Paywall Strategies Forrester Analyst Nick Thomas On Monetising The User Not The Content

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Forrester analyst Nick Thomas kicked off our inaugural conference Paywall Strategies 2011. Nick's a long-time observer of digital content and its place in the consumer economy, so we invited him to get us going. Here are just some of the things he had to say" "Ý

Apple, and its controversial new in-app subscription policy, could be considered the "elephant in the room" at #Paywalls11

But wait: There's actually a much bigger elephant in the room, a king elephant: the consumer. What will the consumer pay for? It's easy to forget that this is even more key according to Nick Thomas. The challenge isn't to monetise whatever content publishers may have online but the relationships with users.

Don't digitise the content, monetise the user!

At the moment, Thomas says, the paid content market is simply failing to meet consumer demands. He's talking about the entire world of music, games, movies and news but this shows how tough the challenge for news businesses is.

So Forrester's recent survey of 14,000 adult internet users (in Q310) found that a healthy 31 percent of people want to pay for music in future, up from 26 percent in the same period in 2009 online movies and ebooks enjoyed a similar increase. But the proportion of people that will pay for news stayed static at 13 percent.

And only four percent actually had paid for news in the last month, according to Forrester's figures, which is  quite worryingly for newspapers particularly a decrease of one percent on 2009.

ǽƒ_ª_The addressable paid marketing for other types of content " " including news " " is limited," " he says. But there is hope: ǽƒ_ª_Consumers aren't anarchists that won't pay for anything" "Ý They will pay for access, convenience and content. consumers will pay for access to the right product delivered at the right time and to the right platform."

The game has changed

"Audience expectations have changed profoundly. There are many competing forms and devices that are fighting for people's time, " says Thomas.

Social networking isn't just how people talk to each other, it's what people do these days an activity in itself. So 43 percent of Forrester's respondents say they visit social networking sites at least once a month; 21 percent of internet users aged over 21 visit daily.

10 years ago we were talking about online portals we all understood the AOL model and that that was the starting point on the web. Facebook is taking that over, though there are some subtle differences."

How do you engage paying consumers?

We've all heard it: content is king. Invest in journalism and quality coverage and the rest will follow. But as a slogan, it's sell-by date has come for Thomas: "I don't get monetising content'. Content does many different things, but monetising content is the wrong way of thinking about this. Content builds audiences and the challenge is the monetise the audience."

He admits that "compelling content is crucial, it's at the core of everything. It still attract users," but calls for some "radical product innovation" to start building real relationships.

Where's the popcorn?

Thomas drew a parallel to the movies industry in 1920s America. They thought of adding sound, experimenting with double-bill screenings but it didn't solve anything. They then thought: 'What's the user experience?' People think of cinema as a content industry, but Thomas adds: "Cinema owners had done all these things, but became profitable by selling popcorn. Once you have the machine there's an operating profit of 95 percent" "Ý It now costs as much as a ticket.

"In a content-based industry, it's still popcorn that generates the profit. The challenge for you is to find your popcorn."

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