Tracking Multiple Paths to the Bottom Line at paidContent 2010

Feb 22, 2010

Article ImageThere has always been a certain irony to the fact that the site is, in fact, a free site. While its owners, Guardian News & Media, are apparently exploring the possibility of charging for some level of site access, the company's North American CEO commented on this seeming contradiction as she kicked off the company's debut paidContent conference at The Times Center in New York, February 19. However, when paidContent's founder and editor, Rafat Ali, took the stage he made his position clear saying that he "supports a variety of business models and revenue streams." And for this event, the bottom line theme was supporting the bottom line.

Setting the tone, the first speaker of the day was James McQuivey, VP and principal analyst from Forrester Research, who raised the question on everyone's mind "Is the content free ride coming to an end?" According to McQuivey, however, that question misses the mark. "We were deluded into thinking people were paying for content," he said. "People don't pay for content and they never have." He posited that people pay for access to content and will continue to for some time to come.

Forrester finds that many of our assumptions about content usage are not accurate. For example, he says people actually watch 30 minutes more TV today than they did prior to the advent of the DVR. The bad news, however, is that he believes "overall revenue will go down, because the advertiser subsidy will get split among many media, old and new." And, whoever controls content access will command the highest share of revenue, such as cable companies, monopoly content rights holders, and device makers.

One access point McQuivey didn't name that occupies a prominent position in the content revenue stream is the search engine. In her Q&A with Yahoo! America's EVP Hilary Schneider, ContentNext Media's EVP and co-editor Staci Kramer pushed hard to illuminate the objectives of the Newspaper Consortium. Schneider was fairly guarded with her responses. However she offered an interesting interpretation of the "pay wall" approach. She said, "When I hear the word pay wall, I think about prohibition." She pointed out that "in the prohibition era, people figured out how to get their hooch." While one could argue that content-hooch is plentiful and accessible, despite pay-wall prohibitions, Schneider is bullish about the growth opportunities in local content, though she cautions that the "levels of advertising are actually quite complex" and says Yahoo! will focus on the "national part of the local equation.

While search companies are making inroads into content distribution, leading users to content through searches remains their stronghold. Though certain content companies find fault with the ability of search engines to profit so well on the content others create, Rob Grimshaw, managing director of for its success with the metered pay wall approach--says Google is "part of the business model." During The Business of Digital News Panel, Grimshaw said that he views search engines as "free marketing." However, he also made it clear that he believes quality content merits a price tag. "I don't see anything wrong at all with creating a great product and asking people to register for it or pay for it," said Grimshaw. "I don't think we're doing anything morally wrong here."

Josh Cohen, Google News' senior business product manager, thinks that content companies may be trying to "roll back the clock" in their expectation for consumers to pay to access news content, to which fellow panelist KC Estenson SVP and GM of replied, "Spoken like a true Google employee." He went on to say, "I believe that around the corner there are new revenue opportunities that we don't see today. We as an industry need to focus on looking forward, not back."

Among these forward-looking approaches is taking time to construct business models and "not always rushing to the flavor of the day." Another panelist, Lincoln Milstein, SVP, digital media of Hearst Newspapers pointed out that, "just because the web has one model, going forward into handhelds devices, we need not to make the same assumptions." To wit, many content publishers, including CNN, successfully charge for mobile apps that offer access and features not found on their free content sites.

Many continue to advocate heavily for the direct route to revenues. Steven Brill, co-funder of Journalism Online, points out that there is "lots of talk about technology, but the core idea that shouldn't be lost is that journalism counts. If you can make your journalism count, you can get your readers to chip in for some of the cost." However, he also says that "we shouldn't focus too much on subscriptions...there are lots of ways to skin this cat." In fact, Brill, whose company developed the Press+ content commerce system, says that, "Culturally, it is important that journalists don't exist purely on the kindness of advertising."

Ultimately, paidContent 2010 reinforced the need for content creators to pursue diverse paths to support their businesses including freemium, metered models, subscriptions, services, and-as demonstrated by paidContent 2010 itself--even events that leverage a successful brand to support the content creation business.