Every media company is asking the question these days: How can we make users pay for digital content? Is there a way to transform the historically succesful print subscription model online?
Not many can claim to have the answer. But it seems clear that in 2010 we will see a lot of experiments in how media sites can make users pay for some of their content.
Here are some of my own reflections on this complex issue.
Main conclusion: Users will pay if they are offered products they perceive to have Unique Value to themselves. But creating unique value is a tough task indeed, especially as content is abundant in the the new digital era.
What constitutes unique value for a media product? – People pay for great content, is typically the answer from media executives. But that is far too simple. Even for newspapers the content as such is only one part of what people really pay for.
I think for a content product to offer unique value it must fulfill at least one of the following five uniqueness attributes, all of which are strongly inter-related. Normally a successful product will combine several of them:
1. Unique Content
If you have content nobody else has, there is a chance that you may be able to charge for it online. But we are talking niche content here, not the broad news coverage you can find everywhere else. This poses a challenge for most newspapers: Traditionally their expertise has been in producing a broad package of news that fits the tastes of the majority of a given population. This approach of course was due to the physical limits of the newspaper format, where editors had no choice but to offer all readers the same product. (And readers had to take what they got, I might add). On the web news have been disaggregated and supply has become abundant. Readers have numerous alternatives for the same type of content.
This means that to make readers pay for the content as such it must be really unique. If it is not, readers will just go somewhere else.
Do newspapers have such unique content? Not all, and I think many editors risk overvaluing their content in this regard.
Some newspapers may succeed. Both Financial Times and Wall Street Journal are experimenting with user payment, and I think both of those newspapers have such unique position in the market that they may be able to make money from charging users.
But most general newspapers will struggle more. For broad news users have numerous alternatives and there will be a high threshold for paying. It will just be too easy for users to change news source.
2. Unique Convenience
Often willingness to pay is closely connected to Unique Convenience, either in terms of unique access to the content in specific situation or because the service makes it particularly easy to consume the content. The newspaper product on Amazon’s Kindle is an example. Buyers obviously make a huge quality trade-off compared to reading the same content in the newspaper or even on the web sites. Still they are willing to pay. One important reason is that the content is available in new user situations, for instance when there is neither wi-fi or 3G available. Others will emphasize that the e-ink screen offers much more comfortable mobile reading than a phone.
Likewise the success of apps in iPhone is closely connected to Unique Convenience. People are offered a way to consume information or perform tasks in new and very easy ways.
I think Unique Convenience is perhaps the most important reason why many people still choose to subscribe to a newspaper. For most newspapers readers would be able to find similar content and information for free online. Yet when they choose to pay it is because the newspaper format still is being perceived as extremely convenient and flexible. You can read it while eating breakfast, bring it along on the bus and even throw the paper away when you are done.
But this uniqueness attribute is being challenged today. More users find it as convenient to bring their laptop to their sofa, read news on smart phones or even e-reader devices.
However, people will still be willing to pay for different types of Unique Convenience. For media companies the challenge is to define what type of digital products provide Unique Convenience.
3. Unique Usefullness
People will be more willing to pay for content and services they can use to achieve personal goals. These services may be connected to the content areas of the media sites, or totally unrelated.
One example is the Vektklubb.no, run by Norway’s largest news site VG.no. Vektklubb (“weight club”) is a service to help members loose weight. As a paying member you can register what you eat every day and track the number of calories according to your pre-set goal.
VG – which is the largest newspaper in Norway – runs a number of pages in the newspaper as well promoting the weight club and inviting people to become members.
Similar services are offered within personal finance, for instance automating people’s need to keep track of which bank offers the lowest interest rate on mortgages.
You will also find user-paid services within the entertainment segment, like media companies offering horoscopes to its readers.
We mentioned Financial Times and Wall Street Journals as newspapers with Unique Content. I think readers willingness to pay for their content in addition is strongly related to perceived Unique Usefullness. Simply put, readers feel the content helps them make money. This sense of usefullness may also be prompted by the fact that the brands are so strong that what they write actually influences the market, making it smart to read their articles as soon as they are published.
And not only the readers. In these cases also their employers value the Unique Usefullness to the extent that many readers have their subscription paid for them. Other readers can deduct the cost on their taxes. No content provider can hope for a better position.
4. Unique Packaging
Content may be freely available online, but still not packaged in a way specific readers want. Especially for niche areas there is a value in Unique Packaging, collecting the relevant quality content for specific interest groups.
Some would argue that this is the very core of journalism. And that is in many ways true. But for Unique Packaging it is no longer necessarily sufficient to serve broad edited packages, like a typical newspaper. Rather real value in today’s market is when content is packaged in highly specialized ways, often combining content from a number of different sources and sometimes even personalized.
Unique Packaging can also be associated with high-end design and presentation qualities.
5. Unique Experience
Using content can have a strong emotional aspect, for instance in terms of social experiences between many people. Users don’t only read an article for their own personal benefit, but often would like to share and discuss it. This can create a strong emotional experience which in the users perception adds unique value to the content.
Today sharing of content through social media is widespread – and free. Yet it is possible to create closely knit communities around specific content which provide so much emotional value to users that they would be willing to pay. In many cases this Unique Experienc is combined with Unique Content. One example could be exclusive live streaming of soccer matches combined with great tools to interact with other paying users during the match.
Unique Experience can also be created if the product makes people feel good about themselves or even smarter.
Likewise a Unique Experience can be created through unique technology. The iPhone in many ways provided new Unique Experience in the consumption of content – paving the way for a new user-paid app market. However, as more and more apps are being developed and competing platforms like Android are entering the market, the experience in itself may over time be perceived as less unique than before.
I think these are the five most important uniqueness attributes for digital content products. To be able to charge users you must fullfill at least one of them in a way which provides Unique Value. Normally a successful product would combine several of these attributes in a smart way.
If you can provide truly Unique Value, you also typically will enjoy a temporary monopoly in the market, giving you an advantage no competitor can compete with – at least not in the short run.
To be sure: This is all very difficult to achieve and requires hard work and smart thinking.