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Tuesday, September 30, 2008

The Future of B2B Media Part 2

The first challenge for the 21st Century Publisher is what to do about news. As a primer for this discussion read this interesting piece from the Monday Note on the economics of newspaper news.

It questions the online economics of the news room and we might question that for b2b too. Lets play the sames game for B2B that the Monday note plays for newspapers. A major weekly trade paper has a total editorial team of perhaps 12. A smaller weekly perhaps 6. In the online news world all the industrial costs of printing etc, disappear. Let's assume the cost of a journalist averages £30k. Let's also assume that we are modern people with a keen eye on productivity and we do without subs, lay out and so on. Let us imagine we can give good coverage of our b2b beat in the online world with half the number of journalists we used to enjoy. We will also need some web hosting and a bit of skill to maintain the technical aspects of our site. Lets pretend thats another £30k a year.

This means our b2b news web site has costs of around £210k for a six person edit team. We might also need a sales person and an office and some overhead. Lets say all up, around £300k a year. How many visitors do we need to make this pay? Lets assume each visit consumes around 3.5 pages per session (and thats probably being optimisitic) and that each page impression contains three ad imporessions (a sky, a banner and a MPU). Lets also assume we can sell all the ad inventory (another optimistic assumption) and that the yield is £25/000. (In other words we have to sell each ad site at an average rate of arond £8/000.

We need around £25k /month revenue to break even. With three ad sites/page impression we need around 1m page impressions/month from 285,000 visits.

Ah. Houston we have a problem. Even with an optimistic view of page views/visit, yield and inventory sell through it looks highly unlikely that most verticals can support high quality editorial with a simple ad model.

Today the web content model is effectively subsidised by the print jounralists contributing content. In a post magazine world the economics of the web only model, using news as the bedrock just won't work.

Our options then are:
1)Find a way to continue to make the mag model work so that we can maintiain our editoiral standards.
2) Find a way to increase the revenue opporunities from the web offering
3) Accept lower standards of news content on the web than we would have accepted in the print model.
4) Act as a content aggregator rather than a original producer.
5) Use news as a loss leader for seeding other b2b activities which can be profitable.

In the next part of our journey of discovery to find the new model for b2b we will examine whether the mag model can be reinvented.

Click here to read
The Future of B2B Media Part 1

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