Yesterday, I wrote that content is expensive, and that there are really only four ways to subsidize content online: ads, subscriptions, marketing writeoffs, and paid delivery channels.
But we’re not really publishers over here in the web content world, so we don’t need to think about this stuff, right?

Eh. If you work in web content, sometime soon, someone’s going to ask you about “premium” content and ads and paywalls and you’re going to have to do better than assuming an optimistic expression and then distracting the client with a cupcake.
Not that I’ve ever done that.

Cupcakes from Saint Cupcake in Portland, OR
LOOK AT MY CUPCAKES. LOOK AT THEM.

When we talk about content strategy, we are, increasingly, talking about a field that goes well beyond editorial calendars, style guides, and some copy. This is wonderful, but if we’re going to stand up and say “Hey YOU with the org chart, we need your attention, because you’re going to be hiring some new people,” we need to be able to talk about the money thing. Not just how we get paid, but how this whole “Day Two Problem” world gets funded.

So. Details.

Ads: Sucking More and Sucking Less

There are plenty of people who can break down banner sizes and text-ad optimization techniques, and I’m not one of them, so I just want to mention two things about ads and content strategy.
  1. Good online ads are relevant and context-sensitive. This is bad news for publishers like The New York Times, which aren’t very good at making cozy, contextually appropriate homes for ads. It’s great for publishers like Nick Denton who build topical blogs with specific audiences that are attractive to advertisers. Likewise, it’s good for sites that are part of the Deck Network, which serves a single, relevant ad per page.
  2. Attention is finite, and ads are attention sinks. For most people, there’s a point past which the benefit of “free” content is outweighed by the obnoxiousness of the surrounding ads, which is when they either leave your site or install an ad blocker.
These two things are related. If you’re running a niche site that attracts an enthusiastic, narrowly focused readership that advertisers want to talk to, you probably won’t need to run bullshit ads that smell like  death.

Acai berry and tooth-whitening ads on the LA times website
Embarrassing scam ads on the LA Times website
Piling on more and larger ads is an equally bad solution. The higher your ad-to-content ratio gets, the less authority you maintain, and the more of your audience you lose—and then you’re less attractive to advertisers, who can in turn demand that you make their ads even bigger. Classic death spiral.
Screencap of the front page of the LA Times website with lots of ads

The front page of the LA Times website, with ads marked in red and navigation in grey
It’s easy to see why this happens, but the end is not going to be pretty. We need to help our clients think about this stuff.

Subscriptions: Friend and Foe

Subscriptions didn’t keep most print publications profitable even when print was doing well—classified and display ads did. Legal databases, academic databases, super-specialized content . . . that’s something a lot of people or institutions will pay for. News? Bloggy or magazine-style content? Not so much.

That’s the conventional wisdom, which seems to be validated by disasters like Newsday‘s acquisition of 35 whole subscribers in its first three months of operating behind a paywall. Jack Shafer provides a nice summary of paid content woes in Slate:, listing the NYT‘s TimesSelect, the LA Times‘s CalendarLive, and Slate itself as publications that tried and failed to make subscriptions work.
The reality is a bit more complicated, though. The Economist notes that despite the disastrous results some publications see with paywalls, others are thriving:
The two most prominent are the Financial Times, which lets web users view just a few articles each month before it asks them for money, and News Corp’s Wall Street Journal, which charges for much business and finance news. The FT says revenues from digital subscribers rose by more than 30% last year. This year the paper expects to generate more from sales of content—including the paper’s print edition—than from advertising. With the help of its online paid subscribers, the Wall Street Journal was the only big American newspaper to report a gain in circulation last year.
So why do some sites die behind paywalls, while others thrive? Shafer thinks he knows:
Not all successful paid sites are alike, but they all share at least one of these attributes: 1) They are so amazing as to be irreplaceable. 2) They are beautifully designed and executed and extremely easy to use. 3) They are stupendously authoritative.
He goes on to list examples like ConsumerReports.org, MLB.TV, CooksIllustrated.com and “genealogical, fantasy sports, gambling, and pornography sites”—a collection that doesn’t entirely support his three-point test for content that people will pay for. The Economist, meanwhile, usefully notes that “There are a great many paid-for newsletters, from the Stockman Grass Farmer to the Gaming Industry Weekly Report.”

So what’s the upshot? People will pay for content that is difficult or impossible to get elsewhere, either because:
  1. the information itself is unique, as with Consumer Reports, Cooks Illustrated, and the Gaming Industry Weekly Report, or
  2. the information is surrounded by obviously and uniquely valuable analysis and context, as with the financial newspapers.
The first is an easy sell; the second is a bitch and a half.

If your content meets either of the above criteria, you’ll also be attractive to advertisers. Funny, that.

Marketing

Most content that professional content strategists work with is subsidized by its function as a marketing or sales tool (which, for me, includes corporate communications, customer service, and PR). There are plenty of exceptions, like interface copy, purely informative content, and intranets, but this category covers most content produced by institutions who don’t consider themselves publishers.
It also subsidizes the blogs and personal of freelancers and other independent artists and craftspeople, the publication of most nonfiction books, magazines like A List Apart, and bucketloads of the awful content designed to confuse and clog search engines.

We already help clients ask the right questions about this: Can I afford to spend X amount of time and money on marketing? If yes, great. If no… Am I sure that’s really true? Am I spending more money doing less effective things? (And if I am sure, what can I afford to do?)

Paid Delivery Channels: The New Hotness

The iPad isn’t going to “save publishing,” but the sale of delivery channels via iPhone and iPad applications may be the proof of concept the industry needs to develop a paid delivery model.
At our SXSW panel earlier this month, I mentioned that the iPhone/iPad app frenzy may be useful primarily as a way of training users to expect to pay for convenience. Yesterday, Slate‘s Jacob Weisberg—who certainly knows a lot more about the business of publishing than I do—gave an interview about Slate‘s iPhone app and the notion of training users to fork over money:
My philosophy about this is we want to keep the content free but people to pay for the convenience of delivery in mobile forms…. I think it makes a lot of sense but I also think it’s very important that we train users at an early stage to expect to pay for mobile.
This is important.

Of course, paid channels are  easy to get wrong. The same principles of good publishing and design elsewhere on the web—give users what they want, don’t make them think, make your design both functional and beautiful, plan for long-term maintenance—hold true in the development of successful mobile applications.

We should be helping our clients ignore the hype, focus on those parts of the model that make sense for them, and make smart choices about integrating paid delivery channels into their immediate and long-term plans.