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Getting Paid for Content
UK-Netmarketing Weekly Round-up - April 13, 2001

Online publishers are having a rough time of it. The recent announcement of The Industry Standard Europe's closure reinforces how tough the market is, even for well-respected publications. Relying solely on advertising revenue is a high risk strategy, which means many publishers are looking at alternative revenue streams such as subscription or offering paid-for versions of content in addition to their 'free' offering.

Neil Durrant asked the list for examples of publishers with successful subscription models, "I'm looking for any case studies or good examples of subscription based newsletters/content sites. Particularly in a B2B marketplace. I've found MarketingSherpa's new ContentBiz and looked at examples such as Metal Bulletin and WSJ. Any other good examples that are working (read profitable)? Any experience with success or problems in making the transition from an existing list where subscribers are used to receiving the information free and moving to a paid for basis?"

I followed up Neil's question asking if anyone had come across an alternative subscription method I'd been thinking about, "I was pondering whether a non-porn Adultcheck for content sites would work for other non-porn content sites? For those not familiar with Adultcheck (and I only know through research...honest), they run a central system for adult webmasters to 'verify' that their audience is over 18. This involves paying an annual fee to get 'free' access to various adult sites that have signed up with the scheme. The webmaster gets peace of mind and a commission for each person they refer from their site to Adultcheck.

Would this proposition work: a user pays a kind of licence fee that opens up access to the premium areas on websites who are members? The user pays an annual subscription fee that is administered by a trustworthy central source and the proceeds are split dependent on usage (this would clearly need some heavy-duty definition and technical implementation).

Site publishers would benefit from a reduced overall cost of administering a subscription system, data could be ring-fenced so personal details are dealt with according to DPA and only available according to privacy policy of the site. Readers would benefit from:

publisher's being able to concentrate on content
still being able to get the content
not having to maintain dozens of subscriptions

Ian Fenn, who had also previously asked about using micropayments for his Chinese food website, responded, "Quite possibly, but I think there's a better way. A non-porn Adultcheck has a number of problems, including:

A high initial financial outlay by the consumer. ($19.95 is a lot of money if you know you only want a recipe)
It doesn't acknowledge that some content is more valuable than others.
Adultcheck exists - a lot of people don't want to be associated with a scheme of payment that is so closely associated with porn.
You have no idea how good the content is before you pay - the site you're looking at could be a brilliantly designed entry page to Adultcheck!

So, for me, Adultcheck won't work. What we need is a pay-as-you-go system for the web. And this was what I was/am going to do with Chopstix version 4. The idea was just as you might expect - visitors spend £5 to open an account and receive credits in return. These credits may then be exchanged for content, in my case recipes. Once the balance runs dry, the visitor pays in a little more money. There's no reason why these credits couldn't be exchanged for content elsewhere. Companies like WorldPay offer products similar to this, e.g. Worldaccount, but generally:

Implement it poorly, e.g. lack of integration between content sites and where the credits are administered.
Charge content sites too much, rendering use of the service pointless.

I prefer this pay-as-you-go model to the subscription one. It copes with differences in the value of content as site owners can decide how many credits to charge. As a consumer I prefer it too - it's easy to understand (just mention pay-as-you-go mobiles) and I'm not being charged for content I'm not using (unlike subscriptions). You can also browse a site as normal, looking a free content, user comments, and generally getting an idea as to how reputable the content supplier is."

Ben Thompson shared his past experiences of payment systems, writing, "The advantage of a non-adult adult check type scheme is that its legal under Visa and Mastercard (the member is buying an actual product (the subscription)), the fact a site receives a royalty is neither here nor there).

I don't think asking people to pay £10 or so to join such a scheme is a problem provided there are enough sites and enough valued content at launch for people to think its worthwhile. One or Two sites is not enough but 50 or so is probably fine and I'm sure if push came to shove there are enough people within UKNM with sites that need to money to easily reach that target.

I'd agree that it doesn't completely with the fact that some content is more valuable then others, however the more compelling your content is, the more likely people are to join the scheme via your site and hence the more money your going to receive. Longer term as the market matures I'm also sure you'd get even more money as higher premium content systems (such as adult check gold (I'm guessing here) which charges a monthly fee are introduced)."

He continued, "For micropayments somewhere between a 30-35% pay out. For subscription based referrals it worked out at 50% but realistically it would have been possible to go up to 60%. Both ratios ignore VAT as the plan was to run everything out of New York. With VAT included in the picture I'd guess on a £9.99 subscription you'd be looking at sharing £4.50 to £5 with the referring site(s) and £3 between everyone on a PAYG [pay-as-you-go] model. And its possible that the 30-35% payout listed above is too high to allow a profitable business and the real figure should be 20-25% (remember there is an ulterior motive for running this system).

The reason for the big difference is simple, every part of a subscription-based systems is cheaper than a PAYG system (hardware, cost of fraud, fraud prevention, customer support, security, payment calculations and processing)."

Ken Cowley suggested some benefits of using micropayments as opposed to a general subscription, "The problem with a general 'bucket' to pay for content on several sites is the establishment of that payment brand. Numerous wallets have foundered trying to get themselves known - and this is just a wallet, albeit targeted at content rather than all categories. Unless you get a roster of entirely complementary properties, each will be reluctant to 'cross promote' the others, which is how they would see linking to a payment site which itself listed sites accepting payment.

