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Copyright Revenue Opportunities and Limitations
Show Me The Money!
By MICHAEL O'DONNELL, Founder & CEO, iCopyright.com
September 2, 2006
The question I am asked most often by publishers is, "How much money can I make from licensing our content through iCopyright?" My stock answer is, "It depends." In this article, I will try to answer this question more specifically. Publishers are busy. They have to focus on the projects that will deliver the best ROI. Copyright licensing is often overlooked in favor of projects that improve distribution, readership and ad revenue. However, if implemented properly, a copyright licensing program can be a cornerstone of publisher revenue and reader acquisition. It can also save publishers money by streamlining the process for its staff and users.
Copyright Products & Services
Some publishers think that copyright licensing is only about granting permissions, and that it is a necessary cost of doing business. The savvy publishers see licensing as a profit center, not a cost center, and embrace a "Publish once, monetize multiple times" business strategy. When a work comes into existence, whether it is a news story, a photo, a video clip, a listing or ranking, or some other piece of content, there are a myriad of ways in which it can be used, and thus, monetized.
With iCopyright, for example, a publisher can monetize each piece of content it publishes 17 different ways. Among the options available to users who wish to use the content are custom reprints, photocopies, bulk e-mail distribution, excerpt, and republication rights. In addition, there are a number of pricing options available to users, such as commercial, educational, and non-profit pricing. Publishers can also earn advertising revenue and generate more traffic to their web sites when their content is passed along from one reader to another. Make no mistake, the *free* use of content is still covered by copyright. Why not monetize those free uses?
Back to the central question: Just how much money can be made from copyright licensing?
Projecting Revenue
When estimating revenue for publishers at iCopyright, we look at the following factors:
- type and amount of content published
- brand recognition of publisher/publication
- audience
- distribution channels (other than the publisher's web site)
- monthly page views
- click-thru rate
- sell-thru rate
- types of licenses offered
- pricing of licenses offered
- pass-along value of the content (advertising, site traffic and new subscriptions)
A simplified version of the formula we use to calculate revenue looks like this:
MPV x CTR x STR x ASP + PAV = Estimated Revenue
MPV = monthly page views
CTR = click-thru rate
STR = sell-thru rate
ASP = average sales price
PAV = pass-along ad value, which is equal to (MPV x CTR x Multiplier X STR X ASP)
This formula is simple to set up in Excel. Once we know these variables, we can project how much revenue a publisher is likely to earn from tagging their content with iCopyright. Let's look at an example of a B2B publisher with six publications, getting five million page views per month across all six publications. Their monthly revenue formula might look something like this:
| MPV |
|
CTR |
|
STR |
|
ASP |
|
PAV |
|
REVENUE |
| 5,000,000 |
x |
.10% |
x |
1% |
x |
$500 |
+ |
MPV x 3% x 3 x 2% x $0.50 |
= |
$29,500 |
In this scenario, one tenth of one percent of the pages viewed will be clicked by visitors to view the available licensing options. One percent of those clicks will result in an average sale of $500. In addition, three percent of the pages viewed were clicked to use the content for free, i.e., `email-a-friend' and `printer-friendly version'. Of that three percent, the content was passed on to another three users, of which two percent of those receiving it clicked on an ad with an average bid rate of $0.50.
How do we know what variables to use? Why use a .10% click rate and not a .25% rate? Why use a 1% sell-thru rate and not a 2% rate? Why is the average sale $500 and not $50? How do we know how many users will use the free-use options and what the bid rate will be to advertise on those articles? We know from analyzing data accumulated from similar content and similar publications. It depends a great deal on the first three factors listed above.
Other factors that impact revenue include the placement of copyright licensing links and outbound marketing. Publishers that proactively promote copyright licensing and employ a sales and marketing team (whether internal or outsourced), enjoy higher revenues than publishers who do not. A copyright licensing program can generate significant revenue from reprints, digital licensing and advertising. If properly implemented and promoted, it can also help publishers to extend their brand and attract new subscribers and readers.
