BtoB

Multiple ways to monetize

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As they took advantage of emerging content platforms over the past decade, b-to-b publishing companies evolved into business media companies. Now, they increasingly see themselves as business information companies. By looking at their content as information and separating it from the business models they traditionally used to monetize it, they are opening up yet more options for driving revenue.

The Deal LLC, for example, had a typical publishing business model for the first nine years of its history, monetizing its editorial staff's reporting and industry expertise through subscriptions and advertising. In 2008, President-CEO Kevin Worth led the organization through a fundamental business model shift, exiting the subscription business, both in print and online, and entering institutional licensing with a new offering called The Deal Pipeline.

Undertaking a business model shift as radical as The Deal's is rare, but throughout the industry, top executives are working harder than ever to identify more ways to monetize content and industry expertise.

There's no end in sight to the debate over whether readers will pay for content online. In the meantime, businesses such as Reed Elsevier's LexisNexis, Dow Jones' Factiva and Thomson Reuters' Westlaw are still getting large institutions to pay for their information services, and business media companies are taking their content licensing relationships with these organizations more seriously.

Paul Gerbino, publisher of Thomas Publishing's ThomasNet News, remains skeptical that media companies can overturn the “content should be free” mentality. Although he is focusing on expanding fee-based services for traditional advertising clients, Gerbino continues to license content to aggregators LexisNexis and Factiva. It's not a major revenue source, but every dollar counts, he said, adding that there's a positive halo effect for the ThomasNet brand when its content is included in these branded business information services.

Eric Baum, VP-licensing at Summit Business Media, used to focus on mergers and acquisitions. “Since that slowed down,” he said, “one of my responsibilities is to look at our current library to find new ways to monetize existing assets.” Baum said Summit is making sure it's maximizing revenue through its current content aggregators, which include Factiva and LexisNexis. That includes “making sure our systems can talk to one another and that our content is tagged correctly,” he said.

Baum also aims to expand content syndication arrangements in which Summit provides a certain amount of content for an annual fee. And he has met with a number of publishers outside the U.S. to explore the possibility of licensing or royalty deals.

At The Deal, Worth and his team decided to license a business information service directly to banks, hedge funds, law firms and large corporations, even though history has shown that “not many organizations can make the organic transition from a subscription business to a licensing business,” he said.

Worth had confidence in his plan for several reasons, including the fact that The Deal would continue to monetize content through traditional advertising. Worth set a goal to reverse the company's revenue mix of about 60% advertising/40% paid content, but he remains committed to both revenue streams. Since The Deal Pipeline debuted in the fourth quarter of 2008, licensing revenue has surpassed advertising revenue and the service has grown to almost 450 customers and 30,000 users, Worth said, adding that renewals are running about 90%.

For the past several years, ALM CEO William Pollak has been leading the charge to expand user-paid revenue in the form of professional legal content for attorneys and business intelligence for law firms.

While ALM had the will to build out its paid information strategy, it was hampered by technology that was not up to the task. “Our first priority is upgrading our Web infrastructure. We have approval from our board to increase spending for that in 2010, and we're well under way,” Pollak said.

“We expect within the next few months to be out in beta with a new research and information product for part of our market. Once we get that one out, we have a whole family of others to follow—all taking advantage of the new infrastructure. Paid content products are extremely important to us.”

Andrew Reid, president of the e-media and market intelligence businesses at Hanley Wood, said, “E-media and data are the two engines we are relying on as growth drivers for our business going forward.”

Like ALM, Hanley Wood is investing in technology as it builds out its paid-information business, Hanley Wood Market Intelligence. “We reinvested to bring Market Intelligence into a Web-based environment, which will launch [this month],” Reid said.

In addition to improving the interface and providing additional applications for users of Market Intelligence, Hanley Wood is expanding its geographic coverage, and Reid estimated that subscription fees will double this year.

Marc Ferrara, CEO of Jobson Medical Information's Information Services Group, oversees Frames Data, a subscription database for eyewear products. While the group's revenue slipped slightly between 2008 and 2009, “the bottom-line improved because we saw a shift from print to digital, and digital margins are higher,” he said.

Advertising revenue for Jobson's Optical Group, by contrast, “was down anywhere from 10% to 20%,” proving the theory that data businesses “spread risk and create the opportunity for increased margins” when advertising softens, Ferrara said.

At e.Republic, the research business that has grown to become the Center for Digital Government and the Center for Digital Education wasn't originally conceived as a money-maker, said CEO Dennis McKenna. More than a decade ago, when his team couldn't find any research on state and local government IT to sell marketers on the value of e.Republic's magazines and events, the company started producing its own research. The centers are now monetized through customized advisory packages, which are fee-based, and subscription services.

In 2001, PennWell acquired a research and advisory firm specializing in optical networks, optoelectronic components and related technologies that had done some work with PennWell's Laser Focus World.

That decision placed PennWell in the business of optoelectronics and photonics, where it subsequently developed a new revenue stream in live events and purchased a digital magazine called LEDs.

“What sets us apart is that we have four legs—a magazine, Web site, conferences and research,” said Christine Shaw, senior VP of PennWell's Technology Group. Penn-Well is now looking to duplicate the four-pronged formula in other markets, she said.

Although media companies typically monetize business information and data through subscriptions, licenses, research reports and consulting fees, many still use the traditional advertising or sponsorship model—especially to get new products to market quickly.

“We always have to ask ourselves whether we have a product that's differentiated enough for the readers to pay for it,” said Michael Alic, VP-electronic media group at Advanstar Communications. If a marketer believes a product has sufficient value to put money behind it in the form of a sponsorship, Advanstar can get it up and running—and generating revenue—more quickly than it would by selling individual subscriptions. If the new data or work-flow product is successful, user-paid products can be added to the mix, Alic said.

Jobson recently launched a new Web site for optometrists, reviewofoptometricbusiness.com, with the same idea in mind. The site is currently sponsored by traditional online advertisers, but “we have identified some opportunities for user-paid products,” Ferrara said. “We need to generate revenue from readers, but sponsors are helping us to build a more substantial site from which we can develop that.”

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