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Oct 25, 2000
How To

ContentBiz.com's Guide to the Internet's Multi-Million Dollar, Custom, Original Content Opportunity

SUMMARY: No summary available.
SPECIAL REPORT

1) Intro: What is custom original content?
2) How big is the opportunity?
3) Marketing and pricing tips
4) Player listing with links

*****
INTRO
*****

A few weeks ago our own publisher was moderating a panel at Qpass' Digital Boot Camp for publishers when she made a brief off-the-cuff remark that custom content was a growing field to watch in the online publishing business. Afterwards she was surprised when more than half a dozen publishing execs cornered her to ask for more details on this topic.

Then the story got picked up in the general publishing press (thanks Steve Outing of Content Exchange!) and dozens more queries poured in from publishers, freelance writers and even prospective custom original content buyers. Obviously this is a topic a lot of people want to know more about. So we decided to research and write this special report for you.


* What's "Custom Original Content"?

The term "custom content" originally came from the magazine publishing world (in fact the Magazine Publishers of America association has a Custom Publishing Council -- more later.) These print publishers coined it to describe content products which were "custom made" (or you could say "tailor made") for a particular client. Many print publishers found this so profitable that they started custom content divisions to run and manage this end of the business. These divisions create magazines, newsletters and even books written and printed to their clients' specifications. These clients are organizations who need content to communicate with their customers, partners and staff more effectively -- but they don't want to hire on a full-time publishing staff to create it. Associations, utility companies, healthcare organizations and financial institutions are all major traditional custom content customers. The custom content industry is now estimated to make sales in excess of $1 billion per year.

You may be confused by the term "custom content" because over the past decade, it's taken second, different definition. Computer technology, the corporate enterprise sales market and the Internet have created a new type of custom content -- that is already existing content which is repurposed to serve another need. For example, some people would say Individual.com (which emails subscribers recently published news articles selected to fit subscribers' interests) is a custom content company.

That's why for the purposes of this report, we've come up with a new term: custom original content.

By "custom original content" we mean brand new content which has been custom created according to the buyers' specifications. Please note for the purposes of this report, when we use the word "content" we are referring mainly to textually based information and not other media such as streaming video or audio.


*****
How Big is the Opportunity?
*****

What prompted our publisher to say she believed the custom original content marketplace was well worth investigating? The Internet has created growth opportunities in four key ways:

1. Organizations need content for their Web sites, intranets and extranets.

2. Web sites need email newsletters to drive repeat traffic and increase loyalty.

3. Then, these Web sites need fresh content to keep repeat visitors interested and informed.

4. Also, marketers are finding that they can raise sales by taking advantage of the online information revolution -- by planting advertorial and/or sponsored feature articles and white papers on 3rd party Web sites potential customers visit for research and news.

Small wonder then, that experts say there's an emerging boom in the custom original content industry.

Steve Smith, Senior Editor of MIN's New Media Report, who's been analyzing the online content industry for more than three years told us, "The opportunities are actually extraordinary, especially in business to business. Most magazine publishers were doing it before the Web came along as special printed advertorial supplements. Now with online custom publishing and sponsorships a number of sites are incorporating ads into the product in ways that were unheard of in the print form." Smith adds, "Most advertisers say they're tired of just getting a rate card of spaces you can buy." With the bad rap banner ads are getting these days (perhaps undeservedly), this is very understandable.

Custom content specialist Jim Offel of Diablo Publications says, "Virtually every company from the Fortune 500 down is revamping its Web site to rise to the challenge of delivering more and better content to their customers. Syndicated content is an important and cost-effective component to an overall content solution, but it's not the whole solution. Companies seeking to create deeper relationships with their customers will have to customize content to their customer groups." He adds, "When I go to a Web site I judge it by the unique content I can't get anywhere else."

This trend has affected Leslie O'Flahavan, Co-Founder of e-Write, who has seen demand for her company's services rise steadily since 1996. She told us, "At the beginning people would say 'Why would I need an outside writer?' Then it changed to, 'Can you fix my print materials into a format that's good for my Web site?' Now people are asking, 'Can you give us fresh content for the site and our email newsletter every month?'"


* Why don't companies create their own content in-house?

