New York Times and Paid Content

The New York Times has announced a new paid content model for their online content. The announcement is here:

A Letter to Our Readers About Digital Subscriptions – NYTimes.com.

The upshot is that occasional website visitors will not have to pay for anything but people who read many articles online with the Times will be asked to pay after using up a monthly free quota of content.

There has been a lot of hue and cry about this, just like there was when they tried to charge for their opinion content way back in 2005 or 06. Here is my take:

Any company like the NYT can be successful with a paid content model. The problem with this change is that they are removing content from their most loyal readers online. They are not offering anything new to their best prospects, they are removing what draws them in the first place It is also rather complicated which will suppress sales a bit.

Why not offer new value to your most voracious online readers and charge for that? The Wall Street Journal does just that with the top end of their online subscription options, providing new in depth content in focused areas. I might pay for an online subscription that provided access to more photos for each article (or the NYT’s photo archive, which is massive), podcast interviews with reporters on the ground where the news is happening, etc. Use what you have to create new offerings that you’ve never provided before but can scale in the online world.

Getting people to pay for something they already had for free is simply a tough row to hoe when there was no expectation set of that free access being temporary.

Micro Payments, Micro Profit?

The only way to make significant revenue with micro payments is to get an awful lot of them.

Any questions? :)

OK, I’ll say a bit more about my rationale for that position.

I work with a lot of membership organizations and the idea of micro payments is often very appealing to their leaders. They provide a very low price point on some products which they can point to when members complain about overall prices of products. It’s also quite trendy, with high profile examples like Kiva.com leading the way with that business model for micro-lending.

Let’s take a look at the math for a hypothetical association. Let’s say they are a scientific society with 20,000 members who pay $399 a year to join. We’ll use them as our pre-qualified base of prospects for a micro-payment product.

Evernote, the very popular note taking application that works on almost anything with a chip and a screen, recently shared some stats. Shortly after they started up, about 1% of their free users converted to paying customers.

If we take a mirco-priced product at $1.00 and 1% of our hypothetical base makes the purchase, then you end up with this:

(20,000 * 1%) * $1.00 = $200.00

Compare that revenue to what they get in membership dues:

20,000 * $399.00 = $7,980,000.00

The organization will literally waste more in jammed paper in their printers than they would make on this single micro-priced product. This is before taking into account the costs of producing the product and implementing micro payments, online access, etc.

Hell, having a single staff meeting to discuss this product already puts it in the hole!

This association would need a base market of about 2,000,000 people to make the revenue even slightly interesting with these assumptions. They still need a lot more people in that market even if you bump up the price and the conversion rate.

Other issues with micro payments include:

  • They must be frictionless to complete (think texting to donate to the Red Cross for Haiti, for example).
  • Products with micro prices are often perceived as low value by your prospective buyers.
  • You’ll often need a wide array of micro-priced products rather than just one to have the level of sales you need to create significant revenue.
  • Repackaging content from other sources into micro-priced chunks often requires selling it to an entirely different, and larger, market.

The only exceptions I might make for developing micro payments if you don’t have a large enough market include:

  • It serves a political or policy need that provides enough value beyond cash revenue;
  • People who purchase the micro-priced product are great candidates for macro priced products that you then sell to them (classic loss leader transactions).

I’m sure someone somewhere in the association world has done a successful micro payment model. (Let me know about it in the comments if you have!) But every leader and product manager must go into the decision making process with a realistic understanding of the numbers involved before committing resources to implement this model.

Engagement Triggers

I’ve written a few posts on engagement this year and I have a feature article in Associations Now coming out in a month or so on the topic. One important concept that I touch on a bit in the article is that of identifying the natural precursors to a product or service among your other offerings.

If you review your data you should be able to identify segments of your customers who are more likely to buy product B if they have already purchased product A. Or they may have taken some other action you have captured that represents a meaningful change that opens new opportunities for you to provide value.

You can map out these connections and essentially develop an acceleration path comprised of a targeted chain of value that you can offer to relevant people.

My friend Tom Breur, a master at turning data into dollars, wrote recently in his newsletter about using automated triggers in your database to target customers for additional value when they have made a relevant purchase or taken some other step that indicates they are suitable. With Tom’s permission, I have quoted the relevant passage below:

Transactions Initiate Trigger-Based Marketing

Event-based marketing are actions that are triggered by changes in the customer’s life. The term trigger-based marketing is also commonly used. We would consider an “event” a complex, multi-faceted occurrence in the customer’s life. “Some” (unusual) transaction will be a signal this event has taken place. For instance, a customer who has bought a house will subsequently change address. Or a (female) customer who gets married changes her name. A customer reports a stolen credit card, etcetera. Sometimes it is clear from the transaction which event has taken place (like in the case of a female changing her name after getting married), and sometimes it isn’t.

If you understand the implications of an event to the customer’s life, it can help you in servicing the customer better. Or possibly selling additional products. This can become a very efficient means of interacting if the campaign or dialogue follows automatically from the transaction that triggers identification of the event.

The key, as Tom points out, is to understand the changing needs reflected behind a particular action you record in your database and determine what targeted value you can offer to them.

What are the most meaningful actions you currently capture? Based on that, what you can you offer to those people that is powerfully valuable to them given the new scenario they are in?

If you found the excerpt above valuable, you can sign up for Tom’s free newsletter here.

Expand Engagement Before and After Membership

As a follow-up to my definition of member engagement for associations, I’d like to discuss the idea of broadening your engagement strategy beyond membership.

If you accept that engagement occurs when someone invests time or money with the organization in exchange for value, you can then consider opportunities to do so before becoming a member as well as after. In fact, membership could be just another station along an engagement progression path, rather than the ultimate destination.

Examples of pre-membership engagement could include:

  • Viewing content on your website, blog, twitter account, etc.;
  • Paying attention to a PSA or press coverage;
  • Sharing content from your website or other publication;
  • Buying a product;
  • Attending a conference or event;
  • Applying for a job via a career center.

Examples of post-membership engagement could include all of the above, plus:

  • Writing or speaking;
  • Volunteering for a committee or task force;
  • Serving in a leadership role;
  • Awarded Fellowship or other achievement status;
  • Spending significant money on sponsorship, advertising, exhibit space, etc.

The important concept here from a strategy perspective is to plot out what lower value engagement activities and options will feed into higher levels and how you can progress people through them.

Imagine professional baseball without the minor leagues. Moving from high school to pro teams for all players (not just the rare exceptional talents) would be very hard to do well from both the player and team points-of-view. The minors provide an important talent channel for the majors. While I’m not suggesting you develop a minor league association, you do need to consider how people will progress through your organization as their relationship with you matures.

Organizations with an efficient flow from low to high value engagement will tend to be healthier from both revenue and mission fulfillment perspectives.

Definition of Member Engagement for Associations

The term ‘member engagement’ is often bandied about in the association world. More of it is considered better yet we rarely state what that actually means. I thought I would put a stake in the ground with my definition of it in the work I do with clients.

Member engagement is the result of a member investing time and/or money with the association in exchange for value. The more of these precious resources they invest, the more engaged they are.

A member who speaks at a lot of conferences and writes many articles for association publications is highly engaged.

A member who invests hundreds of thousands of dollars in sponsorship money is also highly engaged, even if they do absolutely nothing else.

Engagement is about value. The value for the person doing the engaging as well as the value of that engagement for the association.

Healthy associations create more engagement opportunities in areas that create strategic value for the organization. Having a surfeit of articles to publish is nice but doesn’t really matter if the budget has been in the red for the last three years.

Create engagement where it matters.