In a panel discussion at the Software & Information Industry Association's Information Industry Summit in New York, a number of online publishers discussed the challenges facing the industry.
Concerning using a subscription model, New York Times (NYT) director of entertainment, video and audio products Nicholas Ascheim said, "New generations will never get exposed ..." we need "more time to experiment." He also added that in terms of percentages, he thinks that progress is only about "5% down the road," referring to growth and the audience that is being built around content.
Ascheim fears that with the subscription model the content would be hidden behind a paid wall that would scare off younger readers that haven't gravitated toward their online content. "The strategy is to build an audience," he said. In other words they're not looking at monetization as being the key mover at this point.
This is the same strategy that YouTube (GOOG) founders have used: build an audience and then figure out a way to monetize it. YouTube has built an audience and are now facing the realities that their way of building their audience, through having nothing intefere with their users experience, is now the very obstacle they face in figuring out how to make money without alienating their users.
Even though the "Times" has had strong revenue growth from their online properties, they haven't necessarily profited from it; there's a huge difference between revenues and profits.
For example, the fourth quarter online revenues for the company stood at $84.4 million, an increase of 42 percent over the last quarter of 2005. For the entire 2006 year, revenue increased by 41.2 percent to finish at $273.9 million, from the $193.9 million for all of 2005. The Times projects that revenue for this year should grow by a healthy 30 percent in its Internet businesses to reach around $350 million. Yet in all the data cited, you never hear the word "profits" mentioned.
This is the story for any media or content company in reference to the Internet: How do we monetize the traffic and audience we're generating?
Randy Kilgore, chief revenue officer at video ad network Tremor Media, "We see a lot of confusion in the marketplace. We're working with thousands of sites with tons of video, but without a clear strategy of how to monetize."
Do you want to know what I think that the real problem is here? Rather than talk about all of this, simply start trying various marketing techniques and strategies to see what works. It seems from the endless articles and comments on this subject I hear, that companies are being way too shy about going about doing it.
We continually hear about it interfering with the experience of the users, but I would bet that no matter what survey and question you ask concerning this, that the answer from the participants will be that they don't want adds of any kind involved. So what can be done? Either offer a subscription model or start offering adds.
The problem that YouTube has now, plus others that say they want to grow traffic and audience share before they start offering ads, is that you're training your audience that they don't have to experience this if they interact with you. Some day you'll have to contradict that. The question then becomes should you do it at the beginning of the content you offer or sometime later once you get a much larger audience.
To pretend that this question is one that doesn't have to be answered, from a business point-of-view is either naive or negligent. The question of monetization is real; some people are acting like it never has to be addressed. You won't be hearing much from them in the near future.
Am I saying forget about what the users want? Yes and no. Any user that says they won't use you if you monetize your content, is basically saying that they'll use you until you have to shut down and then will simply migrate to the next "free" content site and use it until it folds. There are no other alternatives. Don't be fooled into thinking any other way. If there is no monetization, there will be no content offered.
Again, I think we just need go ahead with marketing to our audience. Sure there are ways to lessen the interference and make it a better experience for the user, but to think that we can just burn through money and things will take care of themselves is a good way to be a case study in how not to do things.
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