Most do. In fact according to white paper syndicator bitpipe's CEO Jay Habegger, "Most white papers are created in-house. Only a fraction are created by 3rd parties for
companies." As advertorial projects such as white papers grow in popularity though, those in-house writers are having a hard time keeping up with demand. Habegger says, "We are often asked for recommendations of companies who can do custom white papers. In fact I'd like more companies on tap to refer people to."

O'Flahavan explains why so many organizations are beginning to seek outside content solutions, "There's a growing awareness that writing for the screen is different than for print. For example, we see a lot of people who are asked to put their eight-page print employee newsletter online. But they have no idea how to alter it or how to get people to read it online. It gets lost in the vast wasteland of an intranet.

"The second reason business is growing is that by its nature a Web site is a black hole of effort. There's no amount of effort it won't consume. It will always take way more time and work than you have. So people realize, 'If we're going to continue to do our business online, we'll need to find someone else who will write the content for this site!'"

This explains why, as Christopher McMurry, COO of McMurry Publishing, says, "Demand is outstripping supply. We find most businesses are simply looking for someone, anyone, to help them develop and deliver e-pubs."

Survey results gathered from corporate America by McMurry's Publications Management newsletter reflect substantial demand for custom e-content. McMurry says results suggest "there are about 6,900 custom e-pubs in circulation presently compared to about 1,900 the year before."


* Who's going to make real money with original custom content?

Merry Bruns who's been producing content-rich Web sites for such clients as the NIH and many large associations since January 1995 says, "You're never going to get rich being a freelance writer for Web sites. There's a joke amongst freelancers: How can you make real money as a writer? Marry rich."

Bruns explains that writing content is only part of the opportunity, "Clients need a nanny, a producer. You have to sit down with the organization's leaders and discuss the drive and the focus of the company, and then what their audience's needs are. I explain the Web is different from their marketing brochures and traditional media -- it's an audience driven medium. They look at me and nod their heads and I know they don't know what I'm talking about. Why should they? It's not their business! It's your job to know this in your gut."

"So," she continues, "there's so much more than just saying 'I'm going to write content for your site.' You have to understand what the user is supposed to do when they arrive at this site. The strategizing goes on far ahead of putting pen to paper. But, a lot of writers just want to write."

Marketing skills also play a factor. Stacy Small President of TheWriteCrowd.com an original custom content firm that utilizes the services of many freelancers, says, "I'm amazed at the high caliber of the writers who are not good marketers. They want to focus on writing and would just as soon have someone like me go out and get Business."

But even if a freelancer has that rare combination of talents

-- great marketing skills and the ability to act as an online content strategist -- their opportunities are still limited due to time constraints. A single person can only take on so much business by himself or herself.

Therefore big money opportunities lie with larger organizations. Three distinct types have emerged in the past year or so:

1) Online divisions of traditional print custom content providers including Hearst, Media South, Custom Communications, McMurry Publishing, Imagination Publishing,
Diablo Publications, Washington News Bureau, Magnificent Publications and many others. These tend to have an edge on the market as they grow relationships with Current print clients into online relationships. However, in some cases (though by no means all) their online products suffer from the lack of a gut-level understanding of the Internet. We expect this to change dramatically over the next year or two.

2) New start-ups often founded by Web-savvy executives from the traditional publishing world who saw an immediate opportunity to grow quickly while their old companies are still adjusting to the Internet. These include TheWriteCrowd.com, Grist Online, StickyContent.co.uk, Texture Media, ContentGenerators.com and many more. Oddly, there seem to be more of these based in the UK than in the USA or elsewhere. These "pure-play" web content companies are hampered by a lack of up-front funding as most Web investors are shy of the content world while traditional media investors are still a bit wary of the Web. However entrepreneurial enthusiasm, and a rapidly growing marketplace can make up for this. We expect these players to be prime acquisition targets for both traditional publishing companies and online content syndicators within a year to 18 months.

3) Hundreds of content-rich Web sites and email newsletter publishers ranging from BetterGolf.net to Women.com which offer advertisers a range of custom content opportunities within their sponsorship model. These can include fully-sponsored mini-sites or special site sections, advertorial emailed supplements and other custom-built, co-branded editorial features. We (along with the rest of the online advertising journalists in the world) expect this trend to continue growing rapidly as advertisers demand "something beyond a banner."

