Wednesday, June 22, 2011

How to sell content by making it easy to buy

A resolute consortium of media companies in, of all places, Slovakia appears to be proving that you can charge for digital content, so long as you (a) hang together as a group and (b) make it simple for the consumer to pay.

The companies, which include seven newspapers and two television broadcasters, are the charter members of a new service called Piano, which allows a user to register at one participating site and then acquire premium content with no further ado from any other member of the consortium.

The content-vending combine says it has collected more than €40,000 (US$57,600) in subscription fees since it launched on May 1. Perhaps even more significantly, at least one of the publishers in the group reports a 14-fold increase in pay subscribers in the weeks since the service launched. More on that in a moment.

The seemingly successful start of the consortium is the culmination of more than a year of work by Tomas Bella, a former online director of one of Slovakia’s biggest newspapers who now is the chief executive and a major shareholder of Piano Media, the company running the payment system.

Bella pulled together a group of competing and independent-minded publishers and then built a flexible pay-wall system that allocates payments among the media partners according to how much content is consumed at each of their sites. Bella is taking 30% of sales in the first year of the venture to defray development and operating costs, but intends to reduce fees for publishers as the service scales up.

Bella’s hunt for a way to charge for content actually goes back to 2006, when he launched the first pay wall for SME, the large national daily where he headed digital operations. That initial effort “was a horrible failure,” said Bella in a Skype interview. “While people understand content is expensive and can’t be free, they have a big problem, not with the cost, but with the inconvenience of paying for it.”

Bella’s early pay wall, like those attempted by several North American newspapers, was a one-off system that was unique to his newspaper and required customers to choose from a complex array of content tiers and payment plans. Taking that experience into account, Bella figured it would “be easier for people if they knew there would be one payment that would let you read as much as you want, anywhere you want it.”

Here’s how Piano works:

After the customer pays €0.99 a week, €2.90 a month or €29 a year for access to premium content at any one of the participating sites, she normally is recognized and granted access to paid content at all the sites operated by the other members of the consortium. In keeping with the convenience meme, consumers can acquire a Piano account not only from participating publishers but also at book shops, through SMS payments on their mobile phones and through their Internet service providers.

Publishers, who have considerable flexibility in the amount and type of content they put behind the pay wall, are paid for the amount of time individuals spend on their sites, not by page views or any other metric. Some publishers are experimenting with charging for access to comments or permitting Piano subscribers to place free classified ads.

Bella and his media partners are reluctant to discuss the specific results of the venture in its first six weeks. But Bella says paid subscriptions at the opinion pages of his alma mater, SME, are 14 times greater today than they were under the in-house system in place before Piano launched. Bella says paid subscriptions rose six-fold since May 1 at Tyzden Magazine, which also previously had a proprietary pay wall. To keep things in perspective, those gains probably are coming off pretty small starting numbers.

“We thought we would have to wait for several months to see if this would work,” said Bella. “After only six weeks, however, we are talking to publishers in five western European countries and hoping to launch a second country in autumn.”

Bella’s not-so-secret advantage is that he only had to bring together a small band of publishers in a country of 5 million residents speaking a relatively obscure language. Could his approach work equally well in the English-speaking world, where competition is far more intense than Slovakia?

“You might not be able to immediately persuade the Washington Post, the New York Times and USA Today to join our system,” he responded. “But if you put all the hunting and fishing magazines together on one pay platform, you could sell a lot more content than any one magazine could ever hope to do on its own.”


Blogger Doug said...

This just reinforces the idea that content is king is not enough. It's got to be content + utility, and preferably + utility + community.

1:59 PM  
Blogger Gunther Sonnenfeld said...

Great summary piece, Alan. I've known about you and your work for quite some time.

What you allude to - and prove through this example - is the long-standing need for a true content marketplace, one that is not beholden to media inventory models as we know them (the Demand Media problem).

With that said, I wonder if even consensual demand through normative pricing levers in the Piano model will eventually result in things like collusion (in this case, content is susceptible to inflationary risk, not the inventory used to sell it). The linchpin here is value around consensus (themes or topics that resonate and are validated through social channels, etc.) that balances out pricing dynamics with softer value metrics like actions (what people do with content or because of it; content that becomes a larger news or story piece, for example) and then levers that with collective guidelines for price control (think of a creative commons construct here).

Was that a run-on sentence or a parenthetical pack?

Anyway, Doug: this actually reinforces the idea that in the content game, context is king ;)

With Intent,

Gunther Sonnenfeld


5:59 PM  
Blogger MrMediaPro said...

Talk about K.I.S.S. Sounds like a sound plan all the way around, wonder why newspaper publishers here couldn't figure it out....Guess same question/answer as why they didn't see Craig's List coming and pre-empt it. Or why they never attempted to migrate print subscribers to digital with an incentive rather than losing them forever..Reminds of what the judge who sentenced OJ Simpson for the memorabilia theft in las Vegas said.."Mr. Simpson, in the beginning I wasn't sure if it was ignorance or arrogance on your part..I now know it was both".

Sad and tragic story surrounding demise of newspapers, hopefully others will learn and not re-create the unfortunate jistory

4:54 AM  
Blogger Bill Bennett said...

Sorry to sound like a malcontent, but the amount of money raised here doesn't sound like much to me. 40,000 euro in, what, six weeks? That might add up to half a million a year.

Even in a place like Slovakia that's unlikely to keep many newsrooms humming.

9:58 PM  
Blogger Perohryz said...

Bill, the 40,000 is for the first 4 weeks. You can hire 20-30 decent journalists for this in Slovakia and to give things in even better perspective, typical national daily newspaper here have about 40-80 journalists.
So yes, this is quite significant number for the first month on our scale.
(Tomáš Bella)

1:28 PM  

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