Three is a CrowdThree insiders on new business models

Trending TopicsKachingle makes the most of „freemium“

Serendipity Vice: ready to topple traditional media

Frankfurt Academy Quarterly

COLLABORATIVE ECONOMYHow to make the most of contentThe most interesting new business models in publishing stand out mainly for one thing: by exploiting the tools of the new digital economy they provide content or services for free yet succeed as commercial ventures. The buzz words here are crowdfunding, crowdsourcing and „using not owning“.

Issue #04, June 2012

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New business models are most successful when they solve a problem in a way that benefits both the provider and the customer. Think of piracy and the stuff-for-free culture, for example: in our “Three is a Crowd” column, we introduce you to some inventive entrepreneurs from Brazil (Bruno De Carli), Germany (Christian Damke) and the USA (Jesse Potash), who have all developed successful businesses in response to these phenomena. Respectively, they have created a print-on-demand service for universities (Pasta do Professor), a lending model for e-books (Skoobe), and a crowd-sourcing and funding business (Pubslush). Since content is becoming increasingly multimedial and social, in this issue under “Trending Topics” we take a look at the world of social media publishing. Kachingle founder Cynthia Typaldos responded to the develop-ments early on by starting a scheme to fund bloggers, journalists and artists with “social cents”. This summer, Kachingle is about to launch a “freemium” model in the B2B field, using its tried and tested micropayment system. Our “Serendipity” section is a place for outsiders’ per-spectives and chance encounters. This time we feature Vice Media, the ubiquitous brand for subculture and youth on the internet. The company is becoming in-creasingly well established as a provider to the main-stream media and it is soon to launch a new online news channel in cooperation with HBO. Vice started life as a free city magazine. Today, nearly all its online content – videos, texts, music, books, films, TV – is still available for free. How does that work? We find out in an interview with the CEO of Vice Germany, Benjamin Ruth, and Alexander Lewin, responsible for TV Content at Vice. 

Welcome!

Holger Vollandfaq@book-fair.com

And by the way, you can meet us on tour this summer: On 7 and 8 August 2012, the Frankfurt Academy will host the international CONTEC conference in São Paulo, Brazil. Contec is an international conference on literacy, education and children’s media content and technol-ogy. Topics at the two-day event will include children’s and young adult media, literacy, education and tech-nology.  Enjoy our fourth issue of the Frankfurt Academy Quarterly – and join in the discussion on our Frankfurt Academy Blog.

P.S.: You can subscribe – or unsubscribe – to the FAQ following this link.

Holger Volland is VP Media Industries at the Frankfurt Book Fair, and head of the Frankfurt Academy

Holger Volland, © Ch. Schmidt

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Three is a croWd

1: Pubslush: croWdfunding WiTh a social conscience

FAQ talked to three insiders to get their take on the new business models: Jesse Potash from the crowdfunding platform Pubslush (USA), Christian Damke from the e-lending platform Skoobe (Germany) and Bruno De Carli from the university service Pasta do Professor (Brazil).

By Siobhan O’Leary

How can you make money from the “slush pile”? And, at the same time, keep readers and authors happy, while contributing to a great cause? Pubslush tries to make the seemingly impossible a reality – on a global scale.

Pubslush is still in its beta phase, having started in 2011. It operates an independent publishing imprint, Pubslush Press, that acquires books from the online platform, and for every book sold it donates a book to a child in need. There’s certainly no shortage of crowd-funding platforms out there, but the Pubslush model evolved from the team’s discussions with authors, when they realised there wasn’t a platform available that actually catered for their specific needs. Kickstarter, perhaps the best known crowdfunding platform,

Jesse Potash is the founder and CEO of Pubslush, a crowdsour-ced publishing platform exclusively for authors to raise funds and build an audience for new book ideas. Jesse hails from a fi-nancial services background but has also worked across a wide array of industries, including publishing, fashion and adverti-sing. He was recently named by mediabistro as one of its “5 eBook Publishing Experts to Watch”. He also serves on the board of directors for the Pubslush Foundation, which is commit-ted to supporting children’s literacy initiatives worldwide. He is a native New Yorker, a yogi, a boxer and an avid traveller.

