Enough Free Content

I produce a fair amount of content, and I give most of it away for free. I’m writing a book, and although the book costs money, it’s basically free (~$16 for the hard cover and ~$10 for the e-book); priced so low that it really shouldn’t be an issue for people. Plus it took over a year to write. And you don’t make any money from books (unless you sell an absolute shit ton of them).

People produce free content (published books included) to get people to buy other things from them or build a platform for themselves. That’s the crux of content marketing. Attract people with free content, monetize them in another way.

That’s what most magazines, newspapers and other content publishers do as well (online or in print). They produce content in the hopes of building a massive, loyal audience and then they monetize in other ways. Usually it’s advertising, which basically means they sell the hell out of their audience.

The audience is the product.

Advertising makes the Internet go-round, but I think enough is enough. Content publishers shouldn’t create content in order to sell the audience. They should create content to sell content.

The content should be the product.

If you want to make money from the content business, you should try charging for the content. It’s the fastest way to know if anyone gives a shit. If they don’t, they won’t pay. If they do, I’m betting they’ll pay. Not many of them, but the fact is that even in a Software-as-a-Service business or e-commerce business conversions are low–1-3% from free users or passersby to paying customers. Could you get 1-3% conversion on a content business, charging a subscription?

In order to make advertising work you need millions and millions and millions of page views. There’s no other way. Advertising rates are so low online, and I don’t think they’re going up. Let’s say you can get $5 CPM (which means $5 for every 1,000 page views) with an online ad unit. If you get 1,000,000 page views/month, you’re earning $5,000/month in revenue. (1,000,000 / 1,000 * $5) That’s not very exciting.

Instead, you could earn $5,000/month in revenue by finding 1,000 people willing to pay $5/user/month.

Which model would you prefer?

The Internet is a big place. If there aren’t 1,000 people interested in what you’re doing that are willing to spend $60/year, you really have to question what you’re doing.

We’re seeing content publishers experiment more frequently with the subscription model (and others, like paywalls). Marco Arment’s The Magazine is a good example. It costs $1.99/month and there are no ads. I’m not sure the issue approach is necessary (putting out issues at certain time intervals), but nevertheless, The Magazine is popular. And there are others. But many of the entrepreneurs I speak with that are in the content / media space still fall back on advertising as their core business model.

I think the answer to hyperlocal is also in subscriptions. People are interested in hyperlocal content (particularly in specific niches) but online advertising won’t work well enough. A small startup tackling a hyperlocal niche is not going to have the expertise or time to produce great content and hunt down advertisers (especially when advertisers are going to spend $20 for an ad). AllNovaScotia.com is a hyperlocal online business that provides business-centric content on a daily basis. It’s 100% behind a paywall. They have a very simple website and mobile application. That’s it. And it’s not cheap–about $30/month (with taxes). But it works. They’ve got thousands of subscribers. They provide a service that no one else does (the newspaper has business news, but not as much as what AllNovaScotia offers). AllNovaScotia isn’t a billion dollar company, but from what I hear they were profitable in their first year of operation and haven’t looked back.

Free content has its place. If you’re building your brand, trying to attract customers, demonstrating expertise or developing a platform from which you want to launch other things, then content marketing can work wonders. It’s not free to produce, but no one’s stopping you from publishing on the Web. And that’s awesome. But if you’re in the content / media business you need to look at alternative business models to advertising. As everything moves online and advertising rates stay flat (plus supply goes up), you have to look at subscriptions, paywalls and other revenue models that basically say, “If you like this content and want it, you have to pay for it. End of story.”

How To Find Perspective and the Right Focus for Your Business

It’s amazing how often something is obvious to one person and not another. Granted, in some cases it’s because nothing is actually that obvious, the issue at hand is murky and no one really knows what they’re doing. That happens more than we’d like to admit.

But in a lot of cases there are reasons behind one person’s ability to see something or get something that’s “obvious” when another person doesn’t. When you run a company, and especially a startup, you are often blinded to a whole lot of “obvious” things. Why? There are a few reasons:

  • you’re too busy just running the business, you can’t focus on anything else
  • you have industry expertise and that’s what you pay attention to, the rest of the business is fuzzy at best
  • you don’t want to know, or you’re scared to look at what’s going on
  • etc.

For many of us, running a company is truly like being the proverbial chicken with its head cut off.

When someone looks at a company from the outside-in they can often – with a fresh pair of eyes and an unfettered brain – see obvious issues and solutions. Having an outsider poke around in your business from a different perspective can be very helpful. Often they’ll tell you what you already know, but often that’s exactly what you need to hear. It’s amazing how many times I’ve suggested things to people and they say, “I know, I’ve been thinking about it for awhile, but just couldn’t wrap my head around it.”

Perspective and the right focus are so important.

Startup founders and business owners work their asses off. It’s almost a universal truth. But logging 200-hour workweeks is meaningless without honest perspective and the right focus.

