imageZuora, the provider of billing components for SaaS companies (review here), is about to lift the lid on it’s latest offering – providing billing and subscription services to media companies. Yes you heard it right, newspapers, those venerable and (if you believe the hype) mortally wounded organizations that have been selling their wares by subscription for the past few centuries, will be saved by a two year old technology start-up. It’s not however as crazy as it seems, read on.

Zuora already provides the billing functionality for a bunch of organizations – GigaOmPro, Boomi, box.net, LiveOffice, Marketo and many others. It wants to extend this offering (flexible, customizable and above all easily integratable billing) outside of software vendors.

Zuora has identified three main factors causing the demise of print media;

  • Rapidly reducing circulation numbers
  • Rapidly decreasing print and classified advertising revenue
  • An outdated, and resource hungry delivery methodology

None of which is at all new of course – for years traditional media has been struggling with how to “get online” in a way that is easy, drives some revenue and doesn’t destroy their existing subscriber base. Many traditional media sources are putting their content behind a paywall, and suffering the obvious problems that arise from that – reduced visibility and searchability.

I asked Tien Tzuo, Founder of Zuora his thoughts around the searchability issue, that is the problems putting content behind a paywall. He pointed out some existing solutions that attempt to solve this conundrum, the Wall Street Journal showing headlines and first paragraphs or FT.com allowing crawling and the first ten articles to be viewed for free – neither of these examples completely address the core issue, but it’s a rapidly moving target and the next year or two should see much more clarity around this issue.

It’s into this breach that Zuora marches, hoping to provide another way for publishers. The thinking goes that any one solution isn’t the correct solution – traditional media companies need to be able combinations of subscriptions, micropayments, advertising, usage based and free. Zuora’s product, Z-Commerce for media, combines their standard billing/subscription offerings and adds to it access controls to allow organizations to set entitlements (for example this content item is free, this one shows a public preview, this one is subscription only), map their content and authenticate users.

zcm

I like the idea of easily and quickly enabling revenue generation for traditional media companies, but put it to Tien that an even better solution would be to run all of the revenue operations on the Zuora platform – subscriptions, classifieds, inline advertising etc. Tien’s response to this was that Zuora have done some proof of concepts around this area, but their perception is that these are different customer segments. Tien commented that they’d love to run all the subscriptions for media companies, both online and off, but that;

Z-Commerce for Media is focused on readers – consumers who subscribe to content they want to read. Classifieds and ads are targeted at advertisers, which is a completely different group.  In the offline world, these systems are different, and it’s not clear that they need to be the same systems in the online world.

Of course Zuora’s product does little (and cannot do much to be fair) to change the existing paradigm – that is resource hungry media, with massive sunk costs, demanding stakeholders and a wildly inefficient editorial model – that’s a huge hump to get over and one that Zuora can hardly be expected to be in a position to solve.

Zuora contends nonetheless, that there is significant value to consumers (and by extension revenue for media companies) by providing highly tailored news content to individual. The thinking goes that by enabling highly customized news to be delivered when and where a customer wants it, by allowing mash-ups between different media companies, and by providing the utmost flexibility to the media company in terms of how they charge, Zuora will enable the start of the tectonic shift that needs to occur. I asked Tien about aggregating content across different publications from different news organizations (after all this is what I get from free media via my RSS, I also want it with my paid content). Zuora have no obvious answers to these questions, but told me that solutions lie in a couple of areas;

first, many pubs actually roll up into a single parent, such as Hearst or Gannett or Tribune.  Historically, SF Chronicle’s web technology is completely independent from Houston Chronicle‘s web technology, even though both are Heart.  With the Internet, these papers can pool together at the parent company level and offer cross site bundles.
Second, there are new initiatives like Journalism Online that have a vision for doing it across multiple newspapers.  We would love to work with companies like that, so they would not have to build everything that we have already built.

Finally I questioned Zuora about the differences between selling billing to brand new software companies with no billing experience and media companies who have been doing this stuff (albeit through different channels) for years. his response demonstrates the opportunity the “new world” has to provide solutions to “old business” steeped in old technologies and processes;

Other than a few examples, they don’t really do this much online.  They do it offline, but those systems are not usable for driving online subscriptions.  They are typically “circulation” systems, not true subscription systems.  They run on old technology, sometimes even old DEC and AS400 computers.
Plus, it’s not even clear that straight monthly or annual subscriptions are the right model.  If anything, the media industry needs even more packaging & bundling innovation to overcome the fact that they have trained consumers to expect that “content is free”

This offering makes sense for Zuora – it takes what is largely an existing offering, and rolls it out to an entire new vertical, and one that is desperate to find a way forward – Zuora may just be able to take advantage of that desire.

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Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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