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Chapter 22

Building the Revenue Model

A successful man is one who can lay a firm foundation with the bricks others have thrown at him.

DAVID BRINKLEY

According to Entrepreneur magazine, the majority of people make money in very few ways. Individuals who collect a salary from a business generally have one or maybe two sources of income (their paycheck and possibly an investment account). Perhaps you know many people in this situation. They go to the same job every day, work to pay off their bills, and don’t have much left over for savings or investment after each month.

Millionaires, on the other hand, have multiple sources of revenue coming in, whether that’s through multiple businesses (and multiple products and services within those businesses), real estate transactions, countless investments, or more.

That’s exactly the type of thinking that surrounds entrepreneurs who engage in a Content Inc. strategy.

YouTuber Rob Scallon describes it this way:

I’m always trying to think up new ways to diversify and have more streams of revenue. My band recently had a song licensed for a national TV ad, which was really exciting. I would love to do [more] licensing. I would love to do merchandise too … there are a whole lot of different revenue streams around my YouTube channel that I do take advantage of and I do get excitement out of.

Whether you are an entrepreneur in a start-up environment or running a Content Inc. program in a large organization, you should always be thinking of how many ways you can monetize the asset of content you are consistently creating.

REVENUE RIPPLES

Doug Kessler, cofounder of Velocity Partners, introduced a concept on Todd Wheatland’s The Pivot podcast that he refers to as “ripples” within a content marketing program. For the most part, marketers measure content programs by increasing sales, saving costs, or creating more loyal customers. These are the obvious objectives, with their associated metrics. But Kessler believes that there may be a more important metric, the one that he called “ripples.” Ripples are the unexpected benefits that come from a Content Inc. approach … like an invitation to speak at an event, someone spreading the word about your expertise, or other unanticipated benefits of becoming a leading expert in your field.

When it comes to revenue for your Content Inc. program, it’s all ripples. When we begin a Content Inc. approach, we are most likely unsure what the revenue possibilities could be. For example, River Pools & Spas had no idea that its Content Inc. revenue line would be through manufacturing. Matthew Patrick didn’t think for one day that YouTube would call him up for his expertise.

We need to go through the process to get there … but when we do, the benefits are powerful.

CASE STUDY: CHEF MICHAEL SYMON

Michael Symon is perhaps the best-known celebrity chef from Cleveland, Ohio. Michael’s entrepreneurial journey started in a fairly typical way (for a restaurant owner) with a restaurant in Cleveland and one in New York. He was slowly growing, adding more restaurants, but it wasn’t until Michael appeared on Iron Chef America in 2007 that everything changed. From there, he continually starred on Food Network shows, culminating in a lead spot on The Chew, a daily, syndicated talk show on ABC.

Michael is seen by millions a day now on various network shows, but the key is that he’s converted that into an audience of over a million social media fans in just a few short years.

Michael’s restaurant business is thriving, including launching gathering spots like Bar Symon and amazing burger joints like B Spot. As of today, Michael is involved in dozens of profitable restaurant ventures, but it’s his ancillary activities that are most worth noting. Michael has built a platform from which he now derives additional revenues including: Books—Michael Symon Live to Cook and The Chew: What’s for Dinner?

Licensing of specialty food items to Aramark (which runs Quicken Loans Arena, home of the Cleveland Cavaliers) Paid spokesperson for Vitamix and Calphalon and official partnerships with companies such as Lay’s Potato Chips Official Michael Symon cookware from Weston

His own brand of signature knives

The list goes on. What works for Chef Symon and other celebrities that build a Content Inc. platform is deriving multiple revenue streams from the content. A shortsighted business model may only look at the added attention to generate more restaurant sales. Michael Symon has taken his audience and generated dozens of different ways to make money.

CONTENT INC. REVENUE EXAMPLES

Here are some Content Inc. examples and how they monetize their audience.

