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Pricing in Digital Publishing

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With all the changes going on in publishing, one of the most common questions asked is how much should publishers charge for content. Truth is that there is not right formula to figure that out. Cory Doctorow, when he talks about ebooks, says that you shouldn’t charge the highest price but you shouldn’t charge the lowest either.

But that doesn’t help us much right? So let’s look at some business models he presented during his talk.

Price Discrimination

You’ll never be able to please everyone. Even if you’ve got a very segmented audience, you’ll have to face different price behavior. For example, coffee lovers. Some will want to pay £5 for a cup of coffee, others will want to pay £1. But you cannot open a coffee shop and start asking people how much they are willing to pay for your coffee, right? Well, Radiohead did it back in 2007 when they released their album ‘In Rainbows’. You might have heard about it, they made more money from the downloads than from the offline sales from their previous album. And only a third of people who downloaded the album chose not to pay anything and get it for free.

In Radiohead’s case, they allowed the customers to choose how much they would pay for the album. This can be extremely dangerous. But you also have examples of businesses that set the price themselves, such as the airlines companies. As Cory mentioned, if you ask around when you’re in an airplane how much people paid for their tickets, you will be surprised. The prices can vary a lot. The airlines carefully handle that, since they know when and who is willing to pay more for the same service.

The issues. There are several issues with using the price discrimination model. One of the biggest is when customers who you’d expect to pay more, end up paying less. And example that Cory talked about, is iTunes. When they started charging $0.49 for the songs, they had a major increase in sales. They were making more profit, since more people were paying. But they decided not to drop the price from $0.99, because if they did, they would loose the audience who was willing to pay more. It gets tricky.

Elasticity of demand

The cheaper, the better. Well, that’s what some people would say. Usually the more you lower your prices, the more people will buy from you. So let’s get back to the airline businesses. Specially here in Europe, the business of low cost airlines is huge. They are known for having the cheaper prices, therefore they’re able to reach a broader audience.

The issues. We usually relate price with quality. The issue there is that your business might be perceived as cheap if you charge a very low price. But this has a lot to do with your segment, and your target audience. If you realize there’s a big demand in the market, and the most important, you’re able to charge a low price, go for it. An opportunity here is to start low and increase after you have a loyal base of customers. This is not easy, your product must be very good and your customers must be able to pay more for it.

Advertisement

We all know this one. This is what’s ‘saving’ most of the publishing business that still don’t charge for any of their content. Advertisement changes a lot depending on your business, it’s not simple to say whether you’d be successful with it or not. But most of the experts out there are saying that advertisement is not the answer. Rob Grimshaw, managing director of FT.com, says that “an advertising-only model is very difficult. Of new revenue streams, payment is one of the most obvious to look at”.

Freemium

I’m sure you’ve used this before, it’s all over the web. The business offers you some of their services for free, but charge you for advance features. Spotify is doing that beautifully. They have recently reacher 1 million paid subscribers, which is amazing. This is a smart way to identify your customers and create an established relationship with them, which will hopefully make it easier to turn them into paid users.

So, what is the answer?

There’s no right answer yet. First we need to understand why people would pay for content. The problem is that we haven’t figured out that yet. There’s so much available for free, and most readers don’t understand (or don’t care) about the quality. So right now we should be flexible – try new things, fail and try again.

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Written by Cristina Dresch

May 23, 2011 at 8:35 AM

Posted in Digital, Publishing

Re-defining ‘publishing’ in a digital era

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We’ve been hearing lately that every brand should consider itself a publisher. But what does that mean exactly? What actually is publishing after all?

Message VS Medium / Publishing VS Print

Many people get confused between the terms print and publishing. I’ve read an article from John Battelle, where he explains why of this confusion:

“Back when paper and printing presses revolutionized how humans communicated, we ended up conflating two very important concepts. One was the message – what was being said, and in what context. The second was the medium – the transport for that message. The two became seen as the same thing in printed matter, and the traditional definition of publishing was born.”

