Revenue for content providers vis-à-vis new media

Chamath from JNW asks me a few questions through a recent comment on a post I made on his mobile news service that hit the core of sustainable content generation for the web. What follows are some basic thoughts – they aren’t answers in the sense that Chamath expects from me because revenue generation from web and mobile services and content is not something I have any experience in, though I share with him a keen interest in exploring ways to do so given my on-going experiments with citizen journalism in Sri Lanka.

Where is the revenue for content providers going to come from?

Depends on who you mean by content providers. For someone such as yourself, providing news and information that may require you to subscribe to wire services the incumbent costs of content generation would have to be met by your subscriber base. This is why you went with a partnership model with mobile service providers, since without incorporating or aligning your business with theirs you would have found it far more difficult to attract a customer base and sustainable revenue model. Getting into their systems also allows the provider to go with opt-out services, whereas independently from outside, all you can ever offer are opt-in services / information products. Opt-out services seem to have a higher retention of customers.

Content providers such as myself (with Groundviews and Groundviews mobile for example) do it without any financial costs aside from the initial setup costs for the website / idea / brand and to kick-start interest in it by a steady stream of content in the first year. What you have as public messages in your website is also content generation along the lines of groundviews, in that you have only to moderate and where you can, check the veracity of the content that is deliverd to you at no cost.

Another is a Rasasa like service model, which say creates a way in which you can get content from the web on to your mobile. Though Rasasa doesn’t do it, users I suspect will tolerate some ads if, as they can with Rasasa, customise their delivery schedules, media and content selection according personal preferences. This tolerance will in turn be based on how the advertising and placement / delivery technologies themselves. Basically, the more the ads reflect personal preferences, the greater the chance that people will not be turned off by them.

Having said this, while web based advertising models are fairly robust and mature, (exclusively) mobile based revenue generation is embryonic. There’s no real model for mobile based revenue generation aside from the usual subscription fare. Also, it isn’t as if click-through ads will work on mobiles. Interesting in this regard is the work of ZMessenger in Sri Lanka. Some of the marketing techniques could be leveraged to augment JNW’s subscriber base, by extension leading to more revenue generation.

Is the web and web applications that find ways of taking free content to readers ignoring the fact that content generation is a costly exercise. Wouldn’t it be futile if content providers are undermined in this process?

Ref. answer above. Depends on which content you are speaking of. Delivering content already on the web through downstream services that terminate in mobiles has no incumbent content generation costs. You are merely a conduit, a facilitator of information on the web through mobiles. Plenty of services that do just that for a wide spectrum of web media that are transformed into mobile friendly media (e.g. Widsets, which I’ve personally tried though it ran too slow on my Nokia E65 to be really useful. Great eye candy though!). Sure, some of these are Web 2.0 with little or no sustainable business plans themselves, but the idea of a critical mass is important. Create enough buzz and through it enough users and the natural progression seems to be that the number of users themselves enhance the value of the company. Facebook is a cogent example of a strong user base that attracted in-line advertising and product placements (even though some of their more outrageous marketing ideas got them sued), instead of advertising supporting the growth of a user base.

JNW on the other hand generates original content in addition to your redistribution of wire news. Both require revenue to operate, so you do have a point that content providers should not be undermined (but specifically by whom or what I wonder – mobile service providers or free web based services like RSSFwd that allow say for content off the JNW website to be delivered to the handsets of non-subscribers?).

Is the solution then the advertising model?

Could be. Could also be a subscription model. Early on, I recommended that you try to attract international subscribers to JNW, based at first on the idea that your SMS news bulletins would be hugely attractive to many Sri Lankans abroad and then on actual instances in which some lamented the fact that they couldn’t get your updates where they lived. Your website was a key tool in this regard, since it captured interest in your service even where you didn’t or couldn’t offer it. Technologies like TextMob or FrontlineSMS may be useful in this regard to expand your geographical reach, provided there’s no breach of contract with your current business partners. Given that your updates also appear on the JNW website, which is then public information even for non-subscribers of your service in Sri Lanka, I guess there are ways in which you can monetise some of that content – by frequency (only subscribers get all updates), by preference (subscribers can select what they want to get based on issue, keyword etc) or by length (subscribers get full messages instead of summaries provided on the web).

