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.”