light through the sea of information," says Chief Content Officer Ann Handley.
MarketingProfs features all original content, mostly free, but with a stable of premium content available only to "Pro" members. The company believes strongly that free content should be as high-quality as what resides behind the paywall. "We want our prospects and would-be buyers to be so wowed by our free offerings that they can't wait to see the stuff we actually charge for access to," Handley says. "We want them to joyfully migrate up to paid membership—and the best way to entice them is by constantly producing great stuff all along the way." Among the corporations whose employees subscribe are Microsoft, IBM, GE, Cisco, 3com, Amazon and Adobe.
Just as quality, free content drives audiences to the Pro level, MarketingProfs has found that people willing to pay for Pro membership are more apt to buy additional content (such as online training product MarketingProfsUniversity) or attend paid events. "They are more likely to become [even] more involved with MarketingProfs as they move along that path," Handley says. With 367,000 registered online users, the pool of potential subscribers is large. While MarketingProfs does not release numbers of paid members (Handley says they are a "significant subset"), the company converts about 5 percent of new basic-level members to Pro each month.
The company recently expanded its paid offerings into training and research, but has no plans to put more of what it gives away behind a paywall. "We have found the paid and free content can be cozy bedfellows," Handley says.
The Deal LLC
Content behind paywall: Deal Pipeline information service
Rate structure: Enterprise information services, magazine and journal subscriptions
The Deal started way back in the "Internet bubble" days as a daily newspaper covering financial transactions. While the company's legacy product, The Deal magazine, still exists as a biweekly print product and website, the primary focus of the company has shifted from b-to-b publisher to information services company. A product called the Deal Pipeline, featuring more than 100 daily articles produced by a newsroom of 70, is designed to be a tool in the workflow of bankers, attorneys and financiers involved in mergers and acquisitions. While the bulk of the company's revenue comes from content licensing, paid subscriptions to The Deal magazine and a monthly journal, Corporate Control Alert, also generate revenue.
For the first decade of its life, The Deal LLC was a classic "pubs and subs" publisher, operating on a three-tiered subscription model (free, paid and premium). "Deal.com is really now just a very limited taste of our content, an opportunity for us to expose what we do to a broader audience who might then become interested in licensing the information service," CIO Michael Lonier says. "There is very limited content there now. [The website] also houses The Deal magazine, which is some of our best content and still has a classical magazine-style website." In addition to offering The Deal magazine in its entirety, the website also features free sponsored microsites called Knowledge Centers, which house content provided by and created in partnership with sponsors.
"There are two things of value in the company," Lonier explains. "We talk a lot about proprietary content—everybody talks about that today if they have any, and of course, the other very valuable thing we have is our audience. We know a lot about our audience, and it's a very unique and highly targeted audience already by virtue of who they are and how we have served them for a decade. They are significantly targeted. So we can drive that audience into our sponsors' digital information; it's not like we are trying to do a massive Web play."
The company's move into licensing and information services has proven to be both well-timed and successful, as the financial industry has moved away from "print sponsorship and print-adapted sponsorships online, like banner ads," Lonier says. Marketers, too, are looking to occupy the highly practical, workflow-oriented information-services space occupied by companies like The Deal and Bloomberg.
"In our universe … there is a real calculated, hard-core, business-oriented focus on the value of what your license offers," Lonier says. "That's how [clients] treat other people in our space. So this isn't like trying to help people figure out what's better, a tennis blog or a tennis website. This is all about Bank of America trying to make its quarter."
Content behind paywall: Archives, full digital editions
Rate structure: Paywall in three forms: single-month pass for $3.95; annual, all-access pass for $2.50 per month/$29.99 per year; two-year online subscription at $1.87 per month/$22.44 per year
Wenner Media put most of its flagship publication, Rolling Stone, behind a paywall in April. Unlike most other consumer magazine publishers, Wenner never offered full, free access to its content online, so it is able to boast unprecedented access to both full issues and rich archival material for those willing to pay. "For us, it wasn't a matter of having content available in an ad-supported basis and then putting it behind a paywall," says Steven Schwartz, chief digital editor at Wenner Media. "We never made the archives available online before, and this is creating an asset that has value."
