1.  Repeat customers are most interesting. Zappos reports that 75% of their customers are repeat customers, who spend 2.5x what new customers do and their average bill size is 30% higher. Compare that to WSJ that only has 10%-25% repeat customers. According to traffic stats about the Wall Street Journal, roughly 400,000 of their visitors visit their site at least once a day (see here). That is very similar to their oft-reported subscriber numbers. Whereas, their monthly unique visitors are in the 3-5 million range. That is, WSJ, the holy grail of selling of online content, only has 10% repeat customers.

2. Word of Mouth: Publishers have been used to the dictum, “Content is King”. That was so true a few short years ago. Welcome to the new dictum, “Customer is King”, that seems so obvious in the e-commerce world. And if that is true, publishers absolutely have to have the customers talking about the stories, whether they are pretty conversations or not. Customers talking about the political biases of media icons is a really good thing from a commerce perspective. Social media integration of the content is so vital to enable that. And social media is not really about “Facebook Connect”, or about “Tweet this Story”. It is truly about enabling conversations around publisher stories, between readers within their social networks.

3.  Establishing a sales funnel: Selling anything requires the establishment of a sales funnel. Sales funnels are a mechanism where customers are corraled into an offer that is very appealing and gradually moved to the part of the funnel where they are willing to pay for what you are selling. For example, take a look at the GoGo Inflight internet offering below, where each circle is a progressively higher level of upsell.

a. Bring customers to your site by providing great content and a rich set of tools to enable conversations.

b. Once the customer is interested in your premium content (look at how Business Journals has created a premium content portlet here), make a really easy offer of purchasing that single article.

c. Provide the reader a choice of applying the purchase of the single article to a day pass.

d. Provide the reader a choice of applying the purchase of the day pass to a longer term annual subscription.

However, the current paywalls have not implemented this lesson. They take the reader from a totally free offering to a major commitment of dollars spanning a loooong commitment of subscription. It doesn’t work !

Of many ways to build a funnel, publishers may consider is a 4 part funnel as follows:

I’d love to hear your thoughts about these lessons or others that may help online publishers.

Learn how to turn the “knobs” of your online content business to maximize the revenue potential of your website.

There are a set of complex and often immeasurable factors affecting the success of any product. We do not have that problem with online content.

In fact, there are a few, highly measurable factors on which we can focus to help us identify the right business model for any business that sells content online.

I’m going to introduce you to three variables that you can use to fine-tune your content business, whether you are a newspaper, non-profit or an indie musician.

Then, on Thursday August 26th, you are invited to discuss with me and Raj Mehta, CEO of ClikServ and learn how to use these variables to maximize the revenue your content generates.

First, a Word About Revenue

Revenue will be our primary metric of success. Revenue is the total income over a period of time from sales of online content and subscriptions.

There are a number of revenue models that can be employed to charge for content, and we will be discussing them in more detail during our Webinar. Some of the most familiar ones are:

· Donations or tips
· Subscription pay wall
· Pay per view
· Metered
· Hybrid
· Ad supported

The last of these, “ad supported” is unique in that the consumer of the content is not paying the bill with money, but with attention, which the publisher is then selling to advertisers.

The three variables, or “knobs” that you can “turn” to affect revenue are

1. Price
2. New traffic to the site
3. Perceived value

Price

Of the three this is the least understood and most abused. Most publishers assume that there is a cap on the price that can be charged for their content, and that the higher the price, the fewer people will buy. For most content, price is actually one of the best ways to establish value. In Robert Cialdini’s seminal book Influence, the trigger

expensive=good

is discussed. When we don’t have time to research a purchase, we use the price to determine the quality of the content.

There is a price curve for each audience that probably looks something like this:

As the price of content is increased, the perceived value of that content increases… to a point. That point defines the extent of price elasticity. Every online publisher must find this point, and we will discuss how to discover elasticity points in our webinar.