Ultimately, subscription is pegged to brand awareness and this is where JNW can explore the potential of the likes of Facebook apps and groups (e.g. The New York Times Facebook application that nudges users back to its site), Ning communities, content syndication (see point below) and Twitter feeds.

On the other hand, you may become the local news and information content generator for a particular mobile service provider. In this case, though you will become invisible you will be able to run a profitable business if you are able to negotiate the funding necessary to maintain local content generation operations, particularly from the embattled North and East, from where reliable news and information are the most scarce and valued.

Coincidentally, I got two emails in the past month from two separate entities wanting to place ads on Groundviews.  I’m not interested in opening up the site to advertising, but found it interesting that the niche audience that Groundviews attracts is suitably attractive for marketing agencies. Clearly, good content seems to attract revenue models.

Are there no alternatives to the advertising model on the web?

Not sure about what you mean here. I’ve understood this as alternatives to a web based advertising model to sustain content generation. Off the cuff, there’s venture capital in the short term, corporate partnerships in the medium term, corporate buy-outs in the long term, donor funding for some types of content generation and private equity. Depending on the nature of your content and the models you employ for its dissemination, there may be other funding available (the example of Digg comes to mind here.)

In addition, there are also a plethora of other ways to generate revenue from content – some of which seem particularly suited for JNW to explore. Syndication seems to be a good model to explore – by displaying your original content on traditional electronic and print media that attract a significant audience, you may be able to negotiate a fixed monthly revenue (e.g. JNW TV ticker exclusive to a particular channel, or cross branding, where you are allowed a banner ad on a newspaper and in turn put a banner ad for it on the JNW website).

I am sure there is growing aversion to advertising (especially unethical advertising). Pay services that gives one the option of not receiving advertising may be the way forward, though new web technologies seem to undermine this.

Again, not sure what you mean by the two parts of this question. What would you say would be an example of unethical advertising and what are the subversive web technologies you are referring to? Are you suggesting that web services undermine a subscription business model? For example, given that you publish all SMS updates on your website / blog, I could use ZapTXT or Rasasa to create a custom alert for me on any mobile, anywhere in the world without having to pay you a cent (or Web Alerts if I’m based in the US or Canada). A less elegant, but in the case of JNW equally effective solution could be this (or a similar trick here).

Point is, you can put a stop to all this by not publishing each and every update on your website, but the catch there is that for all Dialog subscribers (I am one) who are fans of JNW, that pretty much means that the last link we have with your service would be lost since JNW is now only on Mobitel, Tigo, Suntel and Hutch.

You seem to be in favour of a subscription model and I agree. There may however be the danger of a subscription model used from the very beginning that may serve as a deterrent for those who don’t know the quality of your service. Trial services, or a tiered subscription model (x amount gives you x amount of alerts, or x amount gives you y selection of issues on which alerts will be sent, or x amount gives you y list of issues to choose z amount of messages per week from and so on) may be useful to explore. The experience of Malaysiakini’s move from a free service to a subscription based service is deeply instructive in this regard. Launched on November 20th, 1999, Malaysiakini.com offers between 20 to 30 items of news, opinions, editorials, features and letters a day. Since its launch, the website become the leading source of independent news and views on Malaysia. It currently attracts over 50,000 visits a day and over three million page views a month.

So we are back where we started. If all else fails, suggest learning Japanese and going to Japan to learn a few tricks. They seem to be willing to buy books written on and for mobiles, with the authors making small fortunes in the process!

Also read:

SMS News Alerts in Sri Lanka – A short review of JNW’s new site and service
Ideas on SMS news from New Mexico!
News and information through SMS!
News and information through SMS – A second look at JasmineNewswires in Sri Lanka
News, analysis and information through MP3 – JasmineNews through podcasts

6 comments on “Revenue for content providers vis-à-vis new media

  1. Chamath
    April 6, 2008 at 10:58 am #

    Many thanks Sanjana! Very insightful! An initial comment is that for a content provider like us completely focussed on producing our own content (we pay part-time and full-time wages for 12 journalists, and above market rates as much as possible, high telephone bills, rent, utilities etc) costs and revenue are a very serious concern, and will continue to be so.

    This is especially if we are to expand our breaking news operation to in-depth reports with more journalists on the field travelling, cross-checking information etc.