Interestingly, many of these sites are themselves overwhelmed by the work involved in constantly creating fresh content. Therefore, while they are by no means the largest market for original custom content developers (that distinction belongs to corporate America), they are a growing one.


* How much room is there for big players in this industry?

Experts' opinions vary. Many see this as a space for small consultancies only. Lane Cooper President of Washington News Bureau, a custom white paper developer, says, "Right now it's extremely stratified with lots of little niches. I'm not saying that the market won't consolidate, but it would be difficult to manage. There would be some pretty serious challenges."

Andrew Rogerson who left large B-to-B publisher The Economist Intelligence Unit to co-found custom content provider Grist Online agrees, "It would be difficult for any big company to replicate the requisite experience throughout their workforce that a smaller consultancy like Grist offers."

Amy Bowman, marketer for the boutique-sized, custom content shop Magnificent Publications, disagrees, "There's definitely room for a big company who could use clout and educational programs to show how valuable Web content writing is. A big business could do very well in this market."

Michael Hurley, Director of Hearst Custom Marketing is counting on Bowman's prediction being right on the money. He says, "Hearst Custom Marketing is not looking to remain a small business. I think that this will be something that small businesses will identify more clearly, and then bigger suppliers will move in for part of the action." He notes that this is, "the same as the [way the traditional] custom publishing market developed. We are looking very closely at this business as one that may contribute in a big way to our $20 million+ billing."

*****
Marketing and Pricing Tips
*****

At this point in time marketing shouldn't be a serious challenge for any company with an even moderately aggressive business development leader. In fact many of the companies we contacted for this report noted that they are currently inundated with sales from word-of-mouth referrals and personal networking.

TheWriteCrowd.com's Small exclaims, 'I didn't have to go looking for clients. They found me! There is so much business out there. Once people hear what I'm doing they realize they need it. It's a huge referral business."

One of the best ways to get the word out to new prospective clients is by seeking referrals from public relations firms who are often called on for resources by their clients.

Another great way to market services is by providing educational services, such as online writing seminars, to corporate communicators. O'Flahavan says, "A lot of times people come up to us and say 'This is a great class, can you help me do what we're learning today to my site?'" Even a quick speaking gig at a professional luncheon or Conference on corporate communications can reap big rewards.

Many traditionally print-centric custom publishers told us they are having an easy time convincing their clients to expand online. Media South's President Barbara Penland has seen 50% of her business move online. She says, "Our clients on the Web are fairly big companies who are beginning to understand communication is a multifaceted thing."

James Meyers, President of Imagination Publishing has seen what he calls "significant growth electronic custom publishing over the past year." The company has been called on to provide Web site content and regular "webzines" for large clients including Merrill Lynch, Motorola, Wells Fargo, GE Capital and others.

While Robert George, CEO of Custom Communications notes, "Print publishing is still 80% of our business at the end of the day, " he adds, "We tend to get contracts with Fortune 500 companies we wouldn't get if we didn't also offer Web content."

Once a company makes a jump to an outside original online content supplier, they usually come back for more. Washington News Bureau's Lane Cooper says, "There's a lot of repeat business. About 85% is repeat."


* How much can you charge for content?

Pricing is a tricky issue in this industry. On one hand demand for original custom content exceeds supply. On the other hand many executives responsible for purchasing it think content should be fairly cheap because it's so "easy" -- after all they write things themselves every day! e-Write's Leslie O'Flahavan says, "A lot of times people purchasing professionally written content services don't have any idea what it costs."

TheWriteCrowd.com's Small agrees, "Although most companies have a fairly substantial budget, a lot of them think they can get away with getting really cheap. They say, 'It's too high, we'll do it in-house.' Later I look at what they've done and it would have been well worth their while to spend only a bit extra to have a professional do it. The results would have far outweighed the costs!" She adds, "Good content is not cheap and it shouldn't be. It's more efficient and effective to outsource it. It's hard to get good in-house writers. People often initially think they can, but it's not the case."

All publishers agree that there's more than enough market demand to justify walking away when a prospective client balks at a reasonable price. Small says, "If they're not willing to pay what I feel the project is worth then it's usually not worth doing business with them."

So how do you price custom content? Few companies were willing to commit themselves on the record, partially because so many factors weigh into the final price, Including:

- the amount of research required,

- the page-length or word count,

- the quality of previously-created content the client brings to the table,

- how many levels of client-side review the content will undergo,

- who retains ownership of copyright (note: in most cases, if the author retains ownership the deal is for content syndication rights and not a custom publishing deal per say),

- and, how much strategic and Web design consulting is required in addition to content creation.

However, it's our considered estimate that custom online content ranges from 75 cents to $1.50 per word or higher. Some clients prefer to pay by the hour. In this case, charges can range from a low of $80 per hour to a high of more than double that amount.

Custom publishers usually negotiate fixed monthly costs for creating ongoing projects such as regular email newsletters. While in the past some were willing to consider revenue-sharing options instead of payment, this contingent is rapidly dwindling as rumors of dot com bill-paying delinquencies spread. Like most Internet-related contractors these days, original custom content publishers prefer cash-in-hand to dreams of potential riches.


*****
Links & Resources List
*****

Please note: this is by no means a complete or comprehensive list of all the companies or resources in this marketplace. Instead, it's a rough cross-section representing the types of publishers and service providers that can be found in the industry.

bitpipe
An online marketing service provider which syndicates hotlinked summaries of IT companies white papers to major IT news and research sites
http://www.bitpipe.com


Content Exchange
An online marketplace for freelance writing talent. Publishes Content Spotlight, a free email newsletter for publishers and writers interested in online publishing
http://www.content-exchange.com


ContentBiz.com
The weekly, free, email newsletter and resource Web site from MarketingSherpa for publishers, syndicators and content marketers wishing to grow online profits. The publisher of this special report.
http://www.contentbiz.com


ContentGenerators.com
A UK-based company providing Web sites with custom original news, commentary and features
http://www.contentgenerators.com


Custom Communications
A custom publisher serving the print and online needs of Fortune 500 companies
http://www.customcommunications.com


Custom Publishing Council
A division of the Magazine Publishers of America association.
http://www.magazine.org/custompublishing/index.html


Diablo Custom Publishing
Build custom print, digital and integrated publishing solutions for a very diverse client base including Prudential, American Cancer Society and Pets.com.
http://www.diablocustom.com


e-Write
A Washington DC area company providing Web writing skills instruction to corporate communicators, as well as custom original content services
http://www.ewriteonline.com


Grist Online
A UK-based custom content start-up specializing in creating content that furthers clients' ecommerce objectives
http://www.gristonline.com


Hearst Custom Marketing
A $20 million+ division of the Hearst Corporation
http://www.hearst.com


Imagination Publishing
Create Web site content and regular "webzines" for major financial institutions
http://www.imaginepub.com


McMurry Publishing
One of the oldest and largest custom publishers in the USA Also publishes the print newsletter, Publications Management
http://www.mcmurry.com


Magnificent Publications
Serve print and online content needs of mainly associations and other not-for-profit organizations
http://www.magpub.com


MarketingSherpa.com
The publisher of ContentBiz.com -- which is the author of this special report! Publishes six online news channels for marketing and advertising professionals.
http://www.marketingsherpa.com


Media South
Create print and Web-based content for corporate communicators reaching the consumer marketplace
http://www.mediasouth.net


Merry Bruns
Independent Web content editor, producer and instructor
http://www.sciencesitescom.com


MIN's New Media Report
A biweekly, for-fee, print newsletter covering the magazine publishing industry as it moves online.
http://www.minonline.com/


StickyContent.co.uk
A UK-based start-up offering custom original content ranging from feature articles to quizzes for clients' Web sites
http://www.stickycontent.co.uk


Texture Media, Inc
Create innovative content in the outdoor/action sports, adventure travel and health & fitness marketplaces
http://www.texturemedia.com


TheWriteCrowd.com
A custom original content developer specializing in travel and hospitality topics
http://www.thewritecrowd.com


Washington News Bureau
Specialize in high tech industry white papers and trade show dailies which are often distributed online
http://www.washbureau.com

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