The pursuit of paid content: Can b-to-b publishers afford not to charge online?

According to ABM’s recent Business Information Network numbers, b-to-b industry revenue posted a significant increase in 2011, up 7.2 percent to $26.5 billion. The growth was across every product category tracked, with digital up 22 percent, data services up 6.5 percent and even print beating out trade shows in growth (3.8 percent and 2.2 percent, respectively.

But despite those encouraging numbers, “advertising” is starting to become a dirty word in the investment community. “What I find a little surprising is the more general negativity toward all advertising-supported businesses – print and digital,” wrote former ALM CEO Bill Pollak in a recent blog post. “These savvy investors believe that the upheaval in the advertising business has only just begun, and will swamp traditional carriers of branded print or banner advertising.”

Meanwhile, The Pew Center for Excellence in Journalism recently offered a gloomy forecast, claiming that media is only picking up one new digital dollar for every seven that it loses in print ad sales.

Paid content is one of the solutions to evolving beyond an advertising-driven business. Brian Morrissey at Digiday wrote, “Paul Rossi, managing director of the Americas for The Economist, told me ‘it’s suicide’ for publishers to not charge online. The reason: The online ad system simply cannot support high-quality journalism. The Economist gets $70 CPMs in print and $30-20 online. Rossi isn’t the only one who is clear-eyed about this. Martin Sorrell has said as much, and he’s the head of one of the largest ad-buying firms in the world.”

However, The Economist is one of the rare success stories to date — most paid content strategies have shown mixed results. The New York Times last month halved the number of free stories at its site (good for the outlook of paid content), while The New Republic last week announced it would drop its pay wall limiting archives and comments to print subscribers but making key articles from current issues available to anyone (maybe not so good). Press Plus+ — the start-up from Steve Brill and former Wall Street Journal publisher Gordon Crovitz now owned by R.R Donnelley that offers a metered approach for media companies including the New York Times — says almost all of its 285 media partners charge print subscribers a premium for digital access, with papers charging 10 percent on top of print subscriptions for digital access, seeing 90 percent response rates.

Paid content goes to the roots of most business-to-business publishers, whether through old fashioned newsletters, “rich data” or, increasingly, their own subscription/corporate licensed service. Strategies are moving away from the old “push” approach to more targeted, flexible solutions (with renewable revenue streams), such as ALM’s Smart Litigator service. “We like site licenses,” said Pollak at ABM’s Advanced Leadership Program earlier this year. “Right now it’s a license for one product, but the real game for us will be getting licenses for multiple products.”

Of course, paid content requires investment in content creation (something that’s been anathema for many cash-strapped media companies in recent years). As Digiday says of The Economist, “The Economist’s current issue has a 10-page special report on Cuba’s march to embrace capitalism. Rossi allows that’s a fundamentally uneconomic enterprise, hardly something the number crunchers at Demand or HuffPo would think worthwhile. But it’s also what gives The Economist the cachet to charge $120 for a subscription. It won’t discount that for digital media, Rossi said. ‘We don’t start out asking what’s the best ad product,’ he said. ‘We start out asking what’s the best reading product.’”

“Commodity content is going to go away,” said Jack Griffin, founder of Empirical Media Advisors and former president of Meredith’s National Media Group and former CEO of Time Inc. (and the opening keynote at ABM’s upcoming Annual Conference). “What you will be left with is quality content you can’t get anywhere else.”

And while business media companies are pursuing paid content, what’s the hot new revenue source for many business information companies? Advertising.

“In the world of specialized content creation we’re seeing the revival of some greatest hits from the past — what’s old very well might be new again,” says Lucretia Lyons president of Business Valuation Resources and a director of the Specialized Information Publishers Association (and a speaker at ABM’s upcoming annual conference, in which she will be part of a panel with Gordon Crovitz and Bloomberg global head of Web properties Paul Maya discussing “Paid Content Nirvana.”) “Pressure drives innovation and we’re more open-minded about generating revenue from previously untried sources or models. One of the ‘new’ ways of looking at advertising and sponsorships in the specialized b-to-b publishing world directly correlates to the value we deliver in our respective niches. The more words you enter into the Google search bar, the more valuable the results. So the sell side model for us isn’t about getting a message in front of a massively large audience, it’s about getting a product or service in front of, perhaps, 200 ‘hot’ leads. BVR recently hosted a web workshop on Monte Carlo Simulations and landed — for us — a significant sponsorship from a simulation software vendor. We were able to give them 10 minutes during the program to talk about the software at a very advanced level. The rarity of our content has opened fresh dialogue with sponsors and advertisers who demand a clear ROI calculation.”

By Matt Kinsman

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