Trent Reznor has good advice for online media publishers

I recently watched a new show called Digg Dialogg where Kevin Rose interviewed Trent Reznor of Nine Inch Nails. What was especially interesting was some advice on how to earn money from their online media. The advice is based on the experience Reznor had with NIN, which released it's lasts albums online, but can probably hold true for online video series and podcasts. The main points are the following:

- Only a limited amount of people will pay artists if they don't have to. When a NIN album was offered for free online with the artist requesting a donation of $5, only 18% of the downloads were paid. This means that requesting fans to pay for music freely available online will produce less revenue than selling that many copies of an album at retail. A problem of which many labels are now aware since all music is pretty much available online for free. The positive point is that asking for money will still produce some revenue, something that podcasts with a large amount of dedicated fans can use to finance themselves.

- Fans are willing to pay good money for extras. Extra songs and remixes, behind the scene footage, limited edition CDs and DVDs can be sold online with an acceptable amount of success. Although selling a DVD is probably not an option for most podcasts, it can be a serious source of revenue for web serials or web movies. The important point to remember is that the DVD should have a lot of extras not present on the web: better image quality, behing the scene footage, extra episodes etc...

- It pays to target several price points. Some people will not want to pay anything for content and should be targeted with an advertising based model. Other will accept to pay a small sum of money such as $5 either as a donation or to get some extras. Other finally are ready to pay much more money to get limited edition items and luxury editions.

In conclusion, artists can make some money online, but they need to have suitable product lineup with price starting from free (usually the podcast) to expensive (limited edition DVD boxes, exclusive T-shirts and other collectables). The "collectable" aspect of the most expensive products is very important. Making money out of the Podcast itself (through donations for example) can be a source of revenue but it should probably not be the main one. Sponsoring and the sale of derivative goods will be more profitable in most cases.
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