The Content Marketing Institute, the content marketing educational website, makes money from its platform in the following ways: Attendees paying to attend live events

Sponsors paying to exhibit at live events

Readers investing in online training

Sponsorship of live online webinars

In-person corporate workshops

Ongoing consulting retainers

Book purchases

Podcast sponsorships

E-mail newsletter sponsorships

Sponsorship of direct e-mail promotions

Paid speaking opportunities for CMI staff

Online website sponsorships

Michele Phan, the YouTube makeup star, generates revenue from: YouTube advertising royalties

Book royalties

Paid appearances

Music label she launched, called Shift Music Group

Partnership with L’Oreal on a makeup line called “em”

“MyGlam”—a beauty products subscription site she cofounded

YouTube talent network she launched

Andy Schneider, the Chicken Whisperer, monetizes his platform through: Event sponsors such as Kalmbach Feeds

Paid magazine subscriptions

Magazine advertisers

Podcast sponsors

Paid appearances

Book royalties

Website sponsors

Darren Rowse at Digital Photography School grows his platform with: Affiliate programs (paid royalties from promotion on-site)

Purchased e-books and tutorials

Paid online training programs

Online advertising

Brand extension sites such as Snappin Deals

Brian Clark at Copyblogger Media monetizes his platform through: Software subscription products such as Rainmaker Platform

Hosting services such as Synthesis

Paid sponsors for Copyblogger Media events

Registration fees for event attendees

Over the years, Brian has leveraged dozens of additional products and affiliate programs that have paved the way for his current fast-growing products lines.

WAYS TO MONETIZE YOUR CONTENT

Marc Andreessen, multibillionaire and cofounder of Netscape, is one of the largest technology investors on the planet. As of March 2015, he has made 33 investments through his venture capital company, Andreessen Horowitz. If Andreessen lets his money do the talking for him, he’s making a big bet on content platforms. With investments in companies such as Reddit (the online community site), PandoDaily (news and information site), and BusinessInsider (news and information site), Andreessen believes the future of media has never been stronger.

Except for one thing. Andreessen believes the business model for media companies needs to be expanded beyond just advertising: “The news business should be run like a business.” Those leveraging a Content Inc. model can make money in a variety of ways from their content. In Andreessen’s words: “This isn’t a pick one model and stick with it prospect; news [or Content Inc.] businesses should mix and match as relevant.” Let’s review the different ways to monetize your Content Inc. platform.

Advertising and Sponsorship

Advertising revenues are still the go-to business model for most media companies. Simply put, a company wants access to your audience and pays you to give it that access, which may come in the form of a banner advertisement, a print ad in your magazine, or a booth sponsorship at your event.

Baking queen Ann Reardon makes the majority of her revenues from collecting YouTube advertising royalties while she diversifies her revenue streams. Some YouTubers, like Daniel Middleton, who runs The Diamond Minecart, a Minecraft video series with 4.3 million subscribers, has deployed his own outside mobile app for viewing in the hope of someday cutting YouTube out of the royalty equation and selling to sponsors directly.

If you are getting into the advertising-sponsorship game, the best model is to sell packages directly to prospective advertisers. For example, CMI’s weekly podcast, This Old Marketing, sells to one sponsor for each episode, which covers the cost of producing the show and throws off a nice bit of profit.

While there is nothing wrong with collecting advertising revenue, it’s important as a Content Inc. business to not get seduced into this one form of revenue creation. Just like a diversified stock portfolio, we would never put all our assets into one stock.

Subscriptions

The second oldest way to generate money from content is through subscriptions, such as a magazine or newspaper subscription. Over the years, these have morphed into digital subscriptions, like paying for access to the New York Times online.

Because so much content today is available for free to consumers, content subscription programs may be the hardest to monetize of all your options. That said, John Lee Dumas created a very successful community subscription called Fire Nation Elite, which includes regular coaching conference calls and exclusive content.

Premium Content

The majority of Content Inc. models serve up premium content, like e-books and exclusive reports, for free to gain more subscribers or more information about subscribers (called “progressive profiling”). Some, like Digital Photography School, develop e-books and specialty reports for direct sale. DPS’s premium content sales have become the core of the company’s monetization strategy.

Conferences and Events

As more and more people begin to form relationships online, it has created an unexpected need for these people to actually meet in person. The event and conference business has never been more robust. Both Content Marketing Institute and Social Media Examiner drive their revenue models through events. For example, Content Marketing World alone is a $6 million event, with about 30 percent of that coming from sponsorship sales and the rest from paid attendees.