We have a prepayment product in the shape of a scratch card carrying a certain amount of value, and are having some success marketing this to large multi-title publishing groups for on-line access to their titles. Where all are from the same stable, the cross-sell problem goes away. However the deal is obviously done direct, cutting out the 'trusted third party' angle."

Paul Carr commented, "Perhaps there's room for this kind of thing across 'men's lifestyle' sites (FHM etc.), women's portals etc. The payment scheme can be marketed as a type of 'club', which gives access to a network of relevant sites. Also, it occurs to me that the best way to get people to sign up would be to offer discount vouchers worth at least the value of the membership to everyone who subscribes.

For example, a network of blokes sites could charge £20 a year but give each member £50 worth of discounts on, say, grooming products, gadgets and clothes. Naturally these would be fulfilled through e-tailers such as Firebox, thus helping to boost the flagging b2c ecommerce industry."

The fact that no one payment solution has been widely adopted demonstrates that publishers have yet to find a formula to charge for content. The downward pressure on advertising revenues will ensure that this search continues.

What's the point of PR?

The world of PR has had a murky week as Nick Horley pointed out, "The puzzling thing about Sophiegate is that the press ever bought the idea that she was any good at PR. She's not the sharpest pencil in the box (don't ask me how I know) and was lucky to make it further than junior account exec. Without her title her agency would never have had a single client. The fact that the Queen let her get away with selling the monarchy for so long is testament to the Palace's ignorance of how PR operates.

PR works best when it's done discreetly. Hence the only PR practitioners the public gets to hear about are the oddballs who become more famous than their clients - Sophie, Max Clifford, Alistair Campbell... One of the high points of my PR career was getting a complete non-story, unworthy of a mention in the trade press, smack in the middle of the front page of the FT. Big share price movements resulted, millions of dollars were trousered. I would never have got away with it if I had been famous. Inviting public scrutiny of PR people makes as much sense as a magician explaining how his tricks work.

The main reason why press comment about the PR industry is so ill-informed is that most journalists have no idea how much they are manipulated. The only rag that can't be got at is the Economist. The rest are riddled with compromise and must be treated with suspicion. The better you are at PR, the more ashamed you should be. That's one reason why I don't do it any more. Good journalists - and there are a few - spurn PR 'help'. But not many editorial teams have the budget to do their own legwork, so they can't afford to treat PR with the contempt it deserves."

Alastair Pinkney added, "Don't argue with that Nick but sadly my experience of good PR science is getta a load of releases, squirt 'em out and one of them might stick. Bit of a sweeping generalisation there. One broadsheet ed. in my experience prohibited 'PR junkets' and looked upon expensive PR launches with a good deal of suspicion. The secret of good PR is simply not what you know but who you know. and that probably would even count for the Economist."

Russell Goldsmith disagreed with Nick and Alastair, writing, "...nothing like good targeting then!? How about making an effort to get to know your contacts, find out the kind of information they are looking for and the format they prefer it to be delivered in - which is different for each media that you are hitting - just a thought!

My grandma knows a shit load of people - doesn't mean she understands brands and how to deliver a message to the media! Sorry - just felt that before this conversation goes a long way down the route of slagging off PR, I thought I'd stick up for the industry a little!"

"I agree with much of what you say. The very best PR by definition does not draw attention to itself" replied, Andrew Smith adding, "Hidden hand and all that. Apparently there are some 40,000 people employed in PR in the UK - but it is the one or two you mention... that are used to characterise the whole business.

Sure, I'm not denying that there are some pretty stupid things done in the name of PR, but I'd hazard that most working in this business endeavour to be as professional and business-like as any other profession - the trouble is, because good PR should be invisible, you never hear anyone say, nice work - its only the PR balls ups that ever get any attention. I confess I'm a poacher turned gamekeeper - but my first news editor always told me to bypass the PR as much as humanly possible - and ironically the very best PR folk ultimately engineer themselves out of a job because we are there to facilitate the client's direct relationship with the press...

On other matters, the BBC Online article itself refers to the fact that one national newspaper believes 60pc of its stories are PR inspired - if the PR biz disappeared tomorrow, that's a lot of space to fill...The Economist of course takes the US approach where the publication will not accept any kind of PR inducement e.g. paying for press trips to far flung places, gifts, etc. Nevertheless, if we start seeing press stories saying isn't PR a wonderful business, I'd be worried ;-)"

Michael Reidy gave his perspective on the PR business, "I see REAL PR as fulfilling the following tasks:

Carrying out work that client companies can't do effectively
Making the sales team's job easier by creating awareness and attitudes to products and services
In B2B, explaining technology in words that the public and generalist editors can understand [THIS IS WHERE A LOT OF PR COMPANIES BLOW IT - they don't understand what their clients' products do]"

Andrew Petherick shed a different angle, "It's just as much about stopping media coverage as it is about getting it. When a disaster strikes (big oil spill/poison in baby food etc), it's the PRs that can save a brand and ultimately keep it's share price from dropping through the floor. Take Perrier; about 8 years ago it was advised by it's PR consultant to remove every bottle off the shelf of all supermarkets in Britain after a production problem poisoned a batch of bottles. This decision ultimately saved the brands reputation. On the other hand, some brands have been built entirely on PR alone (Body Shop didn't advertise for the first five years and became a high street giant). PS. I'm not in PR."

LINKS OF NOTE:
A quick round up of interesting, funny, useful and other links gleaned from the uk-netmarketing list, office gossip and other nefarious sources...we take no responsibility should you chose to click...basically, it's not our fault. Enjoy:

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