    (As an aside, our spending on journalists is also woefully inadequate at the moment, an industry-wide problem in Sri Lanka)

    We had wire subscriptions, but now we actually divert all such resources to our team of journalists. We hardly use wire content as it defeats the purpose of creating useful new content and building the JNW brand.

    The key point for us is that we are trying to explore alternative to the advertising model on the web and media so that advertising isn’t forced down consumers’ throats.

    If we weren’t, we could look at RSS-type dissemination on various web/non web formats, that also contain advertising, as a revenue model.

    As a media entity I think there are definite pitfalls to relying on advertising where there may be pressure to hold back news reports critical of key advertisers.

    On social costs, I think there are large costs when forcing advertising on people rather than offering them a choice, and even more so when advertisements are not whetted by any authority for standards, such as in Sri Lanka, as far as I am aware.

  2. kiwanja
    April 8, 2008 at 2:25 pm #

    Really thoughtful post, Sanjana!

    Right now, generating income from text messages is a bit of a fuzzy area, depending on how you propose to do it. If you have the time and money, reverse-charge or premium SMS numbers (or short codes) can be set up with operators. Premium SMS would charge the user a premium amount per message sent, and you would get around 50% of the income depending on the arrangement. If you’re running a global operation then you’d need to set up these arrangements in every country with every operator, which would not be fun and quite likely take years. If it’s a service in a single country, then this makes sense and is a good way forward. Just bear in mind you need to pay a ‘rental’ fee for the number, and the operator is going to take quite a large percentage of your income in commission and fees (50% is an average).

    It’s a different matter for services with global reach. One of the few ways you’d be able to monetise your texts here would be to come to an arrangement, say, with an advertiser and agree to tag short adverts at the end of your messages (the advertiser would have to trust that you did!). You could also charge a subscription fee for the service, but that would require a certain amount of administration since the customer would not be able to pay you through their phone (PayPal might be an option, but you’d need to then have a system which kept track of who was, and wasn’t, out of contract, so you could remove them from your lists).

    Taking money directly from mobile users remains tricky, with no easy solution in sight. Software such as FrontlineSMS allows you to set up a standard messaging hub, but only using standard SMS. If you go the premium SMS and/or short code routes then the operators usually provide you with the tools you need to make it work, which is paid for out of the commissions they take.

    Ken

  3. Johnson
    April 8, 2008 at 5:11 pm #

    Excellent and interesting post Sanjana, Web is the best source to generate the revenue to the publishers as the online readership is increasing rapidly from the past three years. Companies like http://www.pressmart.net help print Publishers in distributing their content on multiple delivery channels including web, mobile, RSS, podcast, social media and search engines over a seamless 360-degree full-service platform.

  4. Sanjana Hattotuwa
    April 26, 2008 at 8:07 pm #

    See http://www.nytimes.com/reuters/technology/tech-google-advertising.html?_r=1&ref=technology&oref=slogin

  5. Sanjana Hattotuwa
    May 2, 2008 at 11:12 pm #

    See http://www.cellular-news.com/story/30908.php

    “Sri Lankan operator, Dialog has appointed Celltick to manage its interactive mobile media service Zero77 LIVE. Under the agreement, Celltick will be responsible for raising revenues for Dialog by managing all aspects of the service including editorial content, programming, content alliances and advertising sales.

    Zero77 LIVE, powered by Celltick’s LiveScreen Media, began broadcasting to a test subscriber base of 120,000 and is now open to all Dialog subscribers. Zero77 LIVE delivers carefully targeted content and marketing messages directly to subscribers’ mobile idle screens, turning them into a network of synchronised, interactive personal billboards.”

Trackbacks/Pingbacks

  1. JNW SMS news service returns to Dialog « ICT for Peacebuilding (ICT4Peace) - July 16, 2008

    […] Particularly in this context, I’m very glad that JNW is now back on Dialog. The quality, timeliness and importantly, the accuracy of their news updates, from experience, is impeccable. JNW is the SMS based news and information service that started it all in Sri Lanka. Even though today one finds a range of SMS news services from Ada Derana to the Daily Mirror, none have really matched up to JNW. This blog was the first to highlight the service over two years ago when it launched and since then I’ve written many detailed posts on it, it’s business and revenue model and strategies for its growth and expansion.  […]

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