Almost all digital assets have one thing in common: in the end there are fewer than a handful of players Offer the entire content world with a € 9,99 subscription. Whether spotify in the music business, netflix for videos, etc., as soon as content from users almost only wants to be used digitally, it's all about User experience and thus a competence area outside the publishing houses.
User experience is the crucial Achilles heel
For publishers' premium paid content, an optimal user experience means that
- User only one account have and not dozens
- of Price is right and affordable for more than 80% of people
- mix the Offer through extreme diversity is marked
- to User data content completely tailored are on the consumer
In the digital business, “the winner takes it all!” Always applies in the long term. Ie the Market power of a platform gets so big that even the formerly big publishing players have to subordinate themselves over time.
The market economy reasons for a platform winner:
- Network effects
- Zero cost for infinite digital copies
- Financial power
Unlike in the manufacturing sector, where a product has to be manufactured with material, the copy costs money. And the state, too, cannot and should not help publishers with taxpayers' money, as this will only end up disrupting innovative capacity and dangerous court reporting for democracies.
When are publishers about to be dominated?
If you look at the content that is mainly in digital demand, this is
- (Audio) books
- Online article
It is striking that in all digital domains conquered there are only monopolies or at least oligopolists who have customer ownership (!).
But not yet in the publisher-Editorial content market!
Why have the publishers not yet been overwhelmed by Amazon, Apple, Google, Facebook, etc. and brought under their own roof?
In some cases this has already happened! On the traffic page with Google News and SEO in general. Hardly any publisher can get past it without harming itself! On the advertising side, the platforms have already taken over the advertising business.
The last bastion is still standing: the content is still on the publishers' servers. Efforts have already been made by Google with AMP and Facebook with instant articles. But this doesn't feel like a risk to publishers. Google pays these hundreds of millions annually through the Google DNI program for beautiful new journalistic projects. It is a clever way to buy yourself free from bad press! And Facebook has dropped out of publishers for strategic reasons.
So everything is fine?
I would say no! It's just the question who has the staying power, the publishers or the platforms. The answer is obvious. And when special events occur in society and the economy, the situation changes quickly.
A look into the past
Who were they biggest winner of the dot-com bubble? Google and Amazon! After that there was no more competition and the market power rose immeasurably. For example, Amazon could simply add hundreds of thousands of eCommerce startups to the Amazon marketplace and explode the range and added value for users. Not to forget, the many founders released, as well as the employees who are now the best trained for eCommece technologies, were now on Amazon's payroll at comparatively low salaries in order not to be unemployed.
Every crisis creates winners ...
but far more losers. My prognosis is, therefore, that most publishers will experience an unprecedented downfall in the coming recession. The Ad Business is leveled that Digital subscription the still saving anchor. Many will welcome a white knight who will let them into their castle. Of course not the subscription top dogs like the New York Times or a South German. They will defend themselves against it to the last by any means.
And it will not be an unknown playerwho plays the savior. Because to be a winner, you have to be successful and dominant in the digital business.
It will be amazon!
The US giant is the most promising candidate. As soon as the opportunity arises, Amazon will strike. Until then you will practice almost meditative restraint and denials.
Because the reason for the attack, which has not yet occurred, is a special feature of publishing: journalists can spoil your business in the actual core market: by writing one down if you feel attacked. Every politician feels this power. That is why timing is always important. Imagine that the Thuringian state parliament was elected in the corona crisis. It would not have been a historic event.
A company like Amazon knows that. It only has to wait until the opponent has been economically shot, other issues set the agenda and consumer demand is almost forcing entry into the market. The resistance of the journalists will fall on deaf ears among readers who are also consumers of an extremely popular because customer-friendly and alternative company like Amazon.
Tactically, the Amazon attack begins with the permission of publishers - as always selected first - to upload their content to Amazon. Ie text articles on product descriptions, tests, etc., which then also help to increase affiliate sales. The commissions then benefit the publishers. Thus, Amazon will first of all increasingly motivate the web portals to enter the Amazon realm, which are well-known and publish product-related.
What happens if there is an “Amazon Prime Press”?
Whether within Amazon Prime or more likely as a parallel service like Audible, the service for Amazon customers will be unbeatable:
- Paid content as a flat rate
- now Spot price
- von allen major publishers
- on the whole world
- alone with existing Amazon login and familiar payment modalities
- with a Recommendation system
- uniform, UX-optimized front ends in the form of apps, in kindle, etc.
This offer must come sooner or later because it is mandatory Added value for millions of users. It is simply a market mechanism with convergence!
Ultimately, whether a company like Amazon buys a startup like that, as it did for Lovefilm for Amazon video or as it did for Audible, is only a strategic time-to-market question.
Is there no other scenario?
Theoretically yes, but rather unlikely. There are already payment solutions that go beyond the horizon of a publisher.
Because what will not prevail in the long term is that there are thousands of paywalls and thousands of publishers.
Startups like Blendle or Laterpay would begin to offer solutions that, when concertedly expanded, go beyond the wallet gardens of the individual publishers. This would enable readers to consume paid content across a single account.
It is not realistic that online users will pay for many individual digital subscriptions at the same time. It's just too expensive and at some point you don't have the time to get the money back in the form of read articles. There is therefore a finite amount of potential subscribers available. I estimate that in Germany 25% would fundamentally take out a publishing subscription. But that also means that the many publishers have to share the cake. As a result, the number of publishers will decrease significantly.
Alliances would be an approach
However, it seems like they are Publishers again want to do everything themselves. Startups in publishing can sing a tiresome song about it.
Even in this phase, it is probably the best medium-term strategy to go alone, because as a publisher you can test various payment models and calibrations more quickly.
The publishing DNA has never wanted models from external providers to be put on, which unites the interests of many in a lowest common denominator.
This also has something to do with the self-image of freedom of expression and diversity. Unfortunately, it's also the sore point that can bring the industry down.
Those who do not cooperate and stick together will be overwhelmed at some point.
As in marketing, insight could still mature in some countries Publishers are teaming up again to develop a comprehensive digital subscription. In my view, however, they lack the technology, quick decision-making processes and solidarity. Similar to the EU, no economical country wants to help the lax weaker ones. But far worse:
Even in an artificial alliance, publishers don't really want to work together and only have to do it out of necessity. Bad conditions to survive against digital gods.
It is therefore only a matter of months or years for me, but definitely in the 20s of this century that it was a Superior for editorial-paid content.
The open question is only what the service will be called?
"Amazon Press","Amazon Premium Articles","Google News Plus","Google Articles", .... Or will it still be the "Paid content alliance"?
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