Charging for content: can it be done?
This is an edited re-posting of a blog I wrote in September 2010: on charging for content. This is an updated version.
Whatever people think about this, Murdoch’s decision is a response to a challenge that we, in the think tank community, share with publishers: free content costs money to produce.
I was reminded of this last week at a concert in Lima. The Killers, a world famous band, was playing at the National Stadium for the second time. The next day, Keane was billed to play; then New Order a few days later; and The Hives, the following week. Somehow, Lima has become a must-stop for the best bands in the world. Ten years ago this would have been inconceivable. The closest half decent band got to us was Santiago.
Two things have happened since then: people in Lima have more money to spend (tickets are more expensive in Lima than in London) and bands cannot depend on the income from CD sales (or downloads) any more. Live shows are the best way to go straight to the consumers: consumers that won’t pay for a download but will happily do so for a concert.
Can think tanks learn something from this strategy?
What are the options for charging for content?
A number of business models are available and could be considered for think tanks looking to charge for content.
Freemium model: the freemium model involves providing users with alternative ‘plans’ to access different levels/layers of content or services. For example, all users may get a newsletter but only those who pay get to read the latest articles; or only those who pay get guaranteed seats at events; etc. Free, Silver, Gold, Platinum think tank membership?
‘Free’ helps to build market share but once you have a good share of the market you can begin to monetise it via upsells or adding new models. Chatham House is a good example of an organisation that has been able to develop a membership model.
Subscription model: the subscription model provides a standard service for a cost per day, month, year, etc. It is similar to the Freemium model only that it does not include free content. Some think tanks produce intermediary economic and political data and analysis that may not be of interest for the general public or policymakers but could be of great value for corporations and business or trade publications. Why not sell this by product of their usual research to generate a small but continuous income stream?
Affiliate model: the affiliate model refers to organisations that ‘drive’ traffic to someone else who charges for specific products (goods/services) or who values traffic and is willing to pay. For example, a think tank could redirect to Amazon or to other researcher portals that need hits to get funds from donors.
A think tank could be an excellent affiliate of traders and users of political, economic and social knowledge but also of short- to mid-term programmes that might not have time to direct sufficient traffic to their sites without a strong brands that the think tanks can offer.
Virtual goods model: the virtual goods model involves developing ‘digital’ products such as online publications, downloadable programmes, network services, online platforms, M&E tools, etc. Users would pay for using these products just as they pay for iPhone apps.
In fact, a think tank could develop iPhone or Facebook apps or virtual gifts/goods for people to send each other or for them to participate in research -by providing data, for example.
Live-gig or publication model: while CD sales are falling, live-shows are soaring. The live-gig model would imply charging for events with keynote speakers and preferential ‘VIP’ or ‘Back Stage’ access to meet the experts. A think tank could organise Hay Festival style events or a VIP meeting series targeted at a paying audience. TED charges quite a lot for its events –and there is a waiting list. The live-gig model also includes capacity building activities and workshops in which think tank experts deliver the content of their research directly to the users. In ODI we did this via Outcome Mapping and Research Communications workshops. These were our ‘gigs’.
Similarly, people might not be willing to pay for content on the internet but are still keen to buy a printed publication. This might mean going back to basics (for some think tanks) but it is certainly a good idea to consider. Standpoint for instance, is published by a think tank. And in a way, so is Harvard Business Review.
Network effect: based on the positive network externalities that come with more users using a particular service –and that increase the value of the service way above its price (e.g. as more people use delicious or a particular mobile phone provider, the more valuable vis a vis price it is for users)
Business to business/government e-commerce: where a think tank (functioning as a consultancy) provides services/goods directly to other organisations (NGOs, research centres, donors, governments) including raw data, literature reviews, background work, etc. –that is too expensive or too difficult for them to carry out but that they need to carry out their core business. The Economist Intelligence Unit is a great example; Apoyo is another in Peru.
How useful are these options for think tanks? I am not sure. It will depend of their capacity to develop some of the services and activities that would be ‘paid’ for as well as their context -not every policy or business community is equally interested in paying for additional services and content. Think tanks could follow one or more of these but further analysis is required.
Some principles/guidelines should be observed when deciding to set up a paywall:
- You should not charge for everything and you should not charge everyone
- Those who MUST read you content must be able to read it whenever they want to read it –burden free (which is not the same as free)
- Those who can pay and are willing to pay should pay -but make it easy.
- Those who can pay and are not willing to pay (and are not in the MUST read category) either do not value your work enough or were never really our target audience –so don’t worry about them
- Don’t forget that your researchers, just as journalists, want to be read so be careful that your centre’s pay wall does not limit their audience.
Building walls in the right places
The walls that a think tank builds around its content must be carefully erected to, among other things:
- Facilitate/encourage payment
- Maximise exposure of ‘sample’ or ‘tempting’ content
- Maximise exposure of your experts and researchers
- Facilitate social media access through a ‘back door’ (compatible with the ‘being there’ approach to communications)
- Encourage cross-posting or links to other sections of our ‘space’
Issues to explore
There are a number of issues that one should explore further:
- Identify and review different business models as they are being implemented by similar industries and by other think tanks
- Revenue/profit potential from different charge-for-content business models
- Compatibility with your own business model; and implication of charge-for-content business models on yours. In particular, is it possible for an organisaiton to run parallel business models?
I think it might be worth a try. The live-gig model in particular can be an alternative for think tanks but this will demand that thy invest in developing an approach to events that trully sells. Old-school key-note speeches and panelists that go on for hours on end will not do it any more. Like the The Killers, think tanks will need to invest in their production if they want them to pay off.