Audio for the slides: http://apps.calliflower.com/recording/download/8998

1. 1

2. PATHS TO PAID EXPERIENCE
and other
EVOLVING REVENUE FRAMEWORKS
Owen R. Youngman, Knight Professor of Digital Media Strategy 10.18.2010

3. THERE IS MONEY TO BE MADE.
I have evidence.
3

4. KP_A1R95IWNUSV28F - Digital Publisher Payment Reports - Monthly Subscriptions
Reporting Net Revenue Revenue Share
ASIN Title Price
period subscriptions share Amount
11/1/2009 - The next
B002ACPHLB $0.99 2 30.00% $0.60
12/1/2009 miracle
Year 2009 $3.60
THERE IS MONEY TO BE MADE.
I have evidence.
4

5. A SETTLED
MATTER?
At Google, I could hardly interest anyone in the
question [of whether customers will ever pay
for online news]. The reaction was: Of course
people will end up paying in some form–why
even talk about it?
James Fallows, “How to Save the News,” The Atlantic, June 2010

6. A SETTLED
MATTER?
“Content has always been monetized across a
broad spectrum. You could buy a journal for a
$1,000 subscription price and an audience of
1,000. Or you could pick up a paper that is given
out free on the Metro . . . They have different
business models, and the same principle will
apply on the Internet.”
– Nikesh Arora, Google
James Fallows, “How to Save the News,” The Atlantic, June 2010

7. GOOGLE’S VIEW, GOOGLE’S VISION
Pillars of an online business model: Ideas driving Google’s work:
• Distribution: getting news to more • The solution it knows it will find: the
people, and more people to news sites idea that there can be a solution
• Engagement: making presentation • The problem it knows it can’t solve:
more interested, varied, involving the disruption still ahead
• Monetization: converting these • Another problem that goes well
larger, more committed audiences to beyond its ambitions: the public function
revenue (through fees and ads) of news, in its broadest sense
James Fallows, “How to Save the News,” The Atlantic, June 2010 7

8. ONE
PLACE
TO
LOOK
Source: “Newspaper
economics offline and
online,” Hal Varian (Google
8 chief economist), 3/9/2010

9. BUT THERE’S THIS ISSUE’:
‘THE INTERNET IS A COPY MACHINE’
• When copies are super-abundant, their price approaches $0.00.
• When copies are super-abundant, stuff that can’t be copied becomes scarce and
valuable.
• When copies are free, you need to sell things that cannot be copied.
• So what can’t be copied?
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
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10. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This
explains hardcovers, and now e-books)
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
10

11. IMMEDIACY
11

12. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This
explains hardcovers, and now e-books)
• Personalization: A result of an
ongoing conversation with a user.
• Interpretation: The software is free.
The manual is not.
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
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13. 730,000 uniques looking for
world news
25% to 30% visit 15X or
more
10% to 15% visit 100X per
month
This year’s model: $2.95 a
month, aiming for the
passionate few
INTERPRETATION
13

14. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This
explains hardcovers, and now e-books)
• Personalization: A result of an
ongoing conversation with a user.
• Interpretation: The software is free.
The manual is not.
• Authenticity: Knowing what we
stand for is worth something.
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
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15. There's no such thing as a bad question — but there are bad answers.
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AUTHENTICITY
15

16. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This • Accessibility: Anywhere, any time,
explains hardcovers, and now e-books) always on a user’s terms.
• Personalization: A result of an
ongoing conversation with a user.
• Interpretation: The software is free.
The manual is not.
• Authenticity: Knowing what we
stand for is worth something.
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
16

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Easy tricks for dressing “thin”
Most popular stories
Work and money
Fashion and beauty
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SUAVENOMICS
‘It’s obvious that in 5 or 10 years, most news will be
consumed on an electronic device of some sort.
Something that is mobile and personal . . . Imagine an
iPod or Kindle smart enough to show you stories that
are incremental to a story it showed you yesterday.’
ACCESSIBILITY – Eric Schmidt, quoted by Fallows

18. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This • Accessibility: Anywhere, any time,
explains hardcovers, and now e-books) always on a user’s terms.
• Personalization: A result of an • Embodiment: 90% of life is just
ongoing conversation with a user. showing up....
• Interpretation: The software is free.
The manual is not.
• Authenticity: Knowing what we
stand for is worth something.
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
18

19. EMBODIMENT
19

20. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This • Accessibility: Anywhere, any time,
explains hardcovers, and now e-books) always on a user’s terms.
• Personalization: A result of an • Embodiment: 90% of life is just
ongoing conversation with a user. showing up....
• Interpretation: The software is free. • Patronage: Some want to pay
The manual is not. creators. Especially reasonable ones.
• Authenticity: Knowing what we
stand for is worth something.
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
20

21. PATRONAGE
21

22. PAID EXPERIENCE,
NOT PAID CONTENT
• Immediacy: Some want it now. (This • Accessibility: Anywhere, any time,
explains hardcovers, and now e-books) always on a user’s terms.
• Personalization: A result of an • Embodiment: 90% of life is just
ongoing conversation with a user. showing up....
• Interpretation: The software is free. • Patronage: Some want to pay
The manual is not. creators. Especially reasonable ones.
• Authenticity: Knowing what we • Findability: There’stoo much in the
stand for is worth something. long tail. Who shows me what’s good?
Adapted from Kevin Kelly, Better Than Free, 1/2008 (revised 12/2008)
22

23. 4 POSSIBLE AREAS FOR LOCAL NEWS
• Paid content and paid • Partnerships: User-focused alliances
experience: Products and services with community groups, foundations,
that go beyond providing access to advertisers, and governments.
news behind a wall. “Sustaining local news is not just about
revenue.”
• Advertising: As supply swamps
demand, a focus on less user • New ventures: “If you’re going to
interruption and more user service. be in the news business, you need to be
in another business, too.”
Bill Mitchell, “Clues in the Rubble,” February 2010 (Shorenstein Center on the Press, Politics and Public Policy)
http://www.hks.harvard.edu/presspol/publications/papers/discussion_papers/d56_mitchell.pdf
23

24. SOME ‘IDEAS TO TRY IN 2010’
• Paid experience: Something • Crowdfunding: Spot.us?
pegged to a local passion. Mobile app?
• Crowdsourcing: This is about lower
• Ad ideas: Dynamic information costs. Can the users report stories, not
delivery, not banner ads (MinnPost)? just comment on them?
• Partnerships: With a competitor, an • Content aggregation: Curating
advertiser, a government agency? local news from many sources?
• New ventures: A community event • Donations: Is there a way to ask the
on a topic in the news; sponsorship?. passionate few (Kachingle.com)
Bill Mitchell, “Clues in the Rubble,” February 2010 24

25. A TRANSITIONAL SCORECARD
Opportunity Likely revenue, % overall Fit, impact on users, reach? Fit, impact with values? Long-term learning potential
Advertising
Behavioral targeting
Advertiser-provided content
User fees
Memberships
Metered use
Foundation help
Direct subsidies
News services
Government help
Policy changes
Direct subsidies
Crowdfunding
Donations
Story funding
Partnerships
With competitors
With users
With universities
With government
With foundations
Related businesses
Mobile apps
Information services
Events
Bill Mitchell, “Clues in the Rubble,” February 2010 25