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By Daniel Lagani
The newspaper industry’s frantic search for a new business model in this era of free digital content has taken on a fevered pitch in recent weeks. From Seattle to Boston and many cities in-between closures, layoffs and bankruptcy have become common-place at big and small papers alike. The story is bigger than newspapers alone, however, as ad budgets across all media are being cut in-response to the slowdown in consumer spending. The result is a wide-range of media companies rethinking the free content model and the idea of charging consumers for something that was previously free.
What's noticeably missing in all the coverage is that several brands - ranging from Wine Spectator and Women's Wear Daily to the Wall Street Journal - are already having success charging for content. Why? The answer is two-fold; in most cases their content is original, focused and not readily found elsewhere on the web for free. The very best companies have also cracked the biggest hurdle by making it easy for the consumer to pay with just one-click. Do these things and you can build any range of businesses from deep, specialized content that serves professional needs or personal passions to games, music and other lighter-fare.
Take a closer look at Women’s Wear Daily, (one of my former brands) and you see a targeted media brand that has doubled its paid digital circulation in the past two-years. In fact, with digital allowing for immediate distribution around the globe it has grown to be now more than one-third of WWD's total circulation. Other targeted brands like Wine Spectator and Robert Parker’s Wine Advocate have also taken a paid approach online. These sites are successful because they make the most of the medium; Wine Spectator currently claims to have more than 200,000 reviews online with more than 1,000 new reviews added each month. Coupled with effective search and external links to buy the wine it makes for a very useful digital experience.
As the Wall Street Journal is showing paid content can also work with broader circulation products. WSJ.com’s hybrid-approach makes general, widely reported stories free, but requires a subscription to access core financial and markets features. The strategy allows them the best of both worlds; a large audience to satisfy advertisers and a second more reliable consumer revenue stream driven by deep, focused reporting.
On the other end of the spectrum is what the folks at Apple figured-out - originally with the iPod and more recently with the iPhone; make it easy, make it fun and people will buy digital content of all types without hesitation. For anyone that has ever bought an iPhone “App” you know exactly what I mean. With Kindle, Amazon is in the game and everyday AT&T, Verizon and the mobile telecoms are adding more things for all of us to download and have automatically billed to our credit cards or monthly statements. The key feature across all is a "one-click" purchase that makes impulse buying easy.
So back to where we started - no doubt the era of free digital content has turned the newspaper business on its head--but there is an increasing number of examples where the consumer is paying for content online. Consumers may be tough and increasingly tight-fisted, but they are rational and consistent; bore them, offer them generic content that is widely available for free and they will not pay. Give them access to rich, deep, unique or entertaining content and make it easy to buy and you’ve found the Holy Grail – a business model that still works even when advertisers cut back.
Daniel Lagani is a media and advertising industry veteran. He most recently served as president of the Fairchild Fashion Group.
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