Jul 11, 2001
SUMMARY: If you've ever wondered how much publishers are making by syndicating their content, click on the link below. 154 publishers and 37 syndicators (such as ScreamingMedia) revealed all in this June survey -- including revenue figures and what they secretly loathe about each other. (It's highly instructive, and just plain fun to read the complaints!) This exclusive report is about eight pages long, so you may want to print it out before you read it. || |
Last year at about this time, syndication was the hot topic in the content industry. ScreamingMedia was about to go public, iSyndicate was lining up speakers to proclaim the joys of syndication at its third annual summit that fall, and Factiva had just celebrated its first anniversary. Plus, most of the publishers we spoke to back then were excited about doing their own one-on-one deals with Web sites.
Then things began to sour. Publishers who'd been hoping for a silver bullet got disenchanted with the reality of syndication income. Online ad sales were down so Web sites couldn't buy as much content. Newbies learned selling to the corporate enterprise took a harder and longer sales cycle than expected. And everyone's eyes turned to other income streams to save the day (most notably, subscriptions.)
However, nowadays most people in the content industry are waking up to the fact that there is no silver bullet. No single magical, easy, revenue stream for a successful content company. Profitable business models are a patchwork of many different revenue streams, including ancillary products, ad and sponsorship income, single article micropayments, subscriptions, affiliate income ... and yes, syndication and licensing fees.
In June 2001, MarketingSherpa surveyed its readership, using two separate surveys (one for publishers and one for syndicators) to learn exactly how much publishers are really making from syndication, what their expectations are for the next 12 months, and how syndicators and publishers can work together better. The results were fascinating, and in some cases surprising even to us!
Below you'll find a summarized report on the results.
Please note: throughout the following, we use the word "syndication" in a global sense to indicate all forms of content reselling for the purpose of publication, including licensing, cobranding, redistribution, 3rd party aggregation for resale, etc.
PART 1: Publishers & Content Owners Survey Results
154 publishers and content owners answered our 10-question online survey. They were roughly divided between 54% niche publishers of B-to-B , technical, professional and scholarly content, and 46% general interest publishers of daily news, current financial and consumer feature content.
We expected the answers of these two groups would substantially diverge. THEY DID NOT. In fact different types of content publishers were remarkable for the uniformity of their answers to almost all questions.
- Working with 3rd Party Syndicators
One might expect the readers of MarketingSherpa (which frequently covers making money through syndication deals) who responded to a survey on syndication might be highly likely to have deals in place with well-known syndicators. This was not the case.
Although more than 66% of ContentBiz readers are from publishing companies with more than 10 employees (and 21% are from "household name" companies), only 24% of survey respondents were working with online syndicators such as ScreamingMedia, just 16% had deals with corporate enterprise sellers such as Factiva; and a measly 10% were working with educational and library resellers such as Gale Group. A total of 59% of respondents said they weren't working with any 3rd party syndicators whatsoever!
These figures held roughly true no matter what type of content respondents published -- from general daily news to scholarly journals.
To us this indicates a tremendous opportunity for the syndication industry. However, the industry is notable for its lack of publisher recruitment efforts. In general unless you're very famous name-brand publisher, the onus is on you to hunt down and harass syndicators until they agree to a deal. Is this because syndicators don't see a marketplace that's particularly hungry for more varieties of content? Or, is this because syndicators don't know how to market additional content properly?
The majority of publishers voicing their biggest complaint about working with 3rd party syndicators definitely felt the latter was true. 54% of respondents complained that syndicators are focusing on easy low-hanging fruit -- selling general content cheaply to whoever will take it -- rather than valuing and marketing content as publishers feel it's worth. Sample complaints:
"Really don't care what content is worth. They act like used car salesmen."
"There is a lot of great publishers and content out on the Internet. I believe they don't have enough people exploring new business developments, instead they are focusing on what they currently can distribute."
"Pompous rude sales people who don't 'get' the value of our content and don't return calls."
"They do little or nothing to promote our content to the appropriate audience."
"Bad splits, not great volume."
"The salesforces for the big syndicators seem to only deal with the quick and easy 'brand' names. No one is interested in taking time to develop a 'farm' group of up and coming compelling content providers."
"They are diluting our content. They are commoditizing on our niche content and do not value it as much as they should."
"Royalties too low. Inappropriate weighting of our material along with PR Newswire for example."
"Do not go out of their way to get me business."
"Not premium news, everyone has it."
