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February 27 2012

Business models to monetize publishing in the digital era

At TOC, you're as likely to run into media professionals, entrepreneurs and innovators as you are publishers, booksellers and others working in traditional publishing. This, in turn, makes the underlying themes as varying and diverse as the attendees. This is the second in a series, taking a look at five themes that permeated interviews, sessions and/or keynotes at this year's show. The complete series will be posted here.


As traditional publishing is more and more disrupted in the digital era and deeper and deeper discounts in digital publishing become the norm, big questions about revenues — and where they'll come from — arise. Monetization was a major theme at this year's Tools of Change for Publishing conference. Discussions covered a variety of business models suited to monetize content, including subscription/access, freemium, and ad-based models, and models for moving the focus away from the books themselves to monetizing services, experiences and relationships with customers and readers.

In a keynote address, Andrew Savikas, CEO at Safari Books Online, talked about lessons learned at Safari and why digital subscriptions and access models matter for publishers.

"There are two reasons why subscriptions matter now for books more than they did 10 years ago when Safari first got started: First, we all know readers are much more comfortable with digital reading and other digital media. The percent of adults who own an ereader or a tablet doubled this Christmas — nearly 48% of adults in the U.S. own a tablet, an ereader, or both.

The second reason subscriptions matter more today has to with something Kevin Kelly talked about last year — the shift toward streams of information ... Streaming models are an important alternative and complement to purchase models, and consumers are growing more comfortable with them ... There's a growing product and service economy around access and membership models that reduce the up-front costs associated with things like buying a car; hiring an assistant; or buying enough music, movies or books to build a great library. In addition to reducing the up-front costs, subscription access models also offer on-demand convenience."

Savikas talked about what ebook subscription models look like and with what kinds of books such models work best. He said the model will work with more kinds of books than it's currently used and outlined three reasons publishers should consider the subscription/access model:

SafariSlide

He broke down the payment model and explained how — and why — it can be profitable. He said, "When a book is sold at retail, the publisher and the author get the same amount whether the book is read once, twice or 100 times. In a usage-based model, the publisher is paid only for what people actually read — but, they're paid every single time that page or book is read." Savikas said that at Safari, it's rare for readers to read books cover to cover, but pointed out that it's the aggregate behavior that matters and that brings in the revenue.

Savikas' presentation slides can be found here, and his entire keynote can be viewed in the following video:

Justo Hidalgo, co-founder of 24symbols, addressed the issue of monetization from a freemium model standpoint in the session "New Ways to Sell — Aggregated Content, Paywalls, Subscriptions, and More." He argued that just having free content or paid content alone is not enough — people aren't going to pay for content, he said, unless you have "extremely high-quality, differentiated content," as the Financial Times has, or you have "impressive brand recognition," as the New York Times has.

JustoSlide1

With a freemium content model, the reader gets something for free with the opportunity to get more content, services or a better experience for a price. Hidalgo shared an example from his company's model:

JustoSlide2

Hidalgo's presentation slides can be found here, and more of his thoughts on freemium, paywalls and subscription models can be found in this TOC interview.

The panel session "The Future of the Cookbook" addressed monetization specifically from a cookbook-genre standpoint, but the overall points could easily apply to other areas of publishing. Some monetization ideas that came out of the session included allowing advertising inside ebooks and finding sponsors or co-branding books, and also included subscription-based possibilities, as Andrew Savikas discussed in his keynote. Here are some of the major points the session addressed in the area of monetization:

CookbookSlide

The ideas of chunking — in this case, selling individual recipes — and bundling could be monetized in many genres of publishing. And as Savikas noted in his keynote, the subscription/access model can be applied broadly across publishing sectors.

The slides from "The Future of the Cookbook" session can be found here, and session panelist Adam Salomone, associate publisher at The Harvard Common Press, has further discussions on monetization, ad revenues and the importance of staying flexible in this TOC Podcast interview and in a post at Publisher's Weekly.

Literary entrepreneur Praveen Madan turned the monetization discussion away from content and books and toward partnerships, relationships and experiences in his session "Kepler's 2020: Building the Community Bookstore of the 21st Century." Madan, who is currently working with The Kepler's 2020 Project, said selling memberships isn't anything new but is a very important source of revenue today and an important way to engage a community around a local bookstore. He talked about diversifying the traditional revenue model, moving away from a focus on selling print books and toward a model based on selling memberships, services and experiences, such as charging small ticket prices for author events and educational classes. His monetization discussion revolved around four core principles:

KeplerSlide

Madan elaborated on the first principle and talked about separating the bookstore business into two business — one for-profit and one non-profit:

"More and more, what we find is all the excellent public education programming that bookstores do is really a non-profit activity, and it belongs in a non-profit organization. The community partnerships program — these 120 community partnerships Kepler's has, schools that they're raising money from — that's a money-losing activity. There are about six people on Kepler's staff who do that work all the time. I looked at that and thought, this is really a non-profit organization, but it's stuck inside a for-profit organization, and it's losing money. So, let's just take it out, call it a non-profit and run it separately and fund it separately."

More information on Madan's session can be found here, and a video with further details about Kepler's 2020 Project can be found here.


If you couldn't make it to TOC, or you missed a session you wanted to see, sign up for the TOC 2012 Complete Video Compilation and check out our archive of free keynotes and interviews.


Related:

October 12 2011

Viewing content at the atomic level

This post is part of the TOC podcast series, which we'll be featuring here on Radar in the coming months. You can also subscribe to the free TOC podcast through iTunes.


The concept of chunking or breaking out content into its component parts — and the opportunities that can create — has been much discussed, including here on Radar. In the following podcast, Adam Salomone (@AdamSalomone), associate publisher at The Harvard Common Press, talks about why publishers need to start creating more agile content by viewing it at its "atomic" level. He also offers insights on monetization, advertising revenue and the importance of remaining flexible.

Highlights from the full video interview (below) include:

  • Content suited for granular presentation: There is lot of potential for taking content — especially lifestyle and recipe content — and atomizing it, breaking it down and chunking it, Salomone says. It's important for publishers to look at incremental revenue possibilities and start thinking of their content at the "atomic" level. (Discussed at the 00:57 mark.)
  • The licensing monetization model: Salomone says he's surprised licensing hasn't gotten more of a foothold and that it's important to realize the value of curated content and what it can bring to the table. He suggested such a model could be used to fund some of the other digital transition efforts. (Discussed at 5:30.)
  • Barriers to advertising revenue: The issue is two-fold, Salomone says. First, publishers don't necessarily have the ad sales expertise, and second, they're not thinking of monetization outside the book in the same way they think of it inside the book. (Discussed at 6:23.)
  • The approach to content enrichment: Salomone says publishers are stuck in a we've-got-to-add-video rut. He suggests looking to partner with companies that have related content options to make the enriched content smarter and more useful. (Discussed at 14:38.)
  • The file format conundrum: Salomone doesn't see a unified file format in the near future — or even the continued use of the file formats we have today. He says publishers' value isn't necessarily converting their entire backlists to EPUB, though that needs to be done; the value lies in building the expertise to remain flexible and able to accommodate a workflow that allows the output of multiple file formats — whatever they may be. (Discussed at 19:19.)

You can view the entire interview in the following video.

Related:

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