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recently revealed that less than 32% of its publishing projects actually get funded.

The firm’s philanthropic focus started when Jesse and his partner Hellen visited an orphanage in Kenya, at around the time the company was launched. The or-phanage became the company’s first charity partner. “There’s no question that the main motivation behind Pubslush is the children we work with in our literacy programmes,” says Potash. The objective, he adds, is to harness the power of digital reading technology to reach some of the nearly one billion people in the world who are illiterate and the more than a hundred million children who don’t have access to books.

Pubslush works as a hybrid, for-profit and non-profit enterprise. “Our goal in operating in this fashion is to create a sustainable brand of non-profit that purpose-fully involves the consumer,” Potash added. In fact, Potash doesn’t think of Pubslush users (“slushers”, as they’re called) as customers. “They are part of our team,” he says. “They are the ones who are actually making the industry more democratic and philanthrop-ic.” The Pubslush model also guarantees a certain level of transparency in terms of what readers want and what they are willing to pay for it.

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MEET JEssE POTAsh

You can meet Jesse as a speaker at the CONTEC conference in Sao Paulo, Brazil.

7 — 8 August, Sao Paulo Brazil

http://www.book-fair.com/en/

academy/worldwide/

Or contact Jesse on twitter

@pubslush

Join the conversation on the Frankfurt Academy Blog:

http://blog.book-fair.com/

category/academy/

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On 7 and 8 August 2012, the Frankfurt Academy will host the international CONTEC conference in São Paulo, Brazil. Contec is an international conference on literacy, education & children’s media con-tent and technology. Topics at the two-day event will include children’s and young adult media, literacy, education and tech-nology. The conference will take place im-mediately before the national consumer fair Bienal do Livro de Sao Paulo (9 — 19 August 2012).

CONTEC BRAZIL

Pubslush is powered by technology. “While we strive to keep the books on our site to high standards, those standards are primarily technical (formatting, grammar, spelling, etc.). We’ve passed on the job of judging con-tent directly to the readers,” explains Potash. Digital publishing has certainly led to an explosion of content, but it also opens the door for readers to choose what they actually want to read.

“Our concept is based on social networking,” he adds. “Authors submit their book to our site, and while we have established a core constituency, success-ful authors always harness social media to their own advantage.” Authors work to raise funds and build momentum for their books, usually starting with their own social network. As a book gains traction, it trends higher and becomes more visible to slushers. Social media has already enabled readers and authors to communicate directly with each other. But Potash notes that Pubslush is taking this a step further, “by enhancing that connection with the ability to raise funds and actually understand the analytics of social media interactions in an actionable way.”

Pubslush plans to launch in several additional lan-guages in the coming months. “My dream for five years is that we will have books from literally every country in the world on our site,” says Potash. In addition, the company handles rights and licensing for titles pub-lished by its imprint, Pubslush Press. “Our publishing imprint operates uniquely, in that we actually build a freelance, project-based team around each book… One of the members of this team is a rights specialist who looks after these transactions.” One of the most inter-esting changes he’s seen in rights and licensing is that authors are now taking an increasingly proactive role – a sign that traditional publishers often fail to meet the changing expectations of their authors. “When we acquire books,” he says, “we don’t just think of them as books, but as content that must translate across entertainment mediums and languages.” Although the company performs almost all its operations in house, it is about to announce a new “trusted partner network” – a group of affiliate companies that provide services that can greatly benefit their authors. Potash’s greatest wish is to take Pubslush’s literacy programmes to the next level. “It is my personal goal that the phrase ‘children without access to literature’ will be a phrase of the past, and that every child will have access to an e-reader (and ideally have their own), essentially giving them not only a library’s worth of books, but also the tools (text-to-speech, dictionary, built-in light, etc.) to learn and empower themselves to build a fantastic life.”