"They depress price of product; don't make buyer aware of value of branded content."
The other complaints publishers had concerning syndicators were as follows:
- 14% worried about control over their content's final destination. Typical comments were, "Can't track what their clients do with our content. Some resell against contract and we can't track that." "Tracking sublicensing of content." "When syndicators sell to other syndicators. We lose the opportunity to sell to them direct and the revenue is split so many times that we don't make any money. We also fear losing control with larger syndicators. They don't provide accurate information about exactly who gets our content."
- 11% voiced a dislike of syndicators' publisher-relations, saying "They are slow to respond", "Time it takes them to pay", "Most of them think they are doing you a favor and have little, if any, knowledge of the importance of customer relationships," and "Very slow in replying to all communications. Not up front in negotiations and move the goal posts whenever possible. Go bust or people leave without handing over your case!"
- 10% were under-whelmed with syndicators' technology. "Delivery format", "Technical integration", "Slowness of their servers," "Slow implementation," and "Unreliability" were all cited.
- Other comments included fears of brand dilution.
Given those feelings, no wonder only 4% of respondents relied 100% on 3rd parties to bring in syndication revenues. In fact out of the four major methods we listed to make syndication sales, 3rd party syndicators ranked third in terms of cash receipts for publishers.
- The Breakdown in Content Syndication Revenues
We asked publishers to name the percent of their syndication revenues they got from each of the four main syndication methods. Their answers:
1. 77 generated revenues from ongoing cash-for-content deals they themselves had negotiated directly with the end user. Of these 51% relied on this method for 50-100% of their syndication revenues.
2. 49 sold single-article re-use rights (such as iCopyright deals.) This was not an enormous revenue stream for most - 77% who used it said it accounted for less than 30% of their syndication revenues.
3. 47 of respondents to this question sold through 3rd party syndicators. Again hardly anyone made much money this way, 66% who used them said they accounted for less than 30% of total syndication revenues.
4. 42 publishers admitted to receiving cash through advertising or affiliate revenues made on their content appearing on 3rd party Web sites. However, 79% of these received less than 30% of their syndication revenue this way.
We also asked what percent of their total overall revenues did publishers receive from syndication specifically. 47% of respondents said they currently had zero syndication revenues -- however many of these added comments such as "Not yet anyway" that lead us to believe syndication is definitely on their horizon.
The remaining publishers who are making money from syndication broke down into the following groups:
1. 51% make 10% or less of their overall revenues from syndication. Of these roughly 1/3 were at 1%, 1/3 were at 5% and 1/3 were at 10%.
2. 28% make 11-49% of their overall revenues from syndication. The average for this group was 23% of revenues.
3. 13% make 50-79% of overall revenues from syndication. The average for this group was 65%.
4. 8% made 80-100% of their revenues from syndication. The average for this group was 90%.
- Publishers' Sales Predictions for the Next 12 Months
Most publishers were moderately optimistic about the next 12 months syndication revenues. 43% believed their revenues would stay about the same or rise by less than 10%. 19% hope for a 10-25% rise in syndication revenues. 20% expected substantial gains of more than 25% ... and a solid 16% think their revenues will skyrocket by more than 50%. A measly 2% think they'll make less on syndication this year than they made last year.
Where will the gains come from? Many respondents told us they are definitely planning to start syndicating in new ways over the next 12 months, including (Note: these numbers are in addition to the publishers already syndicating in the formats below):
28% - content to appear in email newsletters
26% - e-content to appear in print publications
25% - single article re-use rights
24% - text-content with graphic components
22% - content to appear on wireless platforms
BTW: Unfortunately for the hopes of technology sellers, of the respondents who had their technology budgets set forth already, 44% are not planning on spending any money on syndication-related technology in the next year, and 18% are planning to spend under $5000. The remaining 36% trickled in at various amounts mainly around $7,500 and $35,000. And just over 2% have a budget in the low-six figures.
PART II: Syndicators' Survey Results
37 third party syndicator employees answered this 10-question online survey. (We suspect there was some overlap with several staffers from the same company answering, but because the survey was anonymous we can't say how much overlap there was for sure.)
They represented a good spread of interests. Syndicators carrying all types of content were pretty evenly included. For example, 65% said they carry technical and scholarly content, and 68% carry newsfeeds.
