Bright ideas for boosting revenue
Tales from the trenches show that an ability to understand customer needs is at the center of creating valuable new products and services
By Marie Griffin
Business media companies are heeding some lessons of the recession: They must lessen their dependence on advertising revenue, whether in print or online, and do a better job of monetizing every available revenue stream.
A growing number of media companies are reviving the idea that users pay for at least some online content, a model being used by the Financial Times.
Also gathering steam are paid-membership business models, such as the one used by the In-Store Marketing Institute.
Searching for ancillary revenue also includes digging into such longstanding businesses as reprints and list rentals, where companies like IDG List Services and Dow Jones Reprint Solutions continue to mine new opportunities.
But few of these ancillary revenue strategies are as simple as they might sound. Joe Pulizzi, who pursued two of those strategies before abandoning them, has a unique perspective on the challenges media companies face in creating new revenue streams.
President of Z Squared Media and a former Penton Media executive, Pulizzi has been building a business around content marketing since 2007. His Junta42 online service matches custom media vendors with marketers. Last year he decided to wrap the content, research and other resources he had collected into a new entity, the Content Marketing Institute (CMI).
First, Pulizzi planned an online education site accessible only to paying members. When target customers told him they probably wouldn't use it, Pulizzi created a membership model that included access to all of CMI's educational resources plus 10 hours of individualized consulting.
When that idea did not take root, Pulizzi unbundled the offering. CMI is now selling consulting services a la carte and website content is free. “It's unrealistic and too hard to get people to pay for things they're not used to paying for,” he said.
People are accustomed to paying for live events, so CMI will host its first one later this year. They also pay for books, so Pulizzi is now signing up authors for CMI's new digital and print-on-demand book publishing business. “I'll package the content whatever way people will pay for it,” he said.
Heather Holst-Knudsen is president of Thomas Publishing Co.'s Manufacturing Enterprise Communications division. Over the past several years, Holst-Knudsen has been working to expand beyond Managing Automation's niche of manufacturing IT to address the worldwide manufacturing industry through the Manufacturing Executive brand.
ME's first appearance was as a print and digital media brand for Europe. Last year, Holst-Knudsen overhauled ME, re-envisioning it as a global platform for high-level information sharing and problem solving for manufacturing executives. At the center of this platform is a website designed for business networking and peer-to-peer communication.
The ME business model is based on membership, with multiple levels of participation and pricing. At the core is the Manufacturing Leadership Council, open both to manufacturers and their suppliers. Membership costs $2,500 per person. In addition to full access to the resources of the ME website, members are invited to two face-to-face council meetings each year, monthly teleconferences, regional Dinner & Debate meetings and an executive education program.
Holst-Knudsen originally priced an annual restricted membership to the website for non-council members at $249 per user, but a menu of free and lower-priced options was added this year. “We allow members to join the site for free to read blogs and articles, view other members and create a profile,” Holst-Knudsen said.
To exchange private messages with other members, create groups or start discussions, a user must upgrade to premium status at $129 per year. At the $249 level, called “Premium Plus,” users get full website access and six issues of the Manufacturing Executive Leadership Journal.
Holst-Knudsen views 2011 as “our evidence year. We have already generated revenues from subscriptions and membership dues related to Manufacturing Executive,” she said. “In 2012, I'm counting on over 50% of our budgeted revenue to come from end-user subscription sources.”
Half of that subscription revenue would be generated by ME; the other half, by TechMatch, an ambitious new software-as-a-service offering that aids executives in selecting enterprise software.
GreenBiz Group, known as Greener World Media until last October, serves the sustainability sector. In 2009, GreenBiz introduced an invitation-only, paid-membership networking group called the GreenBiz Executive Network. Annual membership includes three face-to-face meetings led by a facilitator, four conference calls addressing important green issues and several research reports.
The initial yearly membership fee for one individual had been $9,500; it's now $12,500. The GreenBiz Executive Network had 55 members at the end of February, up from 31 last April. Companies represented include Alcatel-Lucent, Citibank, Ford Motor Co. and Lockheed Martin Corp.
Selling the value of peer networking is not hard in this emerging field, said Pete May, GreenBiz CEO. “Since this is a hot area, consultants are charging tens and hundreds of thousands of dollars for projects that might not be as valuable as one idea someone could get from another member of this group,” he said.
Two business media companies recently debuted paid subscription products. Northstar Travel Media unveiled a service for travel agents called Travel42, while UBM Electronics debuted EETimes Confidential, a new brand for engineers who have moved into senior management.
Travel42 integrates several existing Northstar products, including Star Reports, based on professional reviews of hotels and cruise ships; Weissmann Reports, a database of more than 5,000 destination guides written for travel professionals; and travel alerts from Intelliguide, a service providing updates about transportation, security, weather and health risks to corporations.
This new product is unique in that its user interface helps agents build detailed travel itineraries for clients. For $42 per month, “agents will save time when they are researching travel itineraries, and they will make more money over time by building customer loyalty,” said Tom Cintorino, exec VP-digital media at Northstar.
Currently a monthly digital magazine, EETimes Confidential will add a members-only website during the second quarter, said Paul Miller, CEO of UBM Electronics and UBM Canon. “This product was heavily researched to meet the specific needs of this audience,” he said, adding that the annual price of $497 also came out of market research.
The content will differ from the technical- and product-oriented engineering content of EETimes, Design News and other UBM Electronics brands, with information on hot companies, up-and-coming technologies, in-depth analysis of business issues and other actionable intelligence.
Although most trade magazines switched from paid subscription to controlled-circulation models decades ago, some legendary brands remain paid. Only a small percentage of those have maintained a paid-content model on the Web.
One of those is Reed Business Information's Variety.com, which itself was in the news March 1 when it launched a breaking-news blog called Showblitz. The blog has a simple, one-column-wide design, no advertising and short summaries of stories. Plus it's outside the pay wall to encourage aggregators and bloggers to link to exclusive Variety stories.
An e-mail introducing Showblitz to entertainment bloggers specifically noted that “our pay wall has discouraged sites like yours from linking to our content in the past.”
Although some bloggers expressed hope that Showblitz might represent a new phase in Variety's paid strategy, Neil Stiles, Variety president, said: “The paid-content model will continue to be refined as we experiment with price and content; however, we believe that quality content, especially insight, has real value and should be paid for.”
As a company, ALM is making a strategic investment in content, said William Pollak, CEO. Its regional legal newspapers, including The New York Law Journal, and its flagship magazine, The American Lawyer, require paid subscriptions for print and the majority of their online content. Pollak said about 10% of the online content for those brands is free to everyone, 30% is free with registration and the remainder is paid.
“We're having good success turning the registrations into paid subscriptions, which was the objective, so we think that's generally the right ratio,” he said, adding: “For us, the name of the game is proprietary content that we can use in multiple ways. Often, it's not straight news; it's substantive law or research content. A big part of what we're doing now is rolling out new work flow tools that meet the needs of particular kinds of lawyers, such as litigators.”