Content That Sells Best
The second question I am most often asked is, "Which of my content will my users want to license?" My stock answer is, "The content that covers people, companies, products, and industry trends." This is especially true in the B2B space. Companies license content about THEMSELVES or their competitors for commercial purposes, such as reprints to use in their press kits. However, it is impossible to know for sure what content people will buy, so publishers should tag EVERYTHING they publish with a copyright licensing system.
The iCopyright system processes thousands of copyright licenses each day. When I look at the types of articles and permissions licensed through iCopyright, a few patterns emerge, but licensing activities generally occur across the board. One never knows precisely which stories or photos are going to be used by readers, or passed-along to their friends and associates, on any given day.
Limitations of a Copyright Licensing System
Some publishers see little or no revenue from copyright licensing, even after implementing an automated system like iCopyright. Almost always, the level of revenue produced from copyright licensing is determined by the 10 revenue factors listed above. These revenue factors are all controlled by the publisher. The copyright system itself does not control the factors that determine revenue. In fact, the copyright symbol (or links) is indifferent to the content it sits on. It does not know how good the content is, how many people will see it, or if those viewers will click to initiate a license. The best a copyright licensing system can do is to facilitate the transaction once a license is desired.
The publisher not only controls the content, but also controls the implementation of the copyright licensing system. The implementation can have a major effect on the click rate, the sell through rate, the types of licensing options available, and pricing. Through experience, we have found that publishers put limits on their licensing revenues by not properly implementing the system.
The following are items that publishers can control to better implement a copyright licensing system, and to maximize licensing revenues:
- The Copyright Tags Should be Placed at the Top and Bottom of the Page.
Publishers that place the licensing links at the top of each article see ten times the licensing activity of publishers who place the links on the side or at the bottom of the page.
- The Tags Should Be Cross-Linked Between Free Uses and Paid Uses.
Publishers who provide the 'Email-a-Friend` and 'Printer-Friendly Version' links (free uses), but don't cross link to paid-use options, miss a huge opportunity to sell more content. In fact, if implemented properly, free uses actually help sell more paid uses.
- The Licensing Options Should be Customized Specifically for Your Readers.
Publishers who don't know how their readers want to use the content are bound to offer them the wrong options. If readers like to email the articles to others, for example, it is smart to offer them a "bulk email licensing" option. Too many publishers offer only reprints or republication rights, when the majority of their readers want to use the content in other ways.
- Pricing Levels Should be Set to Generate Incremental Revenue.
Most publishers over-value their content. A few publishers under-value it. Pricing must be tested and modified as needed to hit the sweet spot of the audience. Additionally, pricing should be tuned to the type of user and intended use. A professor who wants to make photocopies of an article for her students should not have to pay the same price as a corporate marketing director who wants reprints for a trade show.
- Outbound Marketing is Vitally Important.
Copyright licensing is best supplemented with an integrated reprints program, where the most likely buyers are contacted by phone or email. Publishers that use a reprints vendor, or have a dedicated reprints staff, generate much more revenue than publishers who do not.
- A Follow-up or License Renewal Process Should be Implemented.
Users who license content have established an affinity for the publisher. These users are most likely to license additional content, but are often never made an offer to do so. Licenses are not granted in perpetuity. They should expire, and when they do, users should be invited to renew their licenses.
Copyright ROI
In summary, the revenue that publishers can earn from copyright licensing "depends" entirely upon factors that are within their control. Copyright licensing augments revenue from advertising, subscriptions, and pay-per-use. If implemented properly, it can generate significant revenue on its own, while helping to attract new readers. By its nature, a copyright license is designed to let one user share the content with other users. Those users become exposed to the publisher's brand and website. When the lifetime value of a new reader or subscriber is factored in, the return on investment from copyright licensing should make it a high priority among all publishers.
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