Very few relied on a single marketplace such as Web sites or corporate enterprises for 100% of their income. It seems syndicators are learning to spread their revenue streams out too. However, only 36% made revenues from print syndication (and even then it represented a slender portion of their total income) and just 24% sold advertising against content distributed online.
- The Reality of Publisher Relations
Syndicators answering the survey who share proceeds with publishers (some headlines-only distributors do not) claimed to share an average of 44% of their total revenues with publishers.
In terms of hard cash per publisher, this amount greatly varied. As one syndicator said, "Huge range $200 to $50,000." The majority said the average size of a publisher's monthly income from them would be around $1000. A few said that monthly income would be around $10,000. The average was $3,150.
68% send out checks every month, 32% pay by the quarter.
83% of syndicators said it takes less than 60 days from the date the contract is signed for a publisher's content to begin being distributed by their system. (We suspect the Web-based syndicators may have weighted the scales on this answer, because some of the more traditional content distributors are infamous for taking longer.)
Plus, 66% of syndicators said publishers could realistically expect to receive their first royalty check within 60 days or less of the date their content started being distributed in the system. Not bad - but we fear overly optimistic. (For example MarketingSherpa itself just received its first check from a major online syndicator that began distributing it 140 days ago.)
Yes, we also gave syndicators the chance to complain in their turn about publishers. Their most common problems when working with content owners were:
55% of problems arise over the financial terms of the deal. Most syndicators believe this is because publishers just don't understand the costs or the reality of pricing for a syndication business model. "Explaining costs involved in implementation and syndication", "Lack of knowledge about digital syndication." "Understanding our exact business model." "Making licensing deals work for both of us."
Some syndicators were simply fed up with what they perceived as content owners over-inflated prices. "Little 'product' sensibility - believe their content is manna from heaven and is priceless. Don't seem willing or able to accept that they are in a business." "They want too much money to license it. It's difficult to set up relationships." "Unrealistic sales expectations in too short a time frame." "Ego."
One syndicator complained about the opposite, "Publishers selling content at a lower prices than syndicator does."
Technology was the next problem after pricing. A full 26% of syndicators had problems with publishers' technical capabilities or set-ups. "Do not have an effective content management system in place. No organization." "Data conversion issues." "Compatibility issues."
The remaining 19% of problems included several worries about control, "They are too controlling over their content", and rights management, "Knowing who has the real rights to content.
It's interesting to note, nobody complained about not being able to locate good content, reach publishers, or a lack of available content.
- Syndicators Revenue Predictions for the Next 12 Months
Syndicators are also moderately optimistic about growth over the next 12 months. A full 59% do not expect content prices to rise at all. In fact 11% think they'll fall.
Everyone pretty much uniformly is distaining last year's great white hope -- sales to Web sites and email newsletters -- in favor of this year's -- sales to corporate and government enterprises and intranets. 49% expect to see the most revenue growth in enterprise sales, while only 8% are hoping to grow sales to Web sites in a big way. Absolutely nobody thinks libraries are a growing market. However 12% of respondents are hoping technology products and services will be their area of greatest gain.
44% of syndicators predicted market demand will grow fastest for wireless content in the next 12 months. 36% saw text-based content still running strong, and 34% were gung ho for video. The loser? Just 14% of respondents said demand would grow fairly rapidly for graphics such as cartoons and photos.
CONCLUSION: New Opportunities in a Slowing Marketplace
It's obvious that both publishers and syndicators believe the other side desperately needs educating about business models, pricing, marketing, and value. Instead of yet another conference with pundits droning on, we'd like to see somebody put together a content syndication university. Professors would carefully explain each side's points to the other, and then help them play more profitably.
There's clearly a bigger opportunity than either side can have working alone. Publishers have a wealth of experience in how to position, package and market content for the highest possible price in their niche. Syndicators have superior technical know-how and a far broader market view.
In addition, it's also obvious that the publishers who are investing in an in-house staff (or expert consultant) to specialize in doing their own one-to-one content licensing deals are the real winners. Content is just like advertising -- relying on an outside rep to sell all your ads is never the way to go. The problem lies in figuring out exactly how much content inventory you need in order to make investing in an in-house person (or consultant) worth while.
We suspect there's also a substantial opportunity for niche publishers to band together. If your content is too niche or too infrequent (i.e. less than 10-20 stories a day) to appeal to syndicators, and you're too small to hire a licensing specialist in-house, perhaps you should reach out to some of your competitors to form a bigger entity in order to sell effectively. Yes, technical and political hurdles could be major, but so could profits.