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Business Models on the Internet - Premium Content - Part 1 - I have already published one or two articles about business models on the Internet in the past.

For example the article “5 business models for self-employed people on the Internet” or the interview “Business models apart from AdSense and advertising”

With today's article, I would like to start a series of articles in which I would like to shed light on various business models on the web. In addition to today's topic of “Premium Content”, the next articles in the series will deal with services, online services, seminars, affiliate marketing, advertising, exit strategies, etc., among other things.

You shouldn't take the term business models too closely. It is more about looking at the combination of business model and revenue model. Or the income model is part of the business model. In short, it's primarily about how to make money on the web.

Today I am dealing with a topic that is currently quite topical and is controversial: Premium Content

I have divided the article into 2 parts because it has become very extensive.

Premium Content

Business Models on the Internet - Premium Content - Part 1

The reason I chose “Premium Content” for the first article in this series is simple. The topic is brand new and is currently being discussed intensively from various sides.

The iPad has awakened the hope of newspaper publishers to still earn money with digital distribution channels. Whether this will happen in the end remains to be seen.

But the topic is also very topical and controversial in the blogosphere. The SEOnaut analyzes the potential of premium content in the SEO area in his way ;-) and compares the pros and cons.

Others are already further. Eisy has quite surprisingly acquired a premium area * and after a good two weeks can now build on 71 paying members. I will go into more detail on this example in the second part of this article.

But let's first ask ourselves what premium content, paid content, or paid content is.

In the first few years of its existence, the World Wide Web was particularly popular at universities and among young people. Accordingly, a non-commercial “everything for free” mentality has established itself.

And this expectation still prevails among most Internet users today. Therefore, one can also mention right from the start that the degree of acceptance (PDF study) for premium content is not as high as with many other business models on the Internet. But he doesn't have to. More on that later.

So basically it's about asking for money for certain content on the web.

And while in the past you also paid for the paper on which the newspaper was printed, this physical argument is no longer applicable today. On the web, you “only” bill for the content and that is surprisingly difficult.

Requirements

What are the prerequisites for being able to successfully implement premium content at all?

There are a few factors that play a role:

• Topicality
  Especially up-to-date content can be a reason people pay for it in certain industries. For example, the financial market, where being up to date is a very important factor.
  
  
• Exclusivity
  Content that is not available anywhere else can also be sold relatively well as premium content. Of course, the appropriate market must also be there. Exclusive information that is of no interest, of course, does not work.
  
  
• Focus
  In my opinion, the focus of premium content should be very clear. Paid content on a topic is usually more likely to be accepted than multi-topic content.
  
  
• Uses
  Premium content can also be attractive by offering additional usage options. So it would be conceivable to offer freely available articles as MP3s, PDFs, and as a mobile version.
  
  
• Time-Saving
  The time factor is often underestimated. It may not matter to a pupil or student. However, time is a rare commodity for employed people, the self-employed, etc. If you get paid content that saves you a lot of time, it is worth the money for many.
  
  
• Bringing in Money
  The classics are of course content, which in turn brings in money. So if you find out how to earn 100 euros a month through 10 euros a month, you are more willing to pay for it. Even if this can save money, many are willing to pay money.

Ideally, your premium content meets all of these requirements. Then the chances are not bad that it will work out.

Of course, it also helps if you already have a certain reach and reputation. The Eisy premium area is certainly quite successful because many people know it and trust that its premium content is worth the money. 

However, there are plenty of other industries where the image isn't that important. In my opinion, it is not a mandatory requirement, even if a very good image helps a lot to successfully establish premium content in many areas.

Target Group

As already mentioned, there must of course also be a target group for the premium content.

You have either found this out yourself through many years of experience by closely observing a market. So if, for example, you have been blogging on a topic for years and then you realize that at least part of the readership would be willing to pay for exclusive content.

Or you can analyze an unknown industry and run tests. This could be, for example, a small eBook that you can sell for a few euros. In other words, tests are supposed to find out what the readiness of the target group to buy is like.

Under no circumstances should you develop and offer premium content without knowing the wishes and potential of the target group.

Planning

If you know the target group and if you consider the potential to be sufficient, then the planning continues.

For example, you should analyze the competitive situation, whether there is already a provider in this area. It also doesn't hurt to use premium content yourself and learn a lot first-hand in this way.

• How do others do it?
  
  
• What works with these providers?
  
  
• What is not working so well and what could be done better?
  
  
• How do billing and pricing work there?
  
  
• Which technique is used?
  
  
• What premium content is offered?
  
  
• etc.

