(This is article 1 in a series on “Challenges with internet publishing”)

Coming up with a sustainable and profitable business model is the number one issue publishers face when considering internet publishing. It is usually the first question I’m asked when I talk about internet publishing with authors, editors, and other publishers. “How will I make money?”

A variety of models have been used online, but none have been attractive enough to allow the big publishers to turn their attention away from print. Some publishers are experimenting with variations on their existing business models where they try to take advantage of the internet, but I don’t think they are going far enough. It is going to take some creative thinking and a few home run swings to find a model (or models) that work for publishers, authors, and consumers. Some of the swings will miss badly, which is why you don’t see the existing firms experimenting much. They have a lot at stake. It will be up to the smaller publishers who have much more freedom to try different ideas.

The challenge is that the internet has fostered an environment where information is free flowing and openness is encouraged. As a result, you can find an enormous amount of quality content online for free. In the print world, your competition sat on the same shelf as you. Now, publishers are competing with the entire internet. You can get a vast amount of information via personal web pages, free content websites, and blogs. Often the quality provided by these sites is “good enough”. To charge for online content, you have to offer something you can’t get for free. But not only that, you need to offer something that is substantially better than what you can get for free.

There is a dichotomy between content in the physical world and online world. What you can get away with charging $49.99 in B&N for 1 copy, you’d be lucky to earn $100/month in AdSense revenue with 500 visitors a day for the same content. Expectations are different on the internet. The bar has been raised and in a big way.

There are several internet publishing business models in use today. In a future article I’m going to cover the pros and cons of each model, but they include:

Free
Give the content away for free and upsell other services such as consulting or training. Giving content away can also help establish and build a brand which you can later use to sell content/services/products. Obviously this isn’t very attractive if your primary focus is publishing content.

Subscription
A reoccurring income stream generally offered on a monthly or yearly renewal cycle. With some subscriptions, access to the entire content base is allowed while in other cases, credits are accrued each month that can be applied toward a subset of content.

Ads
Virtually all internet publishers in existence today use some form of advertising as a source of revenue. It is very easy to implement ads and it costs the user nothing. That’s not exactly true because studies have shown there is a mental payment incurred as users attempt to scan over ads. Ultimately, ads can be a good supplemental income stream, but in only a few situations can it be a viable standalone model.

Sponsored
Sites like Realtimepublishers.com and more recently WindowsITPro.com have started publishing topical ebooks that are sponsored by one or more vendors. This is really another form of advertising as the vendors get their name associated with a book on a topic that is related to their business.

Unit
Pay per unit of content, such as a book or a magazine, is the standard print publishing model. Many publishers offer electronic versions of their books at a greatly discounted price. Pay per page and per chapter are models that companies like Amazon and Google are evaluating.

Earn
With this model, a user has to contribute, rate, tag, or review content in order to earn credits that can be applied toward the access of future content. I’m not aware of a site on the net that uses this as its primary model, but some have used it to help establish a community (e.g., Experts-Exchange.com and Epinions.com).

There are variations on these models, but this list captures the main ones I’m familiar with. Most internet publishers will use a combination of these to obtain multiple income streams. I’m spending a lot of time thinking of creative spins on these models. There are a few that I’ve come up with that have potential…..to either succeed brilliantly or fall miserably. It is hard to know until they tried in the wild.