This made me think about my communication classes back when I was taking my Bachelors degree, when we used to discuss McLuhan for several hours. And as John talks about in his article, apologies to McLuhan, but in this case the medium is not the message.

Well, theories aside

So… what is digital publishing? John says that “publishing means connecting a community through the art and science of communication. And nowhere is publishing more vibrant – and conversational – than through the medium we’ve come to call the Internet.” I would say that’s a great definition.

In order to succeed companies need to create a dialogue with their customer. Hopefully, this dialogue will then turn into a relationship, generating a loyal customer, who will promote the company through word-of-mouth that will then result in new customers. It’s a cycle where everything depends on communication, the ability to build relationships. And that’s what publishing is about.

What has changed?

Now, first thing is first. We need to think — Who is my audience? How are they going to reach me? There’s so much noise online, you need to do something to stand out and be noticed. Once you are, you need to make sure the reader sticks with you. You content must be interesting, captivating.

After you, as a reader, see something interesting in the web, what do you do? You’ll share it! Most likely on Twitter or Facebook, but even in offline discussions. We rarely keep information we like for ourselves, we have this constant need of interaction. Which is great. Brands love it because you’re spreading the word, and your network loves it too, because that’s the point – give and receive.

Written by Cristina Dresch

May 15, 2011 at 1:45 AM

Posted in Digital, Publishing

A quick case study – The Huffington Post

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You must have heard about the Huffington Post, otherwise I’m not sure what world you’re living in (not the Social World, that’s for sure). The Huffington Post was recently acquired by AOL, who paid more than $300 million for the ‘internet newspaper’. It was big news across the globe. I would say AOL acquired The Huffington Post in order to remain competitive. AOL used to be a huge portal back in days, but it’s been loosing a lot of traffic to other places in the web. The key in this business is to remain adaptable. The way we communicate is constantly changing, businesses must best prepared for anything if they want to remain competitive.

Overall Analysis

So, after all, what is The Huffington Post about? What could have possibly caught AOL’s attention, and for 300M? Well… the whole concept is pretty different. Huffington Post is a social newspaper, where each reader has its own account. As any social network, you can have friends and check their activities. You can keep track of your comments, friends, followers, etc. Similar to Foursquare you get badges depending on your level of activity inside the network.

On Huffington you can get 3 different badges: networker, superuser and moderator. The most important feature of the online journal is that it aggregates content. There are full time workers who write the articles in a regular basis, but their key social factor is that any user that is registered in the network can also publish content.

The members

Jason Linkis, Huffington Post reporter, explains in his article why people would be motivated to write at Huffington if they are not being paid. Most of them do it to get exposure, says Jason. There are millions of blogs out there, but many of them are not easy to find. Bloggers have to work hard on finding the right SEO keywords, and making sure their blogs are SEO friendly. In The Huffington Post that is not the case. The audience and the SEO is already there, blogger don’t have to worry about that. But they still need to make sure they’re writing something that people care about and have an interested sharing.

Other example that Jason mentioned in his article is when a New York Times reporter decided to write about his personal vision on Iran, because he simply didn’t have the chance to do so in the NYT. They were not interested in publishing his thoughts, they wanted real facts. Huffington Post is very flexible in that way.

Why the attention?

Online news websites are usually the same – a lot of images, videos, share buttons and (usually) good content. The Huffington Post stood out, they did something different. Similar to what wikipedia does, they decided to rely in the user’s collaboration. Of course, they could not make sure the content would be good and the frequency of collaboration would be ideal. So they decided to hire their own staff as well, which worked perfectly. It was a great balance, and a good way to keep news updated in a regular basis.

Some ways to improve

For being a social newspaper, The Huffington Post doesn’t do a great job of sharing information. I’ve looked for some data on number of members, articles written daily, etc. I couldn’t find any of that. Another point, even more important, is the fact that they don’t clearly explain what they do. If you’re in Social you want to make sure your audience understands what you do, and how they are supposed to start using your website. Unfortunately Huffington does not do that, not that I’ve noticed at least.

Written by Cristina Dresch

May 10, 2011 at 6:27 PM

Posted in Digital, Publishing, Social

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