The Product Dictates The Business Model… Not the Other Way Around
One of the luxuries of writing A Media Operator—and honestly, the reason I launched it—is that I get to talk to a lot of people that are building media businesses. Small and large, these people are doing the very hard work of building profitable companies.
But I’ve started noticing something that troubles me a little and I want to discuss it because the last thing any publisher can afford is to have tunnel vision.
The tunnel vision right now has to do with subscriptions. They’re all the rage. I get it. They should be all the rage right now because they’re working. These past few months have been very friendly to those publishers that have a subscription product, so naturally, everyone else is thinking about getting into the business.
The problem is that publishers are coming at this from the wrong perspective. They’re looking at other companies launching subscriptions and saying, “I need to do that too.” They are letting the business model dictate what they want to do next.
They are deciding that a subscription is what they want to offer their audience and then working backwards, trying to define what product might make the most sense to fit within that model. By this very nature, they have entered the product development arena with a limited scope. They have effectively said that they only want to deliver a product to their audience that works with a monthly/yearly renewal.
This is a problem because they forget about the core constituency that is actually going to be forking over money: the user.
That’s the wrong way to build product.
None of this is to say that you can’t say, “I want to generate revenue from my users.” Of course we can set that as the precursor. But don’t define the tactical means of generating user revenue until you first define the right product for people.
You need to start from the perspective of understanding what your user wants or needs. This can be a variety of things. Here are a few examples.
- Research reports: One-off deep dives into a specific topic can be a great way to give users information they need. Many B2B media companies do this and it’s a great model. While some media companies have done a good job bundling other products into a membership-like product, ultimately, the right product for the user is a single purchase report.
- Short-run Newsletters: Let’s say the Olympics were starting on time in July pre-COVID. You might decide to spin up a newsletter that reports heavily on what’s going on at the events. It can’t run forever, obviously, but during that one month, a single purchase might be appealing to die-hard fans.
- Networking events: Your users are asking for opportunities to network, so you spin up virtual events for them to do just that. You charge for access each time they come.
- Your users are asking for physical products, so you come up with something that works for them. You charge per item.
In all these cases, you are building products that the user wants and then defining the business model that makes sense. You are not saying that you need a subscription and then mandating that anyone that wants these things must accept their credit card being charged every month in perpetuity.
All four of those examples, while not resulting in a predictable, monthly credit card charge, are all perfectly acceptable streams of revenue.
There’s another way to think about it, though. It’s true, the revenue is not recurring. However, by delivering the product that your user needs with the right business model, the relationship with the reader can be recurring. They might trust you more; they might refer the product to other people.
The fact that the relationship is recurring means that as you introduce new products, your ability to get users to purchase again becomes more likely. I mentioned those towels from Food52 a couple weeks ago. I have them; they’re great. It’s likely I’ll purchase other things from them. They didn’t need to get me to become a subscriber to make that happen.
That recurring relationship also means sales will happen over time. If you’re a B2B brand and you write a report on the state of satellites in 2020, that might sell for six months. A reader might come to your site in April, see that report, and still buy it because the information is relevant. You created the report once and you’re still generating revenue months later.
For most publishers, you have a recurring relationship with the reader. They are in your ecosystem, they read your content, and they trust you. If that is the case, you can get creative with the types of paid products you introduce.
None of this is to say that the subscription is bad, of course. A Media Operator is a subscription. But that’s because it was the right business model for the product. A weekly newsletter that provides tactical and strategic thoughts on building a media business coupled with analysis on things happening in the news warrants a monthly/yearly subscription.
One off reports about specific sectors of the media industry might have warranted a different model. Instead, I could have written four reports this year:
- The State of B2B Media
- The State of Food Media
- The State of Sports Media
- The State of Subscription Models
I could have sold each report for $100. Some of you might have purchased all four; more would have purchased one. And who knows, maybe I’ll do that in the future anyway.
But the product I believed mattered—and honestly, what I wanted to build when I launched—was a newsletter. I first defined the product and then picked the business model that made the most sense. In this case, subscriptions.
The goal with any of these exercises is to develop new, diversified streams of revenue. For those that are dependent on advertising, finding a way to get the reader paying for content is important. Strategically, that makes sense. However, that’s as far as you should go into defining the business model before you first define the right product for your audience.
During this time when we are all experimenting with new ways to engage with our audience, monetize and grow, try to remove the tunnel vision. Your product doesn’t have to be a subscription. A one-off purchase is still a win worth celebrating.
If it means you’re giving your users the right product for what they need, you’ll continue succeeding.