Archival material is curated by editors who pore through 43-plus years' worth of music and cultural history to offer interesting content to subscribers. "We may feature the best of Hunter S. Thompson or a John Lennon interview by Jan Wenner," Schwartz says. "People can peruse whatever our editors have selected or browse archives by year, decade … [utilizing] cover thumbnails or keyword search."
Despite its past reluctance to offer entire issues for free online, Schwartz says Wenner believes free and paid content are not mutually exclusive and each can support the other. "The rich and robust focus on the free site is the latest music and pop culture news that is coming out with a Rolling Stone angle and perspective, as well as things like reviews that people want and expect in an ad-supported website," he says. Such material, designed to successfully compete with comparable offerings found all over the Web, is designed to drive people to the Rolling Stone website and "complement what's going on in the magazine." A major site redesign launched concurrently and built around social media functionality serves the same purpose.
Response to these changes has, so far, been good, Schwartz reports. "It is still the early days for us, but the initial response has been positive on all fronts."
American Association for the Advancement of
Content behind paywall: Feature articles (for one year), peer-reviewed research, membership forums. Site registration required to see articles more than one-year old
Rate structure: Association membership fee ($75 and up)
The AAAS, publisher of Science magazine, has always offered its magazine as a premium of membership in the organization, but in recent years has ramped up efforts to expand membership beyond the research community by offering an assortment of free content on its website, including pages targeting educators and journalists. The association has also found success putting content behind a paywall initially, and offering it for free after a period of time.
"A free daily news service and blogs are offered to attract readers to the site," says Beth Rosner, Science publisher. "We believe it is an important part of our strategy to get people familiar with our site and content, and then use this as a step to convert them to full membership. Also, many research articles that are of public health importance or general interest, such as our paper on the 4.4-million-year-old hominid Ardipithecus ramidus, which received worldwide press coverage, are made freely available immediately with registration. Again, this attracts people to our site and gets them familiar with our unique, must-read content. This is an important service to the community, but also provides a way to showcase our articles. After one year, all articles are freely available."
In addition to membership fees, Rosner says advertisers have always valued the premium target audience they are able to reach through Science. The publication benefits from a unique reader base reflecting the magazine's unusual combination of high-quality, magazine-style journalism and peer-reviewed scholarship.
Content behind paywall: ESPN Insider premium content, plus features and commentary from ESPN The Magazine
Rate structure: Subscription plan ($6.95 for one-month subscription; $3.33/month for yearly subscription; $2.50/month for two-year subscription)
ESPN Insider was originally set up back in the '90s to be bundled with subscriptions to ESPN's print magazine, a way to strengthen subscription offers and "help what was then a fledgling website called ESPN.com," says Gary Hoenig, vice president and general manager of ESPN Publishing. "I would venture to say," he adds wryly, "that ESPN.com at 28 million page views per month does not need a lot of help these days."
The overall success of ESPN's online products has given the Disney-owned network the luxury to experiment with, and occasionally neglect, its paid content site over the years. Hoenig took over control of ESPN Insider about a year ago (it had previously been run out of the company's digital team; Insider and ESPN The Magazine online (ESPNTheMag.com) were merged in June 2009) and has since seen subscriptions grow by 33 percent, exceeding the previous record number of subscribers.
"The smartest thing to say is we no longer consider the question of whether people will pay for content a valid question," Hoenig says. "We think the question is where will they pay, and how will we make it easy for them." He stresses that the most important aspect of any paid content site involves making the purchasing decision one "nobody regrets when they get to the other side of the wall"—a simple, rewarding process like the one Apple established with iTunes.
"All you need to do is go to an online store like Zappos or Apple, and you will see how people who are used to a retail relationship made that as easy as possible—and you will find the secret to paid content," he says.
Of course, building an audience of satisfied subscribers means fulfilling the promise of fascinating content. ESPN Insider has managed to set itself apart from ESPN.com in a highly distinct way, offering a deeper level of information and access for the passionate sports fan. If ESPN.com covers sports news in the classic sense—"fact and occurrence," as Hoenig puts it—Insider is a place for informed speculation about trades, drafts, management changes and other activities bound to shape the sports news of tomorrow.
