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Five ways to build Unique Value for paid digital content

What really makes people willing to pay for digital content? My answer: The product must provide Unique Value by clearly fullfilling at least one of five uniqueness attributes. Here they are.

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.

Summing up

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.

About the author: Experienced media manager and journalist. Enthusiastic about digital media – and eager amateur photographer. Currently Chief Communications Officer at Schibsted Tech Polska in Krakow, Poland.

Comments on this entry are closed.

  • http://kristinelowe.blogs.com Kristine Lowe

    Interesting: lots of good points. I agree that it is charging for unique niche content is much easier than charging for general news (I don’t see much of a case for that), but at the same time I think at times even respected “niche providers”, such as FT, leaves a lot to be desired.

    For instance, I pay my FT subscription because it sets the agenda and I feel couldn’t live without being able to to check out its content, but I wouldn’t trust its recommendations to make me money – at least I wouldn’t trust it’s media coverage, which is the FT section I read most closely, to do so. I read it more as a guide to what shapes the market than as a guide to where to place my bets (not that I speculate in shares, but if I were to do so). So what makes it unique is perhaps the business overview it provides and its influence /ability to set the agenda, but there are blogs, aggregators and startups, like @viewsflow, that are shaping up to something that eventually could become even more interesting than the FT in terms of providing the overview.

    I think that’s a useful excercise: trying to analyse what you would or do subscribe to and why (I’d also pay for the Media Guardian if I had to), though I’m also very aware of the difference between what we as “experts” would pay for and what others would. My dad would probably pay for access to a good news site on golf or genealogy, perhaps also even to be part of an informed community around such issues, but never for general news;-)

  • http://hogrim.wordpress.com Helge Ogrim

    Interesting post. I would add one plausible reason why FT and WSJ make money online:
    The customer is refunded.

    No figures available, but I believe a large portion of their base have the bill footed by emplyer or company, while others can deduct on taxes.

    This is hard to match for Murdoch’s Sun, unless there is a good way to bundle paper(s) with other services sold thru smartphone or Ereader, services deemed valuable assets by those who now pick up tab for the business paper. It probably can be done.

  • http://www.betatales.com John Einar Sandvand

    Helge,
    You are right when pointing out that many of FT and WSJ’s customers probably have the subscription refunded by their employer. That is a clear advantage for those newspapers. But I think one reason for that is the perceived Unique Usefullness for business people. When asking for refund subscribers will be able to argue that the content in fact help them do a better job.
    This is the same as Kristine argues: Although the content of FT may not always be unique, the brand is so strong that its coverage sets the agenda. And that is providing Unique Usefullness for business people, who are dependent on knowing early what will shape the market.

  • http://va.se/webbloggen Mikael Zackrisson

    Great post, as I said yesterday, and even greater discussion in the comments.

    I definitely think you must add the “who picks upp the bill”-perspective to it. Media sites that can be regarded as working tools have much high possibility of getting readers to pay, I think.

    My thoughts is on the ad issue. If we continue to offers our sites for free, then we must create much more sophisticated ad formats. The ads must be relevant and relevant for each and every individual user. We are often talking about banner blindness and things like that, but Google has shown that is an ad is relevant to the viewer, it´s not seen as intrusive, but informative.

    But Google still haven´t found a way for it for work for display ads. Display ads are de most common format on traditional media sites, and their main objective is to deliver brand impression, not click through rates. If media sites found a way to make the brands display advertising more relevant, that could open up a completely new market. And supply the revenue that would make many paid models unneccesary.

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  • http://www.betatales.com John Einar Sandvand

    Kristine, Helge and Mikael,

    Thank you for the insightful comments. I have incorporated a couple of your points into the blog post where I write about Unique Usefullness.

    Speaking about ads, I agree with Mikael. Here is an interesting article from the blog Made by Many elaborating on this issue.

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  • http://blogg.abrenna.com Anders Brenna

    John Einar is forcing me to write my comments on this subject in English, in addition to our discussion in Norwegian on Twitter. As I really enjoy his tips and his own analysis, I will obey.

    First of all, the points here are both valid and good. I do, however, believe that they are missing the most important part of the “paying for news” puzzle.

    No one pays for news or the packaging. People pay for content or packaging if they want to be entertained or if they have to learn something, but this is not the way it works with news.

    I have been studying hard, observing and thinking a lot about these issues the last years (like everyone else), and I’ve come to the conclusion that people are paying for news to become a member of society. Several societies, to be exact.

    I recently moved to a new municipality (spelled correctly?). Normally, I would subscribe to the local paper to get access to whats happening in my new community.

    The problem is that I don’t want paper, and they are not charging for online news. They are not charging me the “membership fee” for my participation in this new society.

    They are correct to share the news freely, but they should have charged for their iPhone news application. Some members of the local community will be students, unemployed or other people not able or willing to pay the fees.