New Traffic

For the sake of this conversation, we define new traffic as non-customer traffic, that is, visits from prospects who have not bought, or whose subscription has lapsed.

Not all traffic is the same, and publishers need to identify the core audience for whom their content is most valuable.

Visits to the site must be increased to a certain point to begin drawing this core audience. However traffic cannot be increased arbitrarily beyond that core audience.

We will discuss how to discover and build this core audience in the August 26th webinar.

Perceived Value

The last variable, perceived value is one that baffles many publishers. However, if we solve for value (V) in our equation, we find this:

The revenue (R) divided by price ($) gives us the number of customers (C) for a given period of time.

This leaves us with the number of customers divided by new traffic, or the rate at which you convert prospects into paying customers. This is called your Conversion Rate (CR) for the publisher.

Thus, value (V) can be gauged online by a very measurable metric, conversion rate. This makes sense. If you are communicating value effectively to a qualified core audience, your conversion rate will increase.

Yes, this model even works for ad-supported sites.

Those well-studied strategies and tactics that increase Web site conversion will increase value to the visitor, and this is the biggest opportunity for online content publishers of all kinds.

Learn how to Find the Right Price, Attract Your Core Audience, and steadily increase your Conversion Rate

If you have online content that you wish to monetize, join me, the Conversion Scientist and Raj Mehta of ClikServ as we address each of these “knobs” and show you how to turn them in your quest to be profitable online.

· Find out how much your audience is willing to pay
· Generate traffic that is well-qualified and interested in your content
· Create value propositions that position you away from cheap or free alternatives
· Donations, tips, subscriptions… find the revenue model that is best for your content
· Find out how to test your way to success
· Learn the key tactics that Web sites use to maximize conversion rates
· Become acquainted with ClikServ, an easy-to-implement content purchase system and content consumer community

This webinar is not free, but the price is well below the additional revenue you could generate with what you learn.

· Online news publishers will deliver like The Wall Street Journal and avoid the mistakes made by Newsday.com
· Independent musicians will find that audience that pays a premium for their unique sound
· Associations will learn how to build value that delivers paying subscribers
· Independent artists will find new customers for their works

Be ready to take notes

We are going to pack a great deal of information into 45 minutes and then take as many of your questions as we can in the remaining time.

· Introduction to presenters
· Introduction to the three “knobs” of content publishing
· Revenue models currently in use
· How to discover your best price point
· Strategies to maximize qualified traffic
· Building value and increasing conversion
· Audience Q&A

Presenters:
Brian Massey, Conversion Scientist
With over 15 years of online marketing experience, Brian Massey has helped businesses from a variety of industries generate more leads and sales from their Web sites. Mr. Massey is a national speaker and creator of The Conversion Scientist blog. He is an author for ClickZ.com, Search Engine Land and the Content Marketing Institute. He will be delivering the keynote presentation at Converge 2010 November 7-9 sponsored by the Printing Industries of America.

Raj Mehta, CEO, ClikServ Inc.
Raj brings over 20 years of technical leadership and management experience. He has served companies like Dell Computers, Wayport and Spansion in various roles including Product Manager, Database Engineer and System Architect. He holds a MBA in Entrepreneurship and a MS in Environmental Science.

Price: $79, $59 before Aug 19th.

The Times of London’s paywall experiment has attracted many comments. James Fallows of the Atlantic Magazine blogs:

It is a gutsy move. Will it work? “Work” in the sense of bolstering the paper’s combo of print and paid-online revenues? I have no idea. But I’m glad Murdoch’s trying, for reasons laid out in that Google+News story. In the long run, the tech people I interviewed were sure that customers would pay for online news info. In the short run, no one is really sure which payment system will be the right one. The only way to find out is by trial and error.

Yes, by trial and error works. Except that by the time the experiments are concluded, the publishers wouldn’t be much wiser and the townsfolk utterly confused.

As Jeff Sandefer often reminds us, business problems are not complex. They are simple. It is just that we get ourselves into all kinds of knots.  The solutions need to be equally simple as well.