In addition, you should set priorities in the planning phase and concentrate on certain things. As already described, the relevance of premium content is even more important than that of free content. Who is ready to pay an amount X when they are only interested in 30% of the premium content?

It is also important here to plan long in advance. It's very embarrassing and annoying when you run out of ideas after 4 weeks. The paying customers don't think that's so great.

In general, one should be aware that readers become customers. Your responsibility towards paying customers is much higher than towards readers.

And of course, you should also calculate the number of paying customers you need to earn money: That brings us to the subject of “price”.

Prices

It is not easy to set the prices for premium content. There are also no fixed values ​​that apply everywhere.

In general, one can say that the price of course also depends on the potential target group. If I know, for example, that there is only a relatively small group of potential customers who are willing to pay good money for this premium content, then of course I have to make it expensive enough.

If I have a larger and more hobby-like target group, then you choose a lower price and then do it over the masses.

In his book “The 4 Hours Week” Tim Ferriss also goes into pricing. There it is not about premium content, but the mentioned price concepts can also be used here.

Since I see the potential of premium content more in the niche (i.e. more than 100 customers for a special topic than 10,000 customers for a mainstream topic), I also see higher-priced offers as promising.

But you should also test the prices, e.g. by carrying out test sales of eBooks, etc. beforehand.

You shouldn't forget the costs that you have yourself. Of course, the time it takes to create premium content is of particular importance.

Surveys, on the other hand, are not suitable for determining prices. And for 2 reasons:

1. On the one hand, it is often the case that the survey participants want to push the price down and choose the lowest answer.

2. On the other hand, there is sometimes the effect that people say: “Yes, I would pay the price”. However, that usually changes very quickly when you say: “And now please buy it at this price”.

A survey can therefore produce incorrect results both upwards and downwards.

In the end, the price is mainly based on what someone else is willing to pay for it. And then you have to decide whether the price that a certain number of potential customers are willing to pay is sufficient and profitable

In the second part of the article, I will go into marketing. And there are ways of enforcing higher prices through certain marketing measures.

Billing Models

There are also some billing models. So you can bill according to time, also called subscription. This is how Eisy does it, for example. It offers different period subscriptions. 1 month, 3 months, 6 months, or 12 months.

You should also test a little. As I showed in an example in the last income report from English-language blogs, reducing options can increase conversion. In this case, Eisy should test whether, for example, the conversion is higher when offering only 2 options (1 month and 12 months).

Another option is “pay-per-unit”. So here you would, for example, pay per premium article that you want to read. This requires a higher administrative and billing effort but can work very well. This is how the Stiftung Warentest does it, for example.

“Pay-per-use”, the usage-based billing, is quite difficult to implement on the web. So depending on the time, someone uses content. In times of flat rates and the like, this is not a very popular billing model.

Payment Method

Paypal is now very popular. There are several reasons for this. Many software solutions for premium content have already integrated Paypal so that payment and activation can take place automatically.

Of course, PayPal is not the best option for every target group. Transfers, for example, are more widely accepted but require more administrative effort. This should be taken into account in your cost planning and thus in your pricing.

Software and Technology

The implementation of premium content is not a big problem from a technical point of view.

There is a whole range of (mainly) paid software solutions to set up premium areas including the billing system.

The WordPress plugins “wp-Member” and “A Membership Site” are representative here. Both plugins are paid for, but they are of high quality and the costs can be recovered very quickly.

I will test and present further software solutions in a separate article.

As already mentioned above, you then no longer have readers, but customers and therefore the reliability must also be higher. Instead of cheap web space that is slow or even fails at peak times, you should rent a server. Even and especially if you offer videos, for example.

In addition, it could make sense to offer a premium forum in which customers can exchange ideas. Free forums, such as the Simple Machines Forum, also offer premium areas.

You must build a solid basis for billing, activation, and administration of premium content customers. You should test it extensively beforehand so that you don't get any problems later. Therefore, it is also advisable to use a paid, but the well-engineered solution.

Another aspect of the technical implementation is the security of the data. Of course, it is not 100% possible to prevent premium content from being copied and published elsewhere.

However, measures should be taken to prevent public access. Google should be locked out (which is usually done by asking for a password). And it should also be made clear to premium customers that any other publication is not permitted.

Video

Here is one more interesting videos that deal with paid content. Among other things, it becomes clear that it is a difficult topic that is by far not as simple and clear as the financing model of the print press used to be.

What's Next?

In the second article on premium content, I will focus on the content. What do you have to consider when creating premium content?

It is also about the marketing of premium content and the advantages and disadvantages of this business model.

Until then, you can still read my article on the question "Paid content - is that the future?" do. :-)

 

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