    This is the same as always, and there must be a free solution for them. The rest of us adults with paying jobs can and will pay for this membership.

    How would you feel if you moved to a new country and not have access to any regional or local news?

    You would be lost, and you would never truly understand what’s going on in your neighbourhood. You would spend your time outside, as you are basically not a citizen of that community if you haven’t read the news.

    The same goes for your career. You need to read the B2B news about your field of work to know what’s going on. Perhaps your work field crosses several businesses, and then you need to read even more.

    Hobbies and your kids activities are the same. You read news about the developments to stay current, and so that you can participate in the discussions.

    The problem now, for the press, is that we/you don’t need to read the papers, and pay our membership fees for that anymore.

    The societies have Facebook, blogs, Twitter, Ning and other social media solutions that partly replace the newspapers strategic membership position.

    This is mostly a good thing, but for the news business models it’s a catastrophy.

    We need good journalism more than ever, but it’s hard to build new sustainable business models if the strategic position as the information hub for local, regional, business and hobby societies are lost.

    But as long as we do our analysis correctly, and act on the facts we are finding, we should be able to work our way out of this mess (we put ourselves in).

    Journalism is a community service, and we need to understand which comunity we are serving, and figure out how to serve it best.

    That’s the road to regain our position as the society platform, the greates strategical position any business ever has had!

    It’s actually impressive that we, the media, haven’t been able to monetize such a great position.

    Free your mind and your ass will follow (Yes, that’s what the song originally said). I’m just sad to see that most media leaders have elected to do the opposite, and that ‘s frightening.

    Failure is not an option! Society needs the press, and the press needs to regain its role as the society’s information hub.

    Best regards,
    Anders Brenna

  • http://www.betatales.com John Einar Sandvand

    Not forcing you, Anders, just encouraging quality discussions on my blog! :)

    I agree with several of your points, but I think much of this is covered in what I describe as Unique Experience. If a media product has the ability to connect people in a unique way it might be able to charge. This is becoming harder than before with Facebook and other social networks taking oer parts of this traditional newspaper function.

    But I think we need to realize there are many drivers of willingness to pay, this being only one. In my opinion both Unique Content, Unique Usefullness, Unique Packaging and Unique Convenience can be strong motivators, depending on how the product is designed, distributed and marketed. The challenge many media companies face in the digital world is that is much harder to fulfill these uniqueness attributes in an open market where content is so abundant than in the closed newspaper industry. To put it simple: We have to be much more creative and work harder to succeed.

  • http://sitatsjekk.no Anders Brenna

    I beg to differ, as I believe the membership approach is the key factor to focus on in our development of the future business models for online news.

    I feel strongly about this view, but I don’t think it’s fruitable to focus on our differences on this, when we are such a synced match on the general issues.

    Instead, I’ll try to elaborate and write in more details on this subject for Kampanje the coming week.

    This means that you’re to blame for my postponing of the article on how we can and should create opportunities for unemployed journalists.

    Best regards,
    Anders Brenna

  • http://www.betatales.com John Einar Sandvand

    I look forward to both the articles, Anders – in due time!

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  • http://www.betatales.com John Einar Sandvand

    For those of you who read Norwegian, Anders Brenna’s article about this topic, which he refers to above, can be read in the media magazine Kampanje here:
    http://www.kampanje.com/medier/article545031.ece

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  • http://hogrim@wordpress.com Helge Ogrim

    Rereading your possibly refreshed post, I noticed an interesting, small point: That you can throw the newspaper away (after reading or skimming). Not that this will be repeated in digital media soon, but we still might want to reflect on the versatility of newsprint:
    Discardable, so you don’t have to carry it around.
    Many purposes: swapping flies, lighting a fireplace, drying out wellingtons.
    Shareable, split sections and rip pages
    You can write notes on it and draw mustaches on pictures
    Wipe your bottom if finer grade uanavailable
    etc

    Some, but only few of these can be replicated on iPhone, pad or pc. My only point being: It may be restrictive to gauge the value of a newspaper by its editorial content alone. Any thoughts?

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  • Elene Parker

    …and plain old evolution will kick whatever refuses to change right off the market. Here’s what I’m talking about: http://www.pressdisplay.com/pressdisplay/showlink.aspx?bookmarkid=XFZWABBKSJ7&preview=article&linkid=4ee241a4-c823-44f7-9c53-ad2972b7a02a&pdaffid=ZVFwBG5jk4Kvl9OaBJc5%2bg%3d%3d

    That’s the story nowadays, isn’t it?

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  • http://www.dogs-info.net/html/Breeds/2010/1001/Blue-Heeler-Breed.html Blue Heeler

    yes,Users will pay if they are offered products they perceive to have Unique Value to themselves.i think it too!~

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