To see tomorrow’s hybrid business models, segment usage and passion


RRading through background materials on the online paid content debate in today’s media industry, I’m struck by the sledgehammer approach by our industry’s smartest people. Too often, the debate is between “everything must be free” and “everything must be paid.”

An industry that has invested in marketing and research would know better.

We’re not in one of those industries.

There are basic marketing premises about “value of content” that must be addressed – and I’m confident the major companies are already dancing around this.

The core marketing principle is audience segmentation. Probably a bit less about lifestyle and geography and a bit more about usage and passion.

“Light” users of web sites, like “light” users of print newspapers, have questionable commercial value that we tend to lump together in glorious, but misleading, “averages.”

According to a survey by the Center for Digital Future at the University of Southern California (USC), heavy internet users spent 42 hours a week online versus 2.8 hours per week for light users. More specifically for the newsmedia industry, heavy internet users spent 65 more minutes per week reading newspaper web sites than do light users.

To lump together all internet users and assign an average value is to ignore these stark disparities.

An emerging rule of thumb in our industry is that only 10% of our audience would be willing to pay anything for the content we produce. I suppose that’s based on the pessimistic side of the 10%-15% contribution rates of public radio and television stations.

To see the local media company’s business model of the future, we’re going to have to segment. Then sub-segment the segment. Then sub-sub-segment the sub-segment. You get the picture.

We must identify the heavy users of the internet. We must identify the heavy users of our web sites. We must identify what passion subjects these heaviest users of our web sites want. From a priority perspective, these are our best targets to charge for content. It is a collection of niche audiences, not a substitute mass market.

We’re going to be surprised that this highly segmented customer base is not willing to pay for opinions, readily available news that belongs to the public domain, local news narratives, and rarely even for high-quality investigative journalism. In other words, the premium content that the Journalism Community values most of itself is not what the consuming public values.

Instead, people will pay for in-depth coverage of industries, sports franchises, and unique financial news. Out-of-market people may pay for basic coverage of in-market news. People might pay for contextual services.

That doesn’t mean we don’t cover city council meetings, have pithy viewpoints, and ding the scumbag politician on his expense account. It simply means we’re going to have to find funding beyond the consumer for what we, as artists, view as “quality” but we can’t find sufficient audiences for.

Within five years, I suspect you’ll find the typical local newsmedia brand funded something like this:

  • Directly by consumers for various unique passion niches.

  • Directly by businesses for the use of hassle-free databases and directories.

  • Through foundation monies for specific types of narratives such as investigative journalism.

  • Some kind of low-cost value-added membership formula for some segment of your audience between “heavy” and “ight” users.

  • Through contextualisation of commodity content: alerts based on current location, home, friends, timing, and even experience.

  • Advertising to cover the rest, with print a key component of a strategy to build a large, but unpaying, audience that would be part of a funnel strategy for engagement.

I’m beginning to believe paywalls are less likely in the short-term because the “one-click culture” we live in demands nothing short of brutal simplicity that we can’t deliver today.

Technology, of course, will open new doors – and, no doubt, complicate the doors we’ve created today.

It’s fascinating that for all the complexity of “value of content,” a marketing basic such as segmentation strategy is likely at the heart of tomorrow’s solutions.

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