So what can you do? If you feel you’re drowning, running around without a head, panicking in cold sweats on a daily basis or something equally unpleasant, you need to pull back, stop and breathe. Then you need to look at how you can increase the amount of outside perspective you can bring to the table. Here are some ideas:

  1. Customer Development. Let’s beat a dead horse and keep the silly analogies going, OK? Customer development – the act of going out and talking to customers in a systematic way with hypotheses in-hand and learning – can absolutely help you find perspective and the right focus. And this isn’t a 1-time endeavor; you should be doing this throughout the existence of your organization.
  2. Advisory Boards. An advisory board can help. Find the smartest, most experienced people you can, within your industry or otherwise. You want genuine mentors that will invest enough time in you and your business to give you honest, meaningful feedback.
  3. Read Stuff. Rob Walling has a great post titled Why Startup Founders Should Stop Reading Business Books. And his point is an important one. In the context of my post though I like the idea of just going off, reading some things, re-inspiring yourself, or even just taking a break. When it comes to blog writing, I know that one of the best ways to trigger a post idea is to read other people’s blogs.
  4. Peer Mentoring. I’m a big believer in peer mentoring. If you’re comfortable airing your problems to others who are all in a similar position as you (e.g. CEOs of tech startups), a lot of value can come out of that.
  5. Write Things Down. Things are more tangible when they’re written on paper. If there’s a problem, something nagging at you, put it on a piece of paper and have a look.
  6. Get Outside Help. Recognize your weaknesses and how they’re impacting the business. Take that and hire outside help, or recruit people in to focus on key areas that you’re lacking.

Keeping a business pointed in the right direction at all times is nearly impossible. Without perspective and the right focus you’ll find yourself working hard but making less meaningful and consistent progress. Looking outside for help and guidance isn’t an indicator of failure, so don’t be afraid to do it.

Device Addiction: How the iPad Changes the Way Kids Interact with Technology

The iPad is an addictive device. So was the iPhone (and iPod Touch), but the iPad takes device addiction to a new level. For kids, that’s mostly because of the size (vs. iPhone): it’s bigger, easier to handle, and the graphics look fantastic. I think the iPad will fundamentally change how children interact with technology. There have been several videos showing young kids playing with an iPad as if it’s second nature. I can attest to the fact that this happens – my two boys (6 and 3) picked up my iPad and started using it almost immediately. Once I walked into the living room and my 3-year old was playing on the iPad (I had left it out by accident.) I asked him, “What are you doing?” He replied, “I played Angry Birds, some Shrek Kart, Super Why and now I’m doing Pokemon.” (Note: He said it so casually it was absurd. He also never looked up from the iPad screen.)

As iPads drop in price (and other tablets emerge), I believe they’ll be the “throwaway device” that hangs around living rooms, basements, dens, etc. sitting on sofas or coffee tables waiting for anyone to pick up and use for a few minutes. You can’t say that about a laptop computer. And according to Duncan Stewart, tablets are not just an additive device, they’re a replacement device, which means they’re eating into laptop sales.

Back to device addiction.

Kids get hooked on things very quickly. If you’ve ever seen a kid watch a commercial on TV you’ll know what I mean. Days later they can still be singing the commercial ditty, or worse (for parents), asking you to buy what they saw. Kids are a susceptible audience. And the iPad is the near-perfect device to attract kids – big enough, shiny, colorful and easy to use. That ease of use and intuitive use is what makes the iPad almost instantaneously addictive. That’s a homerun win for Apple. Two additional points:

  • Instant gratification – Kids can get access to fun stuff almost instantaneously on the iPad
  • Endless content – Kids quickly realize that content on the iPad is essentially endless (the same holds true on the Web, but it’s less obvious)

I’m more comfortable letting my kids play on the iPad instead of my computer. The computer always has a bunch of business stuff open (and therefore accessible to my kids dragging stuff to the trash bin for fun!) and it’s setup at my desk where I’ve got papers piled all over the place, bills, etc. The computer is a work device that doubles as a toy. The iPad serves both more easily.

Dave McClure recently tweeted: “Holy Crap: srsly rethnkg @500startups investment thesis & platform priorities re: 2011 iPad sales projctns. fucking *massive* disruption.”

I couldn’t agree more. And where I see huge opportunities is with kids.

The iPad wins by default because the device itself is addictive. Kids will want to use the iPad early and for years to come. That’s a huge opportunity for companies to reach that audience. What we need to see however, are new business models around “apps” because kids are an extremely fickle audience. They have very short attention spans and once they realize that “content is essentially unlimited” they’re loyalty to a specific app or brand (speaking of which, why aren’t more brands on the iPad??) will deteriorate even further. Connecting with kids might seem easy, but it’s far from it, and this is made even worse by the “come and go” nature of the App Store.

The innovation on the iPad isn’t going to be hardware (sure it will improve, but that’s not the priority) or with apps themselves, it’s going to be around business models and more all-encompassing businesses built around apps. For kids that means tie-ins with physical goods, other media and new ways of keeping kids hooked on individual apps. For businesses to succeed on the iPad they have to go beyond addiction to the device itself and create persistent addiction to their own apps.

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Ben Yoskovitz
I'm VP Product at GoInstant.

I'm also a Founding Partner at Year One Labs, an early stage accelerator in Montreal. Previously I founded Standout Jobs (and sold it).

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