"A key feature that gives insight into what we're selling is Rumor Central," he says. "We will publish a series of rumors about players and teams … and evaluate that rumor in terms of how possible it is that it will come true." Whereas most sports news is of interest to the fans of a particular team, speculation about a free agent can potentially interest multiple sets of fans—all the franchises with a rumored interest in acquiring the player. "In the context of that space, we have a larger group of people that might be interested in a given story that has not been resolved," Hoenig says. "That is what we leverage."
In addition to online news and content, ESPN Insider holds events in major cities where subscribers have the chance to meet and talk with leading draft experts and others with inside knowledge of a game.
Hoenig admits that being associated with one of the most highly trafficked websites on the planet, not to mention a successful cable channel, does not hurt when it comes to promoting Insider. "Some of the free part we give away is on television," he says, as commentators from Insider offer glimpses of what can be examined more thoroughly on the premium site. Nothing is taken for granted, however, and much effort has gone into expanding the brand; subscriptions to Insider have historically fallen off when, as was the case in the late 2000s, most effort was concentrated on building site traffic for ESPN.
Hoenig's most interesting observation may be his view that publishers who believe Insider is a unique case because "sports people are crazy" are making a big mistake. "I think if I went out as a consultant for media people right now, I could select content that they have and say, 'This is what people would pay for.' People will pay for what Entertainment Weekly thinks about who will win the Academy Awards, or the Tony or the Emmy—they would pay for that. It's all a question of playing to that part of people's minds," he says.
"I got a call from our ombudsman about this a couple of months ago," Hoenig continues. "He had gotten a few letters, and needed to write about this [issue], so he said, 'Tell me, why do you think it's OK to charge for content?' Because stuff costs money! There's something about this that is so 'emperor's new clothes,' it just kills me. You've got a business, you want people to buy the product, some people don't want to buy it—[and that's] OK. Other people have got to pay for it. I don't understand the [question's] premise exactly. On some level, why are we so tentative about this?"
Content behind paywall: Feature articles
Rate structure: Subscription ($7.95/issue; $39.95/year)
Scientific American went from a long-standing tiered pay model to opening up its entire website for free, and has now re-embraced a paid content model. The company is in some sense a poster child for the recent shift in thinking back toward charging for online access, as it did everything "right" in driving audiences to its site (SEO, etc.) and was still faced with poor return on investment as revenue from Web advertising lagged, then sagged, in the face of recession.
"We were seduced into this notion that we could grow the audience, and we did," says Bruce Brandfon, vice president and publisher. "In order to grow the audience, we did a lot of smart things from a marketing perspective by putting a lot on the website that was designed to generate audience traffic."
Without the revenue, however, maintaining this level of quality would become a difficult proposition, so it was decided to once again charge for feature content that also runs in the magazine. The publisher seems to have learned a thing or two from its success in driving traffic to its website, however: A fair amount of rich content will continue to be available for free, as is the first viewing of a story when a reader arrives via a search engine or aggregation site. "If you come again from that IP address, you don't get the whole story, you get a synopsis of the story and then are prompted to subscribe, to either buy that individual issue or subscribe to the digital version of the magazine," says Brandfon.
An initial drop in page views following the changeover six months ago was quickly overcome; page views are back to pre-paywall levels, Brandfon reports, and the number of unique visitors has remained at "a very high level," mostly coming from search referrals.
An unexpected bonus: In addition to immediate gains in digital-subscription revenue, ad revenue for the entire site also increased, a consequence most likely of the improving economy and the relatively well-educated, affluent character of Scientific American's audience, "different from the casually interested page flipper or Web surfer," notes Brandfon. "You're coming to Scientific American for a specific purpose," he says. "… We have been able to demonstrate to advertisers that if you are looking for an audience that is deeply engaged in a very thoughtful examination of why science, research, technology and innovation matters to them … then we are the website that brings those sort of people in."
Scientific American plans to beef up its behind-the-paywall content with more multimedia in the near future, but will not be neglecting the free side of its website either. By maintaining a robust site accessible to casual visitors while refusing to give away the core of its carefully researched, proprietary content, the publisher seems to have rediscovered a sweet spot in the evolving world of digital media.