Wetpaint CEO Ben Elowitz on the Future of Digital Media
Experiences are the Key to Unlocking Wallets
Publishers today almost universally feel the squeeze in their digital models; and it’s clear that in almost every case advertising revenues alone can’t sustain, let alone grow, a healthy and profitable Publishing 2.0 business model.
So, if advertisers don’t suffice, the industry’s next best bet is to get the consumer to pay. But how do you get people to pay for content? It’s a conundrum as old as the Web itself – only now with added pressure as consumers migrate ever increasingly online and away from high-margin offline publications.
I believe the key to wallet-opening is getting publishers to move from content to experiences. Consumers are savvy: they’re reluctant to pay hard dollars for soft content – especially when they know that content costs almost nothing to be digitally reproduced and transmitted. And that leads to publishers’ greatest opportunity. While content has negligible cost, an experience can have an invaluable impact.
Experiences Are More Than Just Content. An experience is not just a video clip or an article. The essential element of an experience is that it relates to its users as participants, not just consumers. Experiences put the audience in command of an offering that goes beyond the Web page, connecting to deeper human drives of identity, pursuit of meaningful goals, exploration, entertainment, and connection to others.
These deeper forms of impact on audiences are what differentiate the potential of digital media from the old print and broadcast forms. Unlike offline media with its “write once, distribute everywhere” model, Web publishers can relate to users interactively, offering a personalized relationship to individuals. That’s what enables digital publishers to have a higher order of impact on their audience – even if it’s in the form of an intangible.
And it’s no coincidence that this more significant impact of experiences is also the entry to opening users’ wallets.
So, what are the best ways to upgrade from distributing content to creating experiences? Or, put another way, what will compel consumers to pay?
Here are the top 10 key wallet-openers:
1. Access – Offering access to a large, valuable collection can command far more remuneration than charging for usage. Forrester analyst James McQuivey points out that cable TV has proven this over the course of decades, where including not only the channels one watches – but the option to watch many, many more – is a source of value. Services like Netflix are valuable not only for the handful of movies customers watch each month, but for the tens of thousands that they get to choose from. Choice itself carries high perceived value – and it motivates people to pay a premium just for the optionality, even if they never avail themselves of the options it creates.
2. Prestige – Prestige is a universal and powerful human motivator, right at the top of Maslow’s pyramid as a marker of self-actualization. Believe it or not, prestige is something that publishers can offer – and earn revenues for in return. Ty Ahmad-Taylor recently wrote, “The idea of prestige as a monetization model is new, and it means that a lot of companies … are going to become successful without ever needing traditional funding or advertising.” With social games, which subsist on a prestige economy, he continued, “revenue-per-visitor can be 300 to 500 times larger than the revenue generated by Web sites that rely upon advertising.” Explosive businesses like Zynga prove that prestige can command a hefty price tag.
3. Relationships – For many publications, the most profitable arm is their live experiences – i.e. their conference / events business. The Wall Street Journal’s “D” series of conferences put on by Kara Swisher and Walt Mossberg, for example, features a star-studded stage and audience. The fee to attend is as much toward building relationships as it is building knowledge. More virtually, on LinkedIn one can pay an extra fee just for the privilege of being able to send email to people one doesn’t know. People will pay for the chance to connect with others of potential import.
4. Convenience – Consumers happily pay for things that save them time or effort, and that’s the source behind the success of products ranging from the remote control to the Roomba. Among publishers, Pandora has demonstrated that people will pay a fee to be able to listen to music they like for hours on end, without ever having to go to the trouble of selecting a song. LinkedIn earns premium revenues from its paying customers by offering them the same information as its non-paying users, but with more sort and search tools. People pay for ease of use.
5. Affiliation – For premium publishers, your brand is something that’s valuable not only to you, but also to your audience. To look smart, people start a conversation with a name drop: “Did you read that article in The Economist about…?” Businesses put The Wall Street Journal in the lobby to show that they are in the loop; in the same way, listeners plaster NPR bumper stickers on their cars. And this doesn’t even include the ultimate coolmaker: People line up for hours and pay top dollar to snatch up and show off the latest Apple products. Cavorting with cool confers cool by association. So build a great brand and people will pay for a badge to show they are in the club.
6. Packaging – One way to turn content into an experience is to put it all together in just the right way. The Weather Channel has attained coveted Top App status in the iPhone app store even though practically all the content in its app is available for free with just a quick search on the Web. What drives the premium is the packaging: the iPhone app puts it all together and makes it a more compelling experience for users – compelling enough that they’ll pay $0.99 to $3.99 just for the packaging.
7. Prominence – Everyone wants an edge over the competition. On eBay, merchants pay more for a bold listing, so that they will stand out. On blogs, people donate valuable and, in terms of time, costly content in the form of guest posts and comments – all to get their name in the digital lights. Showcasing your users with a picture, a profile, a power ranking, or a hat-tip makes them feel special. And special, to some people, is especially worth paying for.
8. Commerce – A great and instructive example of the bridge from media to commerce is Sugar, Inc. Its founders, Brian and Lisa Sugar, have gone beyond the media model from PopSugar, GeekSugar, CasaSugar and YumSugar sites to ShopStyle.com for Web commerce, FreshGuide for offers to women, and Retail Therapy, a fashion game on Facebook. They definitely understand how to get female consumers to open their pocketbooks wide and often.
9. Fun – Tap Tap Revenge has seen tens of millions of downloads, making it one of the best-selling gaming franchises of all time. With the ability to plug in songs to suit your style and your pleasure, users happily pay bite-sized premiums to make the game more fun.
10. Exclusivity – In many cases, it’s not just paying for what you get; it’s paying for what others CAN’T get. The appeal of the American Express Black Card, for instance, was predicated on it being distributed by-invitation-only, not available for the asking at any price. Here in the Northwest, the Puget Sound Business Journal holds events, like this visit from Ford CEO Alan Mulally, that one must be a subscriber to attend. The more restrictive the exclusivity, the more people will pony up to get in.
Putting Them Together. Each of the wallet-openers I’ve listed above can generate powerful revenues. But the best – and most successful – brands embody and employ a handful of these positive financial drivers.
The Wall Street Journal, for example, leverages its “must-read” status to offer its readers prestige, affiliation and convenience – a potent revenue-enhancing mix that motivates the audience to pay enviable premium subscription fees. At the other extreme, the NFL has built a brand based on fun, packaging, commerce and affiliation. Legions of fans across the country and around the world, for instance, are willing to pay to subscribe to premium sports channels, attend events, and purchase and wear their favorite team’s jersey to identify and celebrate their affiliation.
Getting consumers to open up their wallets in a tough or uncertain economy is especially difficult for publishers and marketers, and the current economy is certainly tough and uncertain. But generating upgraded and premium revenues is absolutely possible if the focus is on providing rich and meaningful experiences that go far beyond just content.