Gain Bottom Line Profits

By: CLI Staff

While top line revenues are important, in the end, the questions will always turn to profitability. Whether you are privately owned, a public company, or have investors, discovering revenue streams that bring high-profit margins will always be important. Consider looking at content licensing with the scrutiny of a magnifying glass to identify profitable content reuse opportunities in your organization.

At CLI, we are often asked about the benefits of content licensing for media companies. The answer is always on a case-by-case basis. When we look across our client base, mature licensing programs generally are between high five-figure to seven-figure revenues, with most of it falling to the bottom line. This bottom line is the crucial difference. Content licensing revenue streams have notable profit margins that should not be ignored.

Licensing generally creates one of the highest profit margins in the media industry. Other top line revenues from other streams need to be 2X to 10X that of licensing to compare. The reason lies in the costs of delivering the services around the revenue streams. With content licensing, the bulk of the costs are in the creation of the content – which is budgeted and spent for its original use, whether in print or digital forms. By the time you license the content, the costs are in the storage (for example as an XML delivery) – and commissions if you are using a sales agent.

There are many benefits to properly planning the process of licensing. You should first set up reasonable expectations. It can take up to two years before licensing revenues start to achieve their peak – though they can begin within six months from the start of the first agreement. However, establishing a licensing business has immediate benefits – the first and most important being the protection of your copyright, the intellectual property. It reinforces that your content is proprietary with a determined market value. A quantitative valuation and a show of real loss if that content is stolen. Determining the fair market values and business rules for your content’s re-use is critical. The uses are expansive for content as is, or in conjunction with partners for derivative works.

Here is a checklist to consider for your company’s licensing business plan:

1. Identify your content’s uniqueness. Articulate its authoritative perspective, voice, or style. What sets it apart as a value proposition for the audience(s) you serve?
2. Brainstorm a list of third-party distributors and possible partners that match your brand identity and can extend your global reach.
3. Do you own the full rights to all the content you publish? You need to identify clear ownership. If you publish other content creators’ content such as AP, make sure your metadata clearly marks these articles so they can be filtered out of any licensing feed you create. To show clear and documented ownership of the intellectual property rights associated with your content. This is important when using freelancers and contributors.
4. Terms of Use Policy: Do you clearly state what can and cannot be done with your content in your digital or print products? These are your legal protections. For more information on protective Terms & Conditions (T&Cs), take a look at our article AI: “If You Don’t Want to Join ‘em, Here’s How to Beat ‘em.”
5. Do you own the rights to all your graphics, images, and illustrations? Your metadata is critical here.
6. Can your content management system (CMS) export machine readable formats, such as XML? For a helpful white paper on this e-mail – [email protected].
7. How good is your metadata? We must emphasize the importance of this in your content management. It helps in search engine optimization (SEO) for content reuse when building thematic issues or other collections. To group the interests of your audience for additional commercially driven opportunities.
8. How much do you have? How big is your archive? These are very important assessments when starting to create your content valuations for strategizing partnerships and forecasting future business.
9. Make reasonable assumptions around the content volumes you produce daily, weekly, monthly, or annually. The number of words or other format types.
10. Look at all content holistically, both traditional articles and multimedia (video, podcasts, etc).

By taking the time to plan and implement a well-structured licensing program, you can unlock a revenue stream with high profit-margins and a long lifespan. Utilize the checklist provided as a roadmap to assess your content’s value, identify potential partners, and ensure you have the technical foundation in place to maximize your returns on content investment. Don’t let your valuable content sit idle – explore the potential of content licensing and watch your bottom line flourish.