Zuora Media Edition

Posted: September 22, 2009 in CRM, Economics, Technology
Tags: , ,

I have been writing for a while about the tough times in the publishing industry, especially newspapers though the pain extends to magazine publishing too.  The nub of the situation is that the boring but predictable revenue streams that papers and journals get from advertising is quickly drying up.  Add to that the challenge that younger readers gravitate to on-line (read “free”) information sources and you have an industry with transition pain.  Though newspapers still distribute plenty of copies daily many analysts, myself included, have concluded that printing is a sunset technology for much of information transmission.

The road out of this conundrum is for papers to sell electronic subscriptions profitably but the infrastructure doesn’t really exist and the papers have shown little interest in building it.  Sometimes it’s like watching a drowning man refusing help.

Since buying a newspaper can safely be characterized as a micro purchase, some mechanism that is efficient and very low cost must be found to make it all work.  But even a completely frictionless transaction will not provide a paper with a revenue stream that compensates for the dwindling ad revenue and there’s the rub.

Since most big papers are owned by an even bigger public corporation, the idea of losing money or even making less of it for a time — while a new paradigm gets established — is anathema.  Rather than continuing with an increasingly out of date paradigm, a smart paper might want to consider planning a transition from print to electronic distribution and with it an on-demand billing and payment system.

As you can see there are many competing needs for any solution that will rescue the newspaper business and for once, a government bailout will not do much to fix these structural problems.  No doubt about it, this is a tough nut to crack but today at Demo in San Diego, Zuora announced a new product that might be the missing link to the eventual solution.

Zuora Media Edition is a billing and payments solution that can provide as close to frictionless product billing as possible and it delivers its solution from an on-demand system in the cloud.  Most importantly Zuora Media Edition has capabilities that can enable a newspaper to better configure its products for individual customers.  Here’s how I envision it working (and no one at Zuora told me I was wrong).

A paper has multiple brandable components.  Traditionally the way a paper makes money is to sell ads and content to its subscriber base in a physical geography and papers can also sell their components through syndication to other papers.  Editorialists and cartoon creators are the two most recognizable kinds of syndicated content providers that come to mind.  But what if your sports section is in high demand in other cities because ex-patriots follow the team or because they’re in the playoffs?  Or what if your book review section (we’re talking about you, New York Times) was highly regarded in its own right?  Often the only way to get that section is to buy the whole paper if you can get it.

With electronic distribution though, and a billing system that can manage high-volume small transactions, a paper could think about selling single section subscriptions.  Depending on the section the revenue might be enough to replace some of that advertising revenue that went south.

But wait, there’s no reason that a paper with a streamlined billing and payments system can’t compete for the ad business again.  People went to online job ads, personals and classifieds not because they hated papers but because those sites were better than conventional printing.  There is a reasonable chance that, if a paper could be competitive with other advertising media, that it could win back some of the advertising it lost.

You can make a similar argument for magazines though many are still selling many, many pages of advertising.  Just look at Vogue, for example.  But all magazines are not as fortunate as Vogue.  What’s the cost of sending out multiple renewal reminders for a twelve-dollar subscription to a monthly magazine?  And does anyone else see the irony in asking the customer to mail in a credit card number to complete the transaction?

As I see it, there are two keys to a “print” renaissance.  First, the publishing companies need to get into the current century and adopt a business model that makes and distributes content rather than one that processes paper and ink and distributes from trucks.  But they can’t do that without a business model supported by modern technology.  That’s where electronic billing and payments come in and that’s why I think Zuora makes so much sense.  But what do I know?  I’m just an analyst.

So, what did you think?

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