Friday, April 13, 2007

Content, Quality, Money

Michelle brings up the question of open content. Laura provides a most excellent and well thought out tirade.

Shockingly enough, I have an opinion. First in defense of paid/ copyright content: (1) it takes money to build content via traditional writer/editorial channels and the most traditional way to extract economic value from content is copyright. So I understand what Michael and Laura are saying and largely agree with it.

However, there are two things that fascinate me:
(1) Something like Idealware could be founded on an online community... something like Compumentor's (this is a tough challenge in and of itself). If Idealware started with free community content that was not produced in a traditional writer/editorial model, then packaged up the very best to deliver to the community, their dynamics and economics would be completely different. They could, for instance, implement a membership model... and their free content would drive membership in that community.
(2) Content is no longer a value generator... it is a consumer capturer. You need to capture the consumer with your free content and then extract value through alternate channels... ads, products, services, memberships, etc.

When will Techsoup acquire Idealware? They can then free the content to capture some "consumers" for Techsoup stock.


Beth Kanter said...


Thanks for your reflection on this point and I am glad that you have an opinion on this. Your framing of point 2 resonates with me.

laura said...

Interesting thoughts, David – and thanks for using us as an example!

I agree that basing Idealware around an online community might work really well for the type of small articles that we’re primarily publishing right now (in fact, while it’s not a traditional model, Idealware is pretty much community based right now). In combination with webinars, events, and individual donations to support the overhead, I think that could be sustainable.

However, we’re setup with the goal of doing much larger reports – things like the Online Donation report, where we’re establishing scorecards for software areas, evaluating software, and publishing actual ratings and recommendations. A community based approach works less well here, for a couple of reasons:

-Relying on the community for this type of detailed evaluation and ratings is quite problematic, for a number of reasons, including gaming by vendors, and the fact that much of this detailed comparative knowledge doesn’t actually exist in anyone’s head (and so someone needs to do substantial research)

-Given you need to pay people, these report aren’t cheap to produce ($15-$20K each). This is more money than I think you can cover based on events and webinars, so you need other models.

I’d love thoughts on the best ways to cover these types of costs while still allowing the content to be open. Here’s where I am in terms of thinking through possibilities:

-Consulting. I’m leery of getting into this. It has a whole different set of skills than writing reports, and is so high touch that it’s hard to see how we could do enough volume to cover costs beyond the consulting itself without charging rates so high they would appear unfriendly.

-Pooling funds for desired reports. This is the next thing that I’m going to try out – asking organizations that are planning to select software in the area to pitch in some money for a report, to get the report that would be useful to them written, and for some kind of (hopefully low touch but useful) inside access to the research.

-Ask people to chip in what it’s worth. We’ve experimented considerably with this, and I don’t think it can support the costs of research and writing unless we can notably change the dynamics here. We’re getting about $0.35 per person for our big reports.

-Sponsorship. Traditional, but useful – I don’t know if can cover the whole cost, but definitely there’s money there.

-Membership. You mention implementing a membership model, where free content drives membership in that community”. Can you expand on this? I’m not sure I’m following it. If the content is free, what’s the driver to become a member?

I’ll point out that charging something like $20 or so for reports (if people would pay) is a compelling income model, as if you can actually make more money for one report than it cost, you can use that money to support other reports rather than have to scrounge for each report.

While we’re not ruling out any possibilities, using candid reviews of software to capture buyers of a particular set of software (like that sold by TechSoup stock) also has some obvious challenges in terms of conflict of interest.