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Old content, new revenue

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Content is king. Especially if someone pays for it.  As advertising continues to surrender its primacy as a revenue stream, b-to-b media executives are increasingly seeing the value of paid content. Among the methods they're using are licensing, subscription fees and reprints.

It seems counterintuitive that so many business media companies are trying to make money from content when so much information is currently available at no cost on the Internet. But Robert Crosland, managing director of media investment bank AdMedia Partners, said he sees no contradiction. "People pay for content of value," he said.

L. Gordon Crovitz, president of Dow Jones Electronic Publishing, agreed. His company recently expanded its free content with the purchase of MarketWatch, but he argues that some content-The Wall Street Journal and wsj.com, for example-commands payment. "We think it is very odd to give away content that you charge for in another medium," he said.

"People are willing to pay for high-quality content on the Internet just as they do in print."

For many b-to-b media companies and associations, which have been built on the controlled circulation model, discovering content that can generate ancillary revenue has turned from luxury to necessity. "Ancillary isn't so ancillary anymore," said Jim Vick, staff director of IEEE Media. "I think all of us are getting concerned about our print products. Making money from content is critically important."

The IEEE, which is an electrical engineering association and the publisher of IEEE Spectrum, has the good fortune of having strong content: a collection of articles dating back to the 1950s. Corporations are willing to pay six-figure fees for access to an online archive of these articles. (See story below.)

Similarly, McGraw-Hill Cos. has designed its McGraw-Hill Construction unit to generate revenue from content in a wide variety of formats. "They're the model," said one business media CEO.

McGraw-Hill Construction generates revenue from a host of media, including conferences, continuing education and subscription products such as Dodge, a database of 600,000 construction projects, and Sweets, a database of construction materials. Additionally, the unit enjoys the rare pleasure in b-to-b publishing of having magazines-Engineering News-Record and Architectural Record-that have strong paid circulation.

McGraw-Hill Construction is now attempting to gain more payments for the online content from these publications, said Virginia Pao, VP-marketing and business development for the unit. The Web sites for ENR and Architectural Record will have three levels of access: free, registration required and payment required.

But McGraw-Hill Construction is not satisfied with being an information provider, even if it's paid information. The unit wants to become embedded in the work flow of a typical construction industry contractor. Pao cited an online bid management tool that McGraw-Hill Construction Network makes available, which not only enables a contractor to solicit bids from subcontractors but provides the framework for the contractor to accept and process the bids online.

McGraw-Hill Construction is not alone in selling software tools. International Data Group's PCWorld created a benchmarking tool to gauge the performance of PC systems so it could write about the systems in the magazine. Now, PCWorld sells the benchmarking technology on CD-ROM for $249 to hardware manufacturers, software developers and VARs so they can test their own systems.

"[It's] another example of how publishers can make money not only by repackaging existing content but by packaging and selling the expertise and data that are developed as a by-product of the content-creation process," said Ulla McGee, general manager of PCWorld.com.

Other b-to-b media companies are pursuing different tactics to extract more revenue from existing intellectual property.

Cygnus Business Media recently hired Charlie Lillis as director-corporate content to boost the company's essentially nonexistent licensing business. Lillis started with the low-hanging fruit. He cut deals with databases such as Lexis-Nexis and Factiva. "I'm sure not all b-to-b publishers are into licensing, but it's a revenue generator that is extremely high margin," he said.

Cygnus also offers other, more exotic licensing opportunities. The company publishes Firehouse, which has a broad appeal beyond a typical trade magazine. Lillis said Cygnus is exploring a licensing agreement to produce a cable TV program using the Firehouse brand.

Tech publisher Ziff Davis Media is also taking advantage of licensing. "Typically, you have a royalty arrangement, so it pretty much falls to the bottom line," said Gregory Barton, Ziff Davis' executive VP-licensing and legal affairs and general counsel.

Like Cygnus, Ziff Davis has some powerful brands that generate licensing revenue. For instance, it licenses to winners of the PC Magazine Editor's Choice Awards the right to use the magazine's logo on their packaging and marketing materials. "PC Magazine licensing is growing at a healthy rate," Barton said. "We literally have hundreds of licenses."

And, like competitor International Data Group, Ziff Davis is licensing its content and brands overseas. Barton said this is probably the company's most lucrative licensing effort. "We look at the map and see where we are," he said. "Where we're not, we try to get there."

PennWell Corp. is also finding that its technology titles are welcome overseas. The company licenses Lightwave, Clean Room and other titles to foreign publishers. "Licensing is a very cool game," said Adam Japko, president of PennWell's advanced technology division. He pointed out that it requires comparatively little effort and delivers margins that can approach 90%.

While some publishers look for new markets overseas, Vance Publishing Corp. has found new markets for its content in the U.S. An example: Vance compiles copious data on pesticides for its Greenbook.

The pesticide information is, of course, of interest to the agriculture industry. But it is also of interest to a very different market: transportation companies. Through a partner, Regulatory Consultants, this information is marketed to companies shipping pesticides to help them comply with U.S. Department of Transportation rules, said Greg Vincent, associate publisher of the Greenbook.

Other companies, such as CMP Media, have overhauled the way they handle content internally. After CMP was bought by United Business Media, which merged it with its Miller Freeman holdings in 1999, the company published magazines on at least four different software platforms.

The company has since installed a single platform, which makes it easier to share editorial content between properties, said Steve Weitzner, exec VP-COO of CMP Media. This single platform, in turn, has made it easier for CMP to create its online Pipeline products, which aggregate stories from around the company dealing with a specific niche category, such as storage or security.

"We've done 21 of these sites since last June," Weitzner said. "We could have never done that before the platform integration." The company doesn't yet charge for these products, but they are, for the most part, repurposed content and supported by advertising revenue.

But CMP is selling its content in other ways. Its fee-based Acumen Intelligence provides corporations access to all of its content in one place, accessible via a browser, e-mail or an intranet.

Dow Jones is a company built around content in a very traditional sense. It has 1,800 reporters on staff throughout the company and to support them it needs to create content good enough that people will pay for it.

The company sells its content in myriad ways. Most news first appears on the Dow Jones Newswires, then the Wall Street Journal Online. The next day, generally accompanied by more in-depth analysis, the story appears in the print Wall Street Journal. It might also appear on the free MarketWatch Web site. Then the story is archived on Factiva, a Dow Jones and Reuters joint venture, which charges for access. And, of course, the story might appear as a reprint, which Crovitz said is a more than $10 million annual business for Dow Jones.

On the reprint front, several companies have been attempting to adapt their businesses to the Internet age. In 2003, Reprint Management Services, for instance, acquired NXTBook Media, which makes software for digital replicas of print magazines. The reprint unit of RMS uses the technology to offer electronic reprints to publishers.

FosteReprints is also offering digital technology. Its "managed eprints" provide software that, for instance, can limit the number of times a newsletter in PDF form can be opened or forwarded. 

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