Ads vs. Subscriptions
One of the challenges for publishers is to build revenues for econtent delivery without alienating online advertisers, who want as many viewers as possible on the publisher's site. For this type of model, there needs to be a balance between advertising and content licensing or subscription revenue, says Ward Downing, director of development for the e-Media division of Hanley Wood, which publishes a variety of construction-related publications.
In June of 2004, Hanley Wood sought a way to build an additional income stream from its digital content that wouldn't undermine the subscription base and advertising revenue. Hanley Wood researched its econtent use and discovered that only 15% of its customers accessed content more than 60 days old. So the company decided that it could charge for access to digital content more than two months old without adversely affecting the advertising base, according to Downing.
Hanley Wood charges $1.75 to look at a single archived article, $9.95 for a three-month subscription with unlimited views for all sites, and $29.95 for a special report. Since instituting the service midway through last year, the company is reportedly earning an additional $1,500 per month. Though that's not a tremendous amount of additional revenue—Downing likens the income to licensing fees for reprints—Downing believes there's room for growth if the company chooses to further develop this part of the business.
In addition to having ecommerce and DRM technologies in place, econtent providers must also have information that "secondary" subscribers want to use, says David Ades, director of strategic initiatives for eMeta, which provides an end-to-end solution that serves as the underlying technology for Hanley Wood. For example, Hanley Wood print subscribers tend to be contractors and builders, but there are countless individuals and small contractors who do some remodeling and building who are interested only in some articles rather than annual subscriptions. By selling archived articles and special reports, Hanley Wood earns revenue with little additional investment because it already has all the content, Ades points out.
Similarly, the Kennedy School of Government at Harvard generates incremental revenue by selling case studies on politics, environmental issues, and other policy-related subjects, says Hai Tran, EVP of business development for Cadmus, which provides Articleworks, the full turnkey solution in use by the university. The process works much like a shopping cart one sees at Amazon.com and other ecommerce sites. The user provides credit card and other information; the latter that helps the university track who is buying the content, which typically sells for $3 to $5 for a single view. Once the card is authorized, the content is encrypted into a PDF format that the buyer accesses via a unique email identifier. The user can also buy multiple views of the content. Similar to Weedshare.com, the Cadmus solution also enables the content buyer to forward the article, giving the university the ability to earn secondary and tertiary income, Tran says.
Tran expects other content providers, like medical journals, to similarly market content access to people who might be interested in single articles on subjects like type II diabetes, but not in a subscription to the entire publication, most of which wouldn't interest them. The secondary market would include not only consumers, Tran says, but also pharmaceutical salespeople who are interested in any articles with positive comments about the drugs they represent.
Working as Peers
While some vendors like Cadmus provide end-to-end solutions that include DRM and commerce components, others see more benefit in concentrating on a certain portion of the business, partnering with other firms to provide the full array of content delivery services.
For example, DigitalContainers, which provides digital rights management and ecommerce for distributed networks, and Clickshare Service Corp., which provides a secure payment system for distributed customer sales and management, recently formed a business alliance. Both companies specialize in peer-to-peer computing, which is both the whipping boy for piracy of content and also one that offers tremendous opportunity for growth for legal, P2P networking.
Increasingly, there are legal and safe ways to benefit from the increased capacity of P2P networks, DigitalContainers CEO Chip Venters says. By including a spectrum of rules about how many times someone can use content (e.g., three times before payment, or unlimited times during a month for a certain price, etc.), the companies give content providers a way to benefit from the increased capacity of P2P networks, which have more total computing power than a single download site.