Insight Piece. Digital Media. Partner Financial Ltd 2018.

Transcription

1 Insight Piece Digital Media Partner Financial Ltd 2018.

2 We now spend more time online each day than we do sleeping 1 With people having less free-time and an increasing amount of that being spent engaged with a mobile device, it s not surprising that the world of media and technology are becoming more and more entwined. Gone are the days where people rely on a television and an aerial to watch the latest episode of their favourite soap, or the need for a separate Walkman and a CD to listen to their favourite tracks. Even the days of downloading albums from ITunes seems a thing of the past with the rise of subscription services like Spotify and Apple Music. In the entertainment area, it is estimated that video streaming is responsible for 30 percent of overall Internet traffic. 2 In a world where all forms of media are becoming increasingly digitalised and less reliant on traditional print, the key question is what revenue model works best for my product, my customer base and my business? Let s take Ebooks as an example; between 2012 and 2014 there was an increase in the number of Ebooks sold by the 5 biggest general publishers in the UK. However, in 2015 there has been a decrease of 2.4% (taken from books/2016/feb/03/ebook-salesfalling-for-the-first-time-finds-newreport). This could of course be attributed to a number of reasons, or simply a natural slowing down of growth and adoption rates in digital, along with a slowdown in sales of Kindles 3 but perhaps it is the revenue model. Many believe that there is something about having a fully stacked book shelf - Waterstones Chief Executive, James Daunt stated A bookshelf of real books makes its digital imitator seem pale indeed. 3 With no financial benefit to the customer then why would they choose Ebooks over traditional print? It is evident that the subscription/ recurring revenue model is in the long term better for your business than the transactional model (with private equity investors) It s gotten to the point where all they want to hear about is recurring revenue. That, to me, is a remarkable shift given that most of the world still operates on a transactional basis. 4 2

3 What perhaps isn t so obvious is that a subscription based service is also, in most cases, more beneficial to your customer. To use the ITunes and Ebooks example above why would a customer pay c 9.99 for one album, when they can subscribe to Spotify Premium for only 9.99 per month with a cancel anytime option. Apple music s individual subscription service is also 9.99 per month and both offer access to over 30million songs (taken from technology/2016/03/17/applemusic-vs-spotify-how-do-the-twostreaming-services-compare/). Are customers starting to question why they can get unlimited music downloads for the price of one album, but the same option isn t available for books? Whilst initially, you may offer a freemium model to your customers and raise revenue through advertising, the increase of ad-blockers and encryption services means that this will become less appealing to advertisers. The use of ad-blockers is a topic in it s own right, however according to Jason Kint, the head of Digital Context Next focusing on ad blockers business models is a red herring. The industry, he says, should be focused instead on serving its readers. 5 In a market heavily at risk of saturation, it is essential that the content you share is either relevant, or offers your customer something i.e. choice (over 30million songs for the same price as one album). Customers want relevant, useful content, not a blocked up inbox or device that is filled with spam from advertisers. So in a world where people are becoming swamped with digital content, the way to build a loyal customer base that is engaged is through quality invest in a freemium service that your customers will fall in love with so that they are then willing to pay a subscription fee for an advert free service. With people ever increasingly looking to their mobile device as a source of information, services and entertainment, this is the prime opportunity to review your revenue model and look at transitioning to a subscription based model. 3

4 pdf

5 CONTACT US E @partnerfinancial.co.uk T +44 (0) W partnerfinancial.co.uk Partner Financial Ltd 2018.