The problem with a paywall, is not too different from an obstacle course wall. Only a small percentage attempt to scale it, in the brave new world of ADD and ADHD afflicted townsfolk.

A simple solution is to allow the readers to step up to the wall and scale it to subscriptions.
Such a solution already exists with ClikServ Revenue System (CRS).

Moreover, even if the townsfolk are willing to scale the wall, it is no easy task to build one. As Mr. Fallows states about the Times of London’s paywall:

You get absolutely nothing without signing up for paid service. No first-paragraph tease (a la the WSJ), no “metered” service of so many free stories per month (a la the FT), not even any Google search results on the contents of the story.

The ClikServ Revenue System provides these models out of the box, that are publisher configurable.  It makes for an extremely simple deployment, taking the risk and confusion out of the equation.

In a future post, we’ll discuss how to experiment with the business models and not confuse the readers.

Raj

A big minefield for start-ups is determining the value of their product or service. Pricing can take time to perfect but ClikServ can provide the payment software to meet your needs. Its micropayment software comes with an array of payment models and services that help entrepreneurs set prices by determining what level of payment a client is willing to support for products and services online.

I believe in a good day’s pay for a good day’s work. Certainly there are alternative ways to receive that payment through advertising and other models but every publisher and blogger should give people the opportunity to value their work with tips to writers and donation to causes during times of natural disaster. ClikServ software exists to support this form of payment for content and Mother Jones has proven the model works. The ClikServ software also supports the new subscription model with micropayments that add up to subscriptions – ultimately readers become subscribers by choice not by force. This is an alternative to completely free content vs. total paywall. The software helps determine reader’s willingness to pay, takes the guesswork out of pricing and provides a new revenue stream.

“So there seems to be a strange disproportionality at work, I think, in many areas of human problem solving, particularly those which involve human psychology, which is the tendency of the organization or the institution is to deploy as much force as possible — whereas actually, the tendency of the person is to be almost influenced in absolute reverse proportion to the amount of force being applied.”

For example

“… those strange little signs that actually flash “35″ at you, occasionally accompanying a little smiley face or a frown, according to whether you’re within or outside the speed limit — those are actually more effective at preventing road accidents than speed cameras, which come with the actual threat of real punishment.”

Isn’t that the biggest reason why large companies have so much difficulty in doing small things that really matter to their customers?  A case in point being Newsday’s major site overhaul in 2009, and requiring a subscription for some content. Well, hmm, that didn’t work. In about 4 months, 35 subscribers had agreed to subscribe as per recent published reports.

Similarly, Times of London is setting up a subscription paywall.   Their approach has been to accept that they would lose a large percentage of their traffic. Is this a problem, where the loss to the company has been built into the initial assumptions?

I wonder if the publishers focused on the small things that matter to the readers, how would their traffic numbers change?  For example, if the site prompted the reader to pay for the one article that the reader is interested in, rather than try to sock him with a long-period commitment, how would the results change? If the site offered the reader a few bucks to try the content as well as the payment system, would that matter?

Here at ClikServ, we are working to find answers to these questions for our publishers. Please comment or contact us, should you have insight into how to get readers to engage with their favorite publishers in ways that result in win-win situations.

Raj Mehta, CEO

In times of financial challenge people need to be informed more than ever. Driven by the need to know they may be willing to pay more for the news. Murdock maintains that a smaller crowd willing to pay is more valuable to him. In a Market Place interview: Assistant Editor Tom Whitwell says the new pay model will be simple — and there will be no way around it. … “If you want to read Times journalism, you pay. If you don’t, you don’t,” said Whitwell.

The assumption that a small crowd willing to pay is more valuable to advertisers needs validation. For the sake of this discussion, I assume the Times has validated that. The reasoning may go something like … “a few paying customers are more willing to purchase from our advertisers”, or “a few paying customers are more likely to click on our online ads”. This definitely is a change from the Journalist’s credo of informing and educating the public to be more important than satisfying advertisers.

