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8 models-for-monetizing-digital-content
1. For Consumer Product Strategy Professionals
Includes data from Consumer Technographics®
June 25, 2009
Eight Models For Monetizing Digital Content
Ad Revenue Softens, And Publishers Seek New Ways To Make Content Pay
by sarah rotman epps
with Mark Mulligan and Erik Hood
ExECUT I v E S U M MA Ry
History repeats itself: As they have in other economic downturns, publishers are considering offering
paid content products as a way to wean themselves off the shrinking teat of advertising. In this report,
we examine the four qualities that characterize content for which people are willing to pay, and we
define eight models for digital content monetization. Whether publishers adopt a “free-mium” model,
introduce micropayments, or develop new products to drive incremental revenue, they need a
comprehensive strategy that accounts for consumer receptivity, impact on other revenue streams like
advertising, and effects on other online and offline products and channels.
publisHers Have Had enougH of tHe all-you-can-eat content buffet
With online ad revenues flat or declining thus far in 2009, publishers have reached a breaking point
where they are forced to radically reconsider their online business models.1 As they have in previous
down cycles, publishers are considering various paid models for their content. The Wall Street Journal
recently announced it would begin a micropayment program this fall that will complement its existing
online subscription program.2 Cablevision has announced its intentions to end free online distribution
for Newsday.3 Martha Stewart Living Omnimedia will be testing paid downloads for its online video
content starting in June.4 And Pandora, whose core streaming radio product is free and ad-supported,
has introduced Pandora One, an ad-free streaming desktop app for $36 per year.5
But these programs can be controversial even within the companies that are proposing them. As one
publisher recently told Forrester, “We’ve worked hard to build a sustainable online advertising business.
Putting content behind a pay wall would kill those efforts overnight.” While it’s true that some efforts
to make consumers pay for content can cannibalize existing revenue streams, other efforts can be
complementary. To help publishers sort out what models make sense for their companies and their
content, we’re taking a closer look at: 1) what types of content people will pay for, and 2) what models
publishers can use for digital content monetization.
“Monetizable” content Has at least one of four characteristics
Conducting research for Forrester’s five-year forecast of the paid content market has led us to conclude
that content people pay for has at least one of four characteristics.6 People pay for content that:
· Supports a job or career. Content and functionality that help people (and we intentionally say
“people” rather than “consumers” to include business users) advance their careers is worth paying
for. LinkedIn, which has been profitable since 2006, complements its free service with premium
Headquarters
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