Becoming Professional: A Blog

How Should You Price Your Digital Content?

Posted on: May 23, 2011


It’s a tough question. As you might have read in the prequel to this post, there are potentially three digital publishing pricing models. Here’s a brief list:

  • Make it cheap or free so that word gets around easier and hopefully encourages purchase of the more expensive versions of the same content. This hits lower price points, but may cannibalize sales.
  • Charge subscriptions to view content, like the Financial Times does. Hopefully the publisher’s brand will be so well regarded the consumers will think it is worth paying for and not opt for the free version put out by competitors.
  • Publish the content as though it were software. Consumers can purchase it, but there will be upgrades and such they will have to purchase as well. This will cover the large initial investment in digital and the subsequent smaller investments to keep the operation running.

But which one works?

Well, Not Paying and Not Ads

The pay wall runs up against the availability of free substitute content. This model requires a strong brand, and those are expensive to grow. Because of this, pay walls can only really work for those companies that already have strong brands. Anything less and this path is unavailable.

software manuel

by mrbill on Flickr

To treat content like a piece of software makes a certain amount of sense, if it is delivered through an app, but if it is merely available online, then the pay wall’s problem still exists. How can a company, particularly if it is not immense and does not have wide brand recognition, grow? Or will we be faced with a monopoly of large publishers as all the smaller ones die out?

Digital advertising can’t cover the bills like it used to, so this takes out many of the free content business models. As John Squires, the former EVP of Time Inc, puts it, digital advertising is worth less than the analog version because it gets around to fewer people. This is odd, considering how people pass along information via social media, but Squires writes that a paper magazine is read by 7 people but a digital version is read by only 1.5 people per copy.

The Answer Is an Infomercial?

Gilt Taste LogoI think publishing will take a different route. Publishers will make their money through the communities that surround their content. They can charge for people to be a part of this community or merely sell merchandise to these individuals. That’s what the new magazine Gilt Taste is doing. The cooking magazine has no ads. Instead it offers consumers the opportunity to buy the products it discusses in the content. This is actually what Cory Doctorow is doing by allowing his books to be passed freely all over the Internet. The content becomes an advertisement for something else. In Doctorow’s case it is the hardcover versions of the books. In Gilt Taste’s case, it is the cooking appliances.

I know what you’re thinking: “This isn’t pricing content! It’s eCommerce! An infomercial!” And you’d be right. That’s exactly what it is, a pretty infomercial. What’s wrong with that? Yes, perhaps the newspapers will have some difficulty with this, after all what can they sell you in an article about Obama? But they could offer you’re a chance to donate to the political parties, which in turn support the coverage.

In either event, I think free content is the way to go. Money should come from elsewhere. Feel free to disagree with me. Many do. You can do it in the comments or even Tweeting at me.

*This post was written as part of an assignment for my

Masters in Digital Marketing from Hult International Business School,

but since the topic was interesting, I decided to use it for this blog.

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4 Responses to "How Should You Price Your Digital Content?"

I’m a bit confused, aren’t you suggesting paid product placements (i.e. ads?). This will work with some forms of publication, but definitely not all…

I think one important lesson publishers learned over the past decade was that putting their content online for free was a very bad idea. As you alluded to in your articles, the increase in volume from ads alone cannot makeup the lost revenue from the susbcription model.

With the launch of tablet editions, the industry has been given new life and a second chance on monetizing its content online. All three of the major magazine publishers have recently launched digital tablet subscriptions, and all are charging close to print subscription rates for thier digital versions (this is in part because they want users to bundle both digital and physical as well as a way for the publishers to re-establish the a higher price point for digital content).

See, I disagree with you, Anthony. Yes, while making things available online for free has complicated the issue, it was unavoidable. This blog is for free, and so are plenty of much higher quality ones. With the availability of free content, particularly editorial or commentary based content, paid content has difficulty competing online. There is the option of a freemium model of content where a little is free but the juicer bits are subscription based, of course, but even this is often difficult to pull off. People now think that digital content should be cheaper than paper content, and while I do disagree with this, there is research that shows that people would have rather paid less for a magazine’s iPad app than the paper version.

As for my suggestion, no, I am not suggesting product placement, though this is a profitable option for publishers. Rather I am suggesting that publishers operate more as ecommerce sites, selling wares based off of or mentioned within their content. This is what the magazine Gilt Taste is doing. This is different from a product placement since the object is not just to promote but to sell. It could be compared to, or even use, an affiliate system whereby a store, let’s say amazon, pays a commission for each item the publisher sells (as well as handling inventory and shipping details). But the whole revenue stream would change from one funded by advertisers or consumers to one funded by sales.

Perhaps I clarify my comment. Publishers who produce high quality content have faced an issue with the cheapening of their content over the past decade, and are using tablets to help revamp how they monetize content.

I think your analysis (and recommendation) needs to segment publishers into at least two groups: those who produce quality content unavailable via alternative sources (e.g., WSJ, NY Times, The New Yorker) and those who just produce interesting content (e.g., LA Times, Wired).

Those who fall in the the first group can use tablets to enhance their business. NY Times has taken its second shot at a paywall, The New Yorker has raised prices, and the WSJ, perhaps ahead of the curve, has been charging for content since the 90s so no big change here.

Those in the second group are being replaced by blogs like the HuffingtonPost and TechCruch. This group, I agree with you, may need to change their pricing model They need to either improve their quality (thus increasing their value and setting themselves apart) or appeal to a wider audience being ad supported. However, it takes significant volume increase to make up the lost subscription fee from a user.

Good Topic… Lots to talk about here.

You’re right! There is lots to discuss. I agree with you that publishers with strong brands like the NY Times can charge for their content. They already have the brand recognition and the reputations to support charging. However newer publishers can’t afford to charge because, as you put it, they “just produce interesting content.” They need a revenue model that both brings in enough money for them to expand and improve and takes into consideration that they do not have a large enough audience yet to make an ad supported website viable. It is this second category that I feel could use a mixture of e-commerce and publishing.

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Who Am I?

I am a Digital Native who is trying to puzzle out what exactly that means. I share my thoughts on social media, digital business models, and PR here on this blog.

I am currently getting my Masters in Digital Marketing from Hult International Business School, having gotten my B.S. in Marketing from Arizona State University. Everything is on track and I am making headway towards my dream: World Domination... or being a productive, helpful citizen and marketer. Whichever comes first.

Don't hesitate to get in touch. I Tweet daily at @KateDavids and also have a science fiction and fantasy blog (maskedgeek.wordpress.com) and Twitter (@Masked_Geek).

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