Ideas & Insights

Strategies for Monetizing Digital Media

As the information age makes content the leading online commodity, more and more organizations are looking for creative new funding streams to optimize their return on investment.

Digital content has irreversibly shaped how companies and consumers create, display, view, and consume media.  Paradoxically, digital distribution channels have allowed media producers to reach larger audiences than ever — while simultaneously leading to sharp declines in revenue.  As a result, leading media companies are adopting a wider variety of proven strategies for monetizing content.

When considering which content is monetizable, there are four types of content consumers are reliably willing to pay for:

  • Practical content that supports a job or career, such as Linkedin and Business Insider.
  • Hobbyist content that helps enthusiasts to seriously invest in their interests, especially if those hobbies have significant mainstream attention and competitiveness, such as photography, music, cooking, engineering, crafting.
  • Entertainment such as games, music, and film.
  • Experiential content that expands interactivity of books, news, and other media

There are many content business models available in several combinations, but the following, while conceptually distinct are not mutually exclusive and can be complimentary when designing consumer access and choice over access options. These are also currently the most successful models used to meet the needs of consumers looking for entertainment.

The Free-mium model is one of the most commonly used to monetize digital content. Digital content is made available for free and is ad-supported with the choice to upgrade to premium content services. Named for the combo of free and premium content, examples of free-mium content include LinkedIn, many gaming communities, Dropbox, and Hulu. This model is where you see VIP, pro, and business accounts. In this model, there are two distinct revenue streams (ads and membership) as well as the option for a third. A popular revenue add-on is content upgrades. Free-mium encourages ongoing and high-level site traffic because of the free content availability as long as ads don’t alienate consumers. Consumers have the satisfaction of choice by being able to add additional value if desired.

The Pay Wall/Subscription model makes all content available, but only to subscribers who pay monthly, quarterly, or annually. Pay walls are a simple model to implement that resonates with many consumers. While it will decrease traffic slightly because it works with a smaller segment of consumers, it can be highly successful. PayWalls are best implemented with established companies that have a great deal to offer, and that already have a great reputation in the marketplace. If there is an established brand, trust, and recognition of quality, consumers will be more likely to pay upfront. Just a few examples include news sites, such as the New York Times, many wedding planning sites that know consumer membership is temporary and need to capitalize on visitation early on in the relationship, and some professional education and management training sites such as Skillsoft and

Using a Microtransactions model is essentially a bundled distribution model. Information and timeless content are available in a modular format that is easy to sell and resell. Consumers can sometimes feel like they are dealing with a fee service rather than a content provider so knowing your audience to develop desirable content, as well as designing proper packaging and marketing are important. This is a classic model employed by virtual gaming giants, but it is also employed by many online education providers where customers get a set of basic and complementary courses for one price. These can include entertainment such as iTunes, Netflix, and app purchases for phones and tablets. Ultimately, inertia is the key to mobilizing higher revenue. Managing user momentum to funnel them through the purchase decision takes a great deal of savvy but is highly rewarding. The biggest downside is consumers are being forced to make multiple purchase decisions, often limiting momentum and extraction if price points and value are not properly communicated or strategized. Additionally, average revenue per customer will have a cap when this model is used across communities. Customers will pay to work at the same average level as their peers, even if they might typically be willing to pay more when not influenced by the limited achievements of other users.

In an Incremental Paid Content Service Model, new content experiences are sold separately from a primary core content product. This formula gives consumers the option to pay for additional value as wanted or needed, but it is important to recognize that revenue will also be incremental. Also, new products or product evolution will be important, but can cause an increase in costs. One example is the use of this model across many online learning platforms. Users, or students, pay for a basic course then pay again for more advanced courses and ultimately pay again for tools and resources that will enhance the experience, such as access to additional books, videos, and articles. Paid add-ons may also include access to tutors, practice tests, and access to online forums or like-minded communities. This is also common in the sales, self-help, and media industries where ongoing lead development, personal coaching, and movie bonus content is made available for varied fees.

In the digital media content industry, the return on investment in solution deployment and comprehensive business models has been consistently proven to be a worthy and necessary investment. Examining digital content management workflow includes the ability to deliver media assets for consumption across platforms. There are many options media companies may integrate to manage content, enable consistent and streamlined distribution, and utilize resources to optimize monetization. These models provide a starting place for building and maintaining a strategic and competitive advantage.

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