Monetisation Model - in a Web 2.0 World

It's become axiomatic that publishers need to "move online", but - now that the first blush of promotional websites and pdf-versions-of-paper is fading - the question persists of how best to make money online.

I should rephrase that: there are many ways to make money online. The challenge, should we choose to accept it, is to create the will, the context and the processes to persistently make money online from the 'raw materials' of a publishing company.

Some months ago, my colleague Craig Hanna and I were set this question by one of the UK's leading publishers. They had titles with an envious reach and a website for nearly every title - yet they felt there was more money to be made. We devised a series of workshops that set out how to make money, but - after general nods of agreement all round - nobody moved... We had encountered the gap between 'knowing how' and 'knowing how to do'. We realised that a new way of evaluating commercial opportunities was needed, in order to break through this glass ceiling.

Making Money Online

Before jumping to the end, however, let's examine the present and the current ways to make money online.

There are four main ways to make money online:

1. The customer pays (note I said ‘customer’ not ‘reader’) - for access to information, for exclusivity, advance notice
2. The advertisers pay - to rub shoulders with and "acquire" the customers your site is attracting - a modern version of crouching near the watering hole to snag the Big Game
3. The supplier pays - an intermediary pays a publisher to create and manage a publishing service - 'contract publishing'
4. Volume - this is a catch-all dimension, but, if you have a large enough quantity of anything - customers, content, visits, widgets - then you'll have more of an opportunity to collect money along the way. If you dig a sufficiently large hole then someone's bound to fall into it!

These models are used, often in combination, in mainstream magazine publishing. The website serves to support subscriptions, yet also "gives away" a great deal of content in order to attract readers, whose "page impressions" are converted into cash by virtue of advertising bought per thousand pages loaded.

There are additional attempts to sell services to customers - whether it's "reader offers" (affiliate sales for commission), special purchases or other merchandise. Overall, however, there's a certain hollowness to the resulting effect. This is manifested by a disconnect between the customer's enjoyment and the contortions of the business model. For example, pages are overloaded with the flotsam of the web - buttons, banners and screaming links - and we're simply teaching customers to ignore them. And, as they ignore them, so the cost per thousand pages (CPM) that we can charge advertisers falls. To compensate, we 'inflate' page impressions by splitting articles over several pages, but this is merely delaying the inevitable: the current business model is not going to sustain the future of publishing. This is not a digital business model: it's an old model digitised.

The Web 2.0 Effect

One of the main reasons the model does not work is the change in user expectation and experience. I hesitate to mention the term ‘Web 2.0’, since it's acquired something of a hollow sound. Despite the imprecision of the label, however, there's something more than snake-oil in the bottle.

I rather resist attempts to define Web 2.0 as a given technology or approach. A more helpful analogy is to consider the change of the seasons. There's no single day that heralds an instantaneous change from winter into spring, but there's no denying that on a given day there's a "feel of spring" in the air. A combination of factors suddenly add up to be more spring than winter. It is just such a tipping point that occasioned the observation that the web 'had changed'. The naming was rather geeky, but there's no denying that, all of a sudden, the web was somehow "working". This was the Web 2.0 realisation.

There's been a great deal written about the technology of Web 2.0, but from a publisher's perspective, it's the open access to and interchange of data that's of greatest significance. Open access to data via publicly-documented access routes (Open APIs) is becoming a norm. Publishers can now access primary data directly, without expensive and lengthy system integration work. Furthermore, metadata is available to us: the camera used to take the photograph (via flickr.com), the sales rank of a book or CD (via amazon.co.uk), the distance between points (maps.google.co.uk). Appropriately formed requests from a website can be "given" to another, specialist, site to execute and return information. This is the trend towards "mashups" - a service built out of components and services from other sites. Examples are myriad and Programmable Web maintains a list of the newest releases - www.programmableweb.com/mashups. Mashups can take data from one source (let's say a directory of wines) and overlay the wines onto a map of France by region (using Google's API) and link digital photos of your wine tasting trips (stored on Flickr).

Examples are increasingly sophisticated and customers now expect publishers to deal in a granular, flexible and customer-focused way with their own data and that of others - whether group companies or competitors.

To return to our problem though, we find that publishers are focused on creating "pages" of content to be printed, bound and distributed, when what is needed is a mechanism to exploit key capabilities online - without major investment or without cannibalising the current flawed (but substantial) revenue streams. Specifically, I want to consider the underlying valuable assets and link those to customer propensity to pay. This approach breaks down the publishing processes into components that are of value to the customer or advertiser and then assembles these components into a service.

Publisher Expertise

The process acts as a discovery tool to expose opportunities. The publisher should focus upon key areas of expertise (or 'domains') and, within each domain, components of distinctiveness and value.

The domains are:

* Expertise - publishers tend to have an expertise in an area - whether it's fly fishing or celebrity gossip.
* Customer - looking at the services for which a customer will pay.
* Toolset - considering the publishing and technical skills that support the other domains and may give advantage.

Publishers need to focus initially - perhaps via a brainstorming session - upon the aspects of expertise that have value. For a given topic, or market segment or title, taking each component in turn, the publisher looks for opportunities to use the by-product of their activities as new material. As an example, for a fashion magazine they will have privileged "access" to new collections; they "create" reviews and interviews; their "selectivity" determines the top looks for a season (and the reader is confident that these are selected from the universe of fashion); their "knowledge" on a subject is demonstrated and "credentials" can be exploited via advertorial promotions or product selections.

What Will Customers Pay For

Putting our customer hats on, for a second, my contention is that there are only five things for which customers will pay. They will pay to research (the best building, the school with the best results); for stimulus (insider tips on travel hideaways, fashion trends or investment leads); the ability to buy, not just view items (the publisher can be the vendor or on commission); to share (whether photos, experiences, access or other services) and to do (to have the tools at their fingertips to configure, order, complete activities).

Finding The Intersection

Having considered, by topic, the unmonetised and distinctive opportunities, and then uncovered (whether from direct experience, research or analysis) that for which the customer is willing to pay, the publisher can now identify the intersection. The aim is to end up with smaller, more focused and clearly-communicable initiatives or repurposings that really resonate online; ideas with the clarity and simplicity to catch a customer's attention in the two seconds or so we have to retain attention online.

Once ideas have been harvested, there are two further necessary steps. The first is a checklist of monetisation methods - whether making direct sales or using the interest to parlay into increased display advertising, the publisher should ensure that no revenue opportunity is passed over.

Feasibility Check

The second is to assess the good ideas as to their feasibility, to ensure that only the most commercially attractive, customer-focused and "do-able" initiatives remain for further consideration.

This approach unlocks new ideas, approaches and opportunities which can then be taken forward for implementation planning. Equally importantly, this process can "kill" ideas that do not have a clear customer connection or which are not founded on the publisher's capabilities (thereby introducing business, development and launch risk). The focus is on delivering rapid, relevant and profitable online initiatives. Given a modicum of thought and planning, new web-relevant services can be unveiled with limited investment, building on the expertise and capabilities already in place.

The approach is to unlock questions rather than give simple answers. The twin foci of customer desires and publisher capabilities lead to revelations, and the emphasis upon monetisation of every component in every way keeps the activity wholly commercial throughout. Breaking activity into small components allows direct, immediate action to be taken without the paralysing planning and approval cycles that beset large change projects.

The changed nature of both the web and the online customer mean that the status quo is unstable and publishers need to adopt more granular, ever-more relevant approaches to retain their customers' attention and cash. The task for publishers is to exploit new opportunities without abandoning either the current revenue streams or the skills and expertise that have brought them success to date.