About the hub-spoke model and a magazine media road map

Recently, Business Insider featured the founder and CEO Conrad Parker of Zenefits, the SaaS HR platform, described by Forbes as the hottest startup of 2014. 

In the story, Parker reminded of the hub-spoke model, telling BI about arriving at its business model: “Inspiration struck: the hub-and-spoke business model. Give Zenefits away for free for services it could sell them (the users).” 

He went on: “If you could be the hub, it’s such a powerful place to occupy” and “you could make so much money off all the spokes, that you can give away the hub for free.”

Within these few words, writes FIPP’s Cobus Heyl, three points:

• Develop your hub to attract and build audience

• Ensure your hub occupies a “powerful place”

• Develop spokes to monetise the audience

The hub-spoke model has been employed across various industries and it’s easy to visualise from a media perspective too: A “wheel” with “hub” in the middle, attracting audience, who are then moved along “spokes” where they are monetised. 

“Freemium” media models build on this idea, and many magazine media brands are of course advanced down this path, mostly through their multi-platform brands. But how do you organise “multi-platform” into a coherent strategy? Can a hub-spoke paradigm help with “visualising” the new magazine media model? 

There is of course no one-size-fits-all answer, but read my thoughts on applying a hub-spoke paradigm to magazine media below, and let me know what you think.

First, take a step back

The web drives media consumption today, consisting of millions upon millions of small, continuous interactions. 

Legacy media had (and still do, to some extent) the benefit of ready-made audiences, congregated around the brand. But many faltered in their execution online. One difference between newer pureplays and legacy media: for pureplays the starting point was the web, for legacy magazine media brands print. 

The latter often approached (and some still do) the web from a “print, periodical” mindset, which runs counter to how engagement and audience development happens online (cue: bring on board and empower some technologists to help change this). 

Online, brands have to engage users at high frequency. Value is built incrementally.

Develop the (free) hub to attract and build audience

To compete in this media landscape, the web offering has to be at the centre of business. Mobile and desk-/laptop offerings, newsletters and social media are all channels for high-frequency distribution. They form the “hub”.

The “job” here is to attract users, drive engagement and build audience – it’s a continuous cycle that never stops. 

The free web is the engine for your business.

Also take into account here many (most?) interactions with your brand will be article- (as one example of an atomic unit of content) rather than brand-led – users engaging with a single piece of content found via for example social sharing or search, rarely to take much notice of your brand. Accept the latter will remain true for at least some of those users you count as “audience” every day. 

But each interaction is an opportunity. Each article template is a landing page, showcasing your eco-system with an invitation for deeper engagement. Through relevancy, frequency and depth, you do have the chance of building a deeper rapport with the user, moving them from casual to regular and eventually to habitual, brand-loyal users. 

Develop your hub to ‘occupy a powerful place’

Two articles worth reading is this one by Fredrik de Boer, a Purdue doctoral student, and this one by Matthew Ingram, writing a follow-up on De Boer’s piece for Gigaom.com. In short, the conversation is basically one of “scale” and of “same-ness” of sites versus creating something more unique.

Most magazine media brands have an existing advantage in that they already occupy a position of interest in consumers’ minds. It follows then that the brand should build on this positioning – in an authentic and consistent way – to develop its “hubs” into “occupying a powerful place,” where it can dominate the area of interest through actions taken as discussed above.

Therefore, when it comes to the hub, three questions:

• What constitutes your hub?

• Where is its powerful place?

• How will you dominate this place?

Develop spokes to monetise the audience

While you will make money through the “hub”, its job is more than this: It is to be the engine for your overall business. The question now is which of your channels, products and services offer premium monetisation opportunities that can be driven off the hub? These form your “spokes”. Following are eight examples. None are new and they need not all be there (or there may be others), but it will give you the idea.

Print: There is still a place for print, but it is highly unlikely to be your “hub” today. It’s a “spoke.” Let’s take Net-a-Porter’s premium print brand, Porter, now a year old, as an example. For whatever the objectives with the magazine, imagine for a minute them positioning the print brand as their hub? It does not make sense. Another good example is Meredith’s Allrecipes, which started life as a desktop brand before expanding into print. Read their story here

Advertising: This includes video (taking advantage of shifting TV ad budgets), native (creating truly engaging branded content experiences) and other premium advertising opportunities with high CPMs. These services are high-value spokes, irrespective of channel.

Paid content: Paid content does not necessarily have to run counter to the free web, but do not gate content that naturally fits in the (free) “hub”, where it can do an audience job for you. Ask, for example, whether it could be that your premium content actually lives “offline” (i.e. in print) or in some specialist, premium app rather than on the free web.

Subscriptions: With newsstand sales of print in a state of decline, subscriptions are increasingly important as a premium revenue stream. Take the Allrecipes example again – their “hub” (digital channels) drives most of their print subscriptions, and they are doing pretty well off this! 

Membership: A number of media companies are taking a step beyond subscriptions to offer premium membership – experiences and more over and above access to content. The Guardian “newspaper” in the UK is an example. It’s a premium opportunity.

Events: Events helps position brands, boost exposure, build deeper audience relationships, and, of course is a premium revenue stream. It’s becoming an increasingly competitive field, but barriers to entry are still relatively high and disruption therefore less likely. What is clear is that the more engaged your audience with your brand, the better the chances to find event success.

Ecommerce: There can be debate whether this is a premium service, given that it is generally driven at low margins off scale. But there are different models, and it could be as “simple” as driving some of your existing transactions (such as subscriptions) online. And some brands are perfectly aligned to take advantage of e-commerce. One example is Hearst Fujingaho in Japan, where ELLE Shop was expected to contribute 50 per cent of the brand’s net sales in 2014.

Licensing, syndication and merchandising: Long a part of magazine media business, the changing media landscape impacts here in varying degrees. Models may change, but high-value opportunities remain.

A few final thoughts

Think “network”: All of the above – hub and spokes – form a “network” of distribution touch points. I emphasise network, because this implies a connection between the various channels: while each one has a clear role to play, they’re all interconnected and working in unison to drive overall business.

Content: Digital first, mobile first or even social first. This is all fine as it neatly frames and pushes centrality requirements to the fore. But in the end, it’s really all of the above. The one central ingredient across it all is content. Engagement, irrespective where it happens, is driven by content. It matters.

Systems architecture: It’s not only about the customer-facing side of the business, but also about your systems providing a solid foundation from where to work. Take for example subscriptions: are you a dinosaur trying to serve the Amazon generation?

Data: Data is the extremely valuable “by-product” of the interactions brands generate through the hub and spokes. Not only does it enable brands to compete in ways way smarter than before, but in itself presents premium opportunities on which to build. Don’t pay lip service to it; it’s central to the business and several magazine media companies are already making millions thanks to a data-centric approach.

Habits: This should be a key word in your strategy. On the one hand audience consumption habits will continue to change and brands have to react at lightning speed to it, while on the other brands need to engage across its network to become part of users’ consumption routines. It will be very difficult to create habitual use of your brand in the new media landscape if you operate with a periodical mindset. The “hub” is a crucial first step.

Brand and audience: To win, brands have to accept audiences are their equal partners. Brands therefore need to be authentic and consistent in message and voice, across the hub and all spokes. Brands need to allow users to participate, and listen to what they have to say, directly or through the data they generate. 

Something to watch: Things may change. Take Snapchat Discover, where media partners’ content is hosted natively on the platform. In this model, they become more of a “premium partner” than a more distant 3rd party platform used for distribution. It has the potential to present a new ball game, so if you are not already engaged, keep a close eye on it.

Get in touch

So that offers one line of thinking. Drop me a line with your thoughts.

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