Cross-Media (Books, Magazines, Webinars, Podcasts, Etc.)

Once you develop a content platform, you can monetize that content through a full suite of content products (both paid and sponsored) such as book offerings, video programs, print or digital magazines, webinar programs, and podcasts.

Comedian and podcast celebrity Marc Maron has built one of the largest podcast audiences in the world with his flagship, WTF with Marc Maron. At the same time, he’s launched a bestselling book, Attempting Normal, and a CD series called This Has to Be Funny, as well as a successful video series on Netflix called Maron. Maron also performs at comedy clubs around the country. (Note: Maron has an impressive subscription model where superfans can get early access to all the podcasts as well as complete access to his content archives.)

Crowdfunding

With services like Kickstarter on the rise, it’s easier than ever to ask your community to help fund your Content Inc. model. Seth Price decided to launch his own Content Inc. platform with a podcast. In the absence of funding, he went to Kickstarter to try to raise $5,000. Seven days and 69 backers later, Seth had his funds and was off to the races.

Micropayments

Although I personally have not seen this work, Marc Andreessen believes that collecting micropayments through Bitcoin is a viable option for Content Inc. models. Coinbase, an online wallet system for Bitcoin, is one easy way to set up your site to collect micropayments using the online currency model.

Philanthropy

Pro Publica is a nonprofit organization that uses its funding to develop investigative journalism that it deems is important for the public to hear. Founded by Paul Steiger, former managing editor of the Wall Street Journal, Pro Publica employs 45 journalists and received its major funding from the Sandler Corporation, which committed funding for multiple years upon Pro Publica’s launch in June 2008. Pro Publica also accepts ongoing donations from anyone that believes in the organization’s cause.

Products

According to Anne Janzer, author of Subscription Marketing, selling products from a content site, while being the most intensive in research and development, has the biggest revenue upside.

As an example, look at Copyblogger Media. It sells content and search software as its core sales driver. Moz, which launched as an SEO blog, has grown into a $30 million–plus business off the back of its search analytics product.

WHAT IF YOU ALREADY SELL SOMETHING?

If you’re a mature company with multiple products or services, you monetize your content by answering this question: “What is the difference between those that subscribe to my content and those that do not?” Let’s look again at River Pools & Spas. Before launching its Content Inc. approach, the company installed fiberglass pools. By monitoring the engagement of its blog content, River Pools found that those audience members that engage in at least 30 pages of content and request a sales appointment will buy 80 percent of the time. The industry average for sales appointments is 10 percent. So in this particular case, there is an 800 percent increase in the likelihood of a sale.

River Pools also looks at particular articles and their performance. In using a marketing automation system (the company uses HubSpot), River Pools has found that its blog post entitled “How Much Does a Fiberglass Pool Cost?” has resulted in over $2 million in sales. How’s that for a return on investment?

Another example is American Express. It has found that its content platform, Open Forum, delivers as many new credit card sign-ups as anything else it does digitally. How? Once someone joins the site (subscribes to the content), the company monitors that person and, at the right moment, delivers credit card offers.

If you are trying to find the impact of your content, here are a number of questions to consider: Are subscribers more likely to buy?

Are subscribers more likely to buy new products?

Do subscribers stay longer as customers?

Do subscribers talk more about us on social (word of mouth)?

Do subscribers close faster than nonsubscribers?

Do subscribers buy more on average than nonsubscribers?

Any one of these can justify the investment behind a Content Inc. approach.

The most recent Content Marketing Benchmarks report from Content Marketing Institute and MarketingProfs offers a look at the top organizational goals for business-to-business marketers in North America. Ongoing, engaging content leads to a number of benefits that will help grow your business. Your challenge is to find the benefit that justifies the program.

CONTENT INC. INSIGHTS

There are many ways to make money from your content and subscribers.

Sometimes the best revenue opportunities are unexpected. It’s important to not get so tied up with your main revenue generation source that you might miss a better opportunity.

Some of the best Content Inc. models employ multiple ways to make money from their audiences.