“We are assuming there’s going to be an enormous drop-off in raw traffic to the site, because at the moment, we get 20 million-odd unique visitors,” said Whitwell. “We are hoping to develop a much more dedicated readership that’s clearly going to be much, much smaller than that.”

At Clikserv we offer an array of possible solutions that keep news available and encourage people to pay as they go and pay only for what they want to read. Ultimately loyal readers become subscribers – by choice – not by force.

We wonder how many of the Times’ readers will start reading from The Guardian!

2. There’s a new level of independence in news. News readers get top news stories as they happen, search by topic, compare news views, make comments and increasingly they are interacting with the news. News Readers want to keep their independence. ClikServ gives readers the power of choice.

3. Readers want their news on the go. News Readers want unencumbered news. ClikServ’s quick payment system keeps readers moving through content without thinking about the payment process. The click and read process – like a prepaid fast pass at a tollbooth keeps readers moving through content. And when they need to top up the payment process never moves them off the news page.

4. Pay walls will only restrict the reader’s willingness to pay for additional services. Premium news can be payment enabled with ClikServ. The fast access to audio/video news is a valuable service. We are still discovering valuable interactive news services.

5. Readers have grown accustomed to aggregated news systems like Google and Yahoo news. They are not likely to leave. Being open to all readers you open yourself to the larger segment of the population – and to larger revenue. News Readers want an open system of news.

Dreaming up ideas to serve a market assumes a keen understanding of the markplace ecosystem. That is not easy. One needs an initial understanding, deep contacts and lots of digging. Researching a market that is large and varied is itself very daunting. What is the right persona to base it upon? Who can provide the right feedback? How do we validate the feedback? Is our customer the publisher or the reader?

At ClikServ, we rejected the first approach and postponed the latter in favor of a relatively new idea. First we identified that our success can only arise from adoption by readers. If the readers like it, the publishers will follow. So went our thinking.

While looking for a method of defining features and ideas to serve content readers, I came across Luke Hohmann’s Innovation Games methodology and book.

Innovation Games methodology allowed us to engage with readers (customers) in a fun way. We played “Prune the Tree” game with a group of 35 readers. We took liberties with the prescribed game and changed it to “Build the Tree” where

1. Roots were the ClikServ infrastructure required
2. Trunk was the ClikServ platform
3. Major branches were the offering features, and
4. Minor branches were the future of ClikServ offering

ClikServ Tree Doodle

The results of the game were amazing. Folks were given 20 minutes to play, but the game went on for more than an hour with strong participation. Many wondeful ideas came up, many of which we were able to include in our future roadmap. More on that in a later post.

The biggest lessons learnt were

1. Staff your Innovation Game fully. Learning from the game is seriously hampered without at least 4 individuals, including 1 presenter, 2 observers, 1-2 bad wedding photographer.
2. Make sufficient time for the game. The game takes an energy of its own and should not be curtailed artificially. Neither should one provide too much time that folks start leaving.
3. Allocate sufficient time before the game for prep, and after the game for a very detailed review.

Please contact us if you feel you can benefit from content monetization, or would like to help us help publishers and readers.

The core idea is borrowed from our agrarian past, where when one farmer decided to build his farm, the neighbors came together to help him build. He in turn paid back in kind, by helping his helpers when they needed such help. The official explanation is

What BarnBuildr Is

BarnBuildr is a community marketplace that revolutionizes the way entrepreneurs launch companies by connecting people to projects, through the exchange of services, social capital, and other non-monetary currencies. To get involved yourself, visit our online list and introduce yourself!

Fast forward to late 2009. When we found the list, we took advantage of it. We have recruited our experienced execs, located an accounting outsourcing vendor, a website designer and developer, and business partners through the list.

Social lists have existed for a long time. What is unique about this list? Go figure.

As the BarnBuildr.com website states it … What are you looking to begin in 2010?