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January 19 2012

Getting the content out there isn't enough anymore

Content is still king, but now it has to share its crown. Justo Hidalgo (@justohidalgo), co-founder of 24symbols and a panelist in the "New Ways to Sell" session at the upcoming Tools of Change for Publishing Conference, believes added value and personalized services are just as important as the content itself. He explains why in the following interview.

In what contexts does content aggregation create the most value?

JustoHidalgoMug.pngJusto Hidalgo: Companies that take content and contribute added value for readers are generally better positioned to succeed. Specifically, I believe content aggregation is useful in the following contexts:

  • Hubs — Why did The Huffington Post gain so much success? Why is Spotify increasing its number of users constantly? And why is Netflix in trouble? There are of course many reasons, but one is particularly clear: Users want hubs where they can find most, if not all, of the content they want. Content aggregation enables just that. While creating silos of information can be valuable in specific niche markets, it does not work in mass markets unless your brand recognition is immensely high.
  • Value addition — Social recommendation is a typical yet good example of value addition to content, as is adding information about a title's author and surrounding context. This meta-information can be manually or automatically added. I believe in the power of machine learning and data mining technologies applied to this area, along with human expertise.
  • Discovery — While having thousands or millions of books complicates a search, it also creates an impressive opportunity: There are more relevant datasets to match recommendations and tastes as well as to facilitate serendipitous discovery.

How about paywalls — is anyone doing this properly? What is the best way to make this model work?

Justo Hidalgo: Paywall models only work if what you offer is extremely exclusive. Maybe the New York Times or the Financial Times can succeed at offering paywall content, but in a digital world absolutely nothing can be prevented from being copied and propagated. So the key is not the content itself, but the value-added service offered on top of it. Only a mixture of high-quality content and a great service will be compelling enough to make users pay.

In general, the content — and the service that contains it — needs to be testable, and models like freemium, whether "free" is forever or for a limited time, are critical in the digital content world. Spotify is creating a massive user base with this model, even now that its free offering is not as compelling as before. The New York Times is also using a freemium approach, letting its users read a few articles per month for free before the paywall kicks in.

The challenge of paywalls in this context is that high quality is not only expected, but required. With so many good free sources of information available, if I am to pay for it, I expect it to be impressive — not only in terms of pure content, but also in terms of the benefits the service provides in a personalized way.

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24Symbols is based on a subscription model. Since your launch, have you had to change the model to make it work?

Justo Hidalgo: Pivoting is inherent to any startup. We made some changes to our product strategy, like focusing on the HTML5 version before the native apps for iOS and Android.

In terms of the model, the basics are the same. We believe a cloud-based social reader with a freemium subscription model is key for the future of publishing. And we recently branched out to license our technology to companies and institutions that want to offer a cloud reader to their customers or employees. This was in our minds from the start, but we wanted to focus on the consumer offering first and create a top-class platform.

This interview was edited and condensed.

Related:

Reposted byRK RK

July 28 2011

Books as a service: How and why it works

Justo Hildago (@justohidalgo), co-founder of 24Symbols — a kind of Netflix for ebooks — says books as a service not only benefits readers, but publishers as well. Hildago outlines his company's business model and explains the benefits it offers in the following interview.

Hidalgo will also expand on these ideas at TOC Frankfurt 2011 in October.

How does 24Symbols' business model work?

Justo HidalgoJusto Hidalgo: 24symbols is a subscription service that lets users read in the cloud, and it includes social capabilities. This means that the user does not need to download the ebook. The book goes wherever you go — read it on your laptop, iPad, smartphone, and so forth.

We have a freemium business model. Users can subscribe for free in order to read ad-supported books online. Or they can pay a monthly, quarterly or yearly fee to access a bigger catalog with no ads, and with additional capabilities, such as reading offline — on the plane, on the subway, or in any place where Internet connectivity is not available.

What we're offering is quite different compared to what the big players are doing. We're offering an alternative approach — a new channel where publishers can provide additional value to the readers, and where readers can take advantage of what the Internet is offering.

How does your model benefit publishers?

Justo Hidalgo: There are three main benefits for publishers:

  • Piracy — Though not as high yet as in music or movies, piracy in books is clearly increasing. Publishers can either wait until the numbers get so high that nothing can be done, or they can act accordingly. The examples of Netflix and Spotify show that if you give users a compelling way to consume paid content, they will pay for it.
  • Cannibalization — We don't believe books are dead, but rather that they will co-exist with their digital counterparts. 24symbols helps in that coexistence as a way to easily re-direct traffic to retailers — if you love a book on 24symbols, give it as a gift; if you read for a while but still prefer the printed version, buy it.
  • Books as a service — The trend toward consuming content from the cloud is clear and inevitable. Publishers must start positioning themselves in an area that is already profitable in many businesses and clearly will be soon in the book industry. The benefits it brings to publishers — statistics and data gathering, close revenue control, and the ability to experiment — override the current concerns.

Additionally, we share revenue with publishers. The way to do this is by having a common revenue pool where we include all book-related ad revenue and the paid subscriptions. For a specific time range, such as a month, this revenue plus the number of pages that have been accessed throughout that period gives us the "price per page." Then we just count the number of pages per publisher and pay each publisher accordingly.

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How are publishers responding?

Justo Hidalgo: We're finding lots of interest from publishers. Most of them understand how our model can help them and since we're quite flexible regarding how to start, it's easy for them to begin by publishing some content in order to experiment. We're adding new books to our catalog every week, and we're finishing some deals with big publishers that will provide a "seal of quality" to our project.

Is piracy a concern for you?

Justo Hidalgo: The project itself was born with piracy in mind. As I mentioned before, piracy is increasing in the ebook market. This doesn't help the industry, as it didn't help other cultural and entertainment industries, but it clearly shows a shift in how content is accessed and consumed. We offer a solution that's based on a proven premise: if you provide readers with a convenient, unified and affordable way to access content, people will use it. Once that's achieved, piracy doesn't matter that much.

This interview was edited and condensed.

For more on how 24Symbols works, check out the video below:



Related:


  • Data markets aren't coming. They're already here
  • For publishing, sales info is the tip of the data iceberg
  • Book piracy: Less DRM, more data
  • Ebooks and the threat from "internal constituencies"


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