Scott Gray

O’Reilly is at the Forefront of publishing Walking the walk on digital publishing. Experiments in every facet Trying many different business models Measure everything

History of Digital Content at O’Reilly 1993 – First commercial website. GNN – Global Network Navigator (first commercial web browser). Safari Books Online – partnership with Pearson (2003)

More history 2005 – Purchased “Useractive, inc.” elearning company. 2005 – Started selling PDFs of books. 2005 – Rough cuts. Preprints in PDFs. 2006 – Short Cuts PDFs.

Even more: Ebooks, Mobi, epub, kindell, iphone apps – 2009/2010 Ebooks finally take off in 2010

In the mean time Print business has been declining

Questions remain: Is the rate of increase of ebooks enough to offset decline in print? Is this a new format bump? i.e. is this increase due to re-cataloging by customers? Will new distribution channels be enough to take up the slack when old reliable channels fade? Will long tail sales be enough to keep authors happy? New model here?

Music business is a warning

Analogy: B to C Online market = Serengeti plain Different body types evolved to take advantage of different opportunities

Review of Publishing Business

Sales curves for individual books Not such a bad thing: Shows Market saturation

Google is a herd of Wildebeast

Arguments for digital content It’s what users want. Users consume smaller chunks. Higher profit margin (no printing and shipping) Faster to market. Remix and mash up inventory. Compete with Google

Big numbers online!

O’Reilly has been out exploring the Serengeti with different species (different kinds of business Models)

O’REILLY statistics via SiteCatalyst ROI, conversion ratios, revenue, and traffic analysis.

Online Business Models (ways to collect revenue) Advertising E-Commerce (pay per view) Subscriptions (all you can eat)

Advertising (lifted from Tim) Building a $10 million dollar division. At the $5 CPM level achieved by demographically targeted sites, you need 166 million page views/month. (2 billion/yr.) At the $1 CPM level achieved by most general sites, you need 4 billion page views/month. At the $20 CPM level achieved by highly targeted sites, you still need 40 million page views/month. (480,000,000 pg views/yr)

Video Ads (lifted from Nat’s Radar post) 15 cents per video 15 cent cost 67,000,000 downloads per year to get $10M

See Tim’s “Free is more complicated than you think” talk… “Follow the Money”

Revenue = P*C*N P = Price C = Conversion Rate N = Number of Visitors E-Commerce Revenue = P*C*N P = Price C = Conversion Rate N = Number of Visitors C = is virtually the same, and relatively independent of P across types. N = is less for High P

Higher Returns Revenue = P*C*N Lower Returns

The short head Vs. the long tail for digital content. These graphs Don’t intersect!

Let’s do some Math ( Goal $10M) Suppose you’re conversion rate on your own site is 1% (ours is currently .7% which is a new online record for us) $4.00 @ 1% needs 250 million visits/yr $10 @ 1% needs 100,000,000 visits/yr $30 @ 1% needs 34,000,000 visits/yr

$400 @ .5% needs 5 million visits/yr Let’s do some math (Goal $10M) suppose it’s half (.5%) for higher priced products $400 @ .5% needs 5 million visits/yr $750 @ .5% needs 2.7 million visits/yr $1250 @ .5% needs 1.6 visits/yr (our conferences do about 1% actually) $10,000 @ .1% needs only needs 1,000,000 Visitors to make $100,000,000 (online accredited schools)

Subscription Model (raises P) Periodical (Make magazine) Physical units lifestyle support All you can eat (Safari) Digital Bigger the better Community

Can we go from free to subscription? Sports sites for example

Other Advantages of premium online Increases customer acquisition power Marketing Power Adwords (some words @ $60 per click!) Advertizing in general Affiliate programs Higher ROI

Most of the nutrient rich food for B to C publishers is up high in the trees.

Ways to increase P (premium business) Charge More (IDC, O’Reilly Reports) Add a combination of other products and services (Conferences, OST) Subscriptions (Safari, Make) P*C*N

Online School offering courses and certificate programs in Information Technology and Systems. In partnership with

How we add value to a digital product

Some examples of how different the business models in elearning can be: Skillsoft – 6,000,000 users @ $40/user (hr managers choose) Capella – 16,000 users @ $16,000/user. (end users choose) Same size of businesses.

Go online, but don’t forget about the giraffes

Be Patient, it takes a while to grow premium business

Beyond ebooks = Maker Cubes Show us cool stuff, Scott!