The role of technology and social media

Global reach for crowdsourced authors

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2: from buying To lending: WhaT’s nexT for e-book libraries?

Christian Damke, CEO of Skoobe

„Use it, don‘t own it!“ – under this slogan borrowed from the “colla-borative economy”, a number of lending models have recently emer-ged for e-books. Skoobe is the latest in a series of technology start-ups that offer digital reading experiences on a temporary basis.

In mid June, Penguin and 3M announced a deal with the New York and Brooklyn Public Libraries to make Penguin’s e-book catalogue available for lending. Amazon recently signed an exclusive license with Pot­termore to make all seven Harry Potter e-books availa-ble for free through the Kindle Owners’ Lending Library. Bilbary.com launched its US bookstore and library in March and its UK platform this month, with more languages and territories on the way. E-book lending is certainly a hot topic in the US and beyond, although according to a poll by the Pew Internet and American Life project, 58% of library patrons don’t know they can borrow e-books from their library and only 2% of people aged 16 or older in the US have ever borrowed an e-book. The same study showed that e-book bor-rowers also tend to be avid e-book buyers.

Christian Damke is the managing director of Skoobe. After completing his studies in economics at Brunel University and earning an MBA at the IESE Business School, he got his start at Bertelsmann in 2005. Starting in 2006, he supervised the digitisation of books as director of business development for Verlagsgruppe Random House.

He is responsible for cooperation with publishers, marketing and finance.

Launched in February 2012, the German mobile e-book library Skoobe is betting on e-book lending as a viable commercial model. Skoobe is the brainchild of Verlags-gruppe Random House, Holtzbrinck and arvato. It offers readers a new form of access to the world of electronic books – one that raises interesting questions about the meaning of ownership in the age of digital reading.

As managing director Christian Damke explains, “Read-ers do not buy single titles, but become members of an ever-growing mobile library. They can borrow titles …and read them immediately on their smartphones or tablets.” Skoobe has a limited introductory offer that allows its first 10,000 readers to borrow any number of new books each month for 9.99 euros a month, until 1 March 2013. Readers may keep up to five borrowed books in their personal libraries at any one time. When the introductory offer ends, members will be allowed to borrow two books per month for the subscription

By Siobhan O’Leary

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fee. Publishers get an undisclosed share of revenues based on how many times each of their books is bor-rowed. “In developing Skoobe,” says Damke, “we have tried to understand the special needs of e-book readers better. Now, browsing, reading and organising one’s own library, and the possibility of using the books on up to three devices, all offer a rewarding reading expe-rience.”

Skoobe currently works with nearly 100 publishers and it adds new titles and imprints every week (all in German at present). “We are [also] in discussions with many international publishers and intend to intensify our talks at the Frankfurt Book Fair 2012,” says Damke.

E-books still represent a very small slice of overall book sales in Germany - around 1%, as a recent study by the German Publishers and Booksellers Association revealed. But Skoobe views itself as a way of attract-ing customers who wouldn’t otherwise have purchased books for their mobile devices, and it hopes to have a

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MEET ChRIsTIAN DAMkE

You can meet Christian or the Skoobe team at the Frankfurt Book Fair.

10 — 14 October, Frankfurt Book Fair,

Frankfurt am Main

or contact Christian by email:

christian.damke@skoobe.de

Join the conversation on the Frankfurt Academy Blog:

http://blog.book-fair.com/

category/academy/

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positive effect on the industry as a whole by making it easier for people to discover titles. “Our goal is to help people find new books and e-books using smartphones and tablets, by offering a very simple, free app which provides immediate access to book extracts,” explains Damke. The Skoobe app is currently one of the highest ranked book apps in the Apple store (with 4.5 stars) and can be installed on an iPhone, iPad or iPod touch using iOS 4 or later. It will be available for Android devices later this year. Another goal is to encourage price-conscious readers to use their smartphones or tablets to read e-books, maybe even in combination with the printed versions at home. To date, high prices have been a major deterrent for potential e-book readers in Germany.

Although Skoobe does have a strong publishing con-nection, given its founding companies, it is still a very new player in the market. According to Damke, it is an ongoing challenge to raise awareness for the brand through marketing, press and social media. “We have a very active community on Facebook, and we use Twit­ter and other social media channels to talk with our potential customers.” They even invite their customers to visit the Skoobe offices in Munich, and they actively request feedback. “More than anything else,” says Damke, “our customers value the ease of use, as well as the simplicity with which they can access a great cata-logue. The willingness to pay depends on the size of the catalogue and the type of reader.” Skoobe is, above all, a technology company that aims to meet the changing demands readers make of the e-book market, while of-fering a rewarding reading experience.

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3: converTing freeriding sTudenTs To Paying cusTomers

By Carlo Carrenho, PublishNews Brazil

In earlier days, Brazilian students photocopied the books they needed – mainly because there was no alternative. A new service called Pasta do Professor offers a legal alternative to book piracy – with huge success.

It was March of 1990 and I was attending my first university classes at the prestigious University of São Paulo. Being an Economics major, one should think my first lessons were about monetary economics, since Brazil´s inflation was skyrocketing at the time. Nothing could be more wrong. Since each teacher asked us to read texts from a selection of several books, and the university library had only one or two copies of each of them, the option we poor students had was to photo-copy the selected chapters. So the first thing I learned in the Brazilian university was how to pirate books. In order to make our life easier, each teacher had a folder – the so called “Pasta do Professor” - at the photocopy bureau where he left all the copyrighted materials to be reproduced, and the students would copy every-thing and bind the results into a “book”. For the next four years the system would not change.

Carlo Carrenho is a Brazilian publishing consultant and jour-nalist. In 2001, he founded PublishNews, a daily newsletter that covers the Brazilian publishing market. He has worked for several Brazilian publishing houses as a publisher and more re-cently turned his attention to the digital revolution that is taking place in the book industry. You can contact Carlo by e-mail: carrenho@gmail.com twitter: @carrenho linkedin: http://br.linkedin.com/in/carrenho

Bruno de Carli, founder of Pasta do Professor © Ola Kjelbye Carlo Carrenho, PublishNews © Ricardo Costa

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In that same year of 1990, an engineer started his 7th year as an advertisement professional. His name was Bruno De Carli, and little did he know that 15 years later he would start a project that could finally offer a legal alternative to students like me. De Carli was used to big changes in his career. During his teens, all he wanted was to become a commercial pilot, and he even got his pilot certification before his driver’s license. But after college he opted for a career in engineering because “you cannot have a family if you are a pilot”. After a brief period as an engineer, De Carli moved to advertisement, working at his family’s agency. “In advertisement I learned there are other intelligences and I really enjoyed dealing with different markets”. The advertisement market changed and De Carli again went through another big change. For one year, he developed Siciliano Bookstores’s online store, finally debuting in the book market. From there, he became the CEO of Thomson Learning’s Brazilian branch for four years, and finally, in October 2005, he was called by the Brazilian Association of Reprographic Rights (ABDR) to develop a very innovative project to fight book piracy in Brazil: the Pasta do Professor, or “Professor’s folder” in English. Pasta do Professor’s goal was clear and challenging: to provide a legal alternative to the established piracy system of professor’s folders in the Brazilian universities. “In my personal perception for each page legally printed in Brazil there are three pages illegally photocopied”, alerts De Carli. The engineer bachelor spent 2006 developing a computer system to control the sales of book chapters separately. The initiative was launched in March 2007, supported and sponsored by 10 educational publishers. Two universi-ties were interested in the new project, but it would still take some time for it to take off.

The publishers provided Pasta with their fragmented content, and licenses were sold to photocopy bureaus to print out the contents. “There were two main dif-ficulties in the beginning: the teachers’ resistance and the fact that it was a B2C model”, explains De Carli. The teachers, of course, did not want to be limited by the Pasta do Professor’s catalogue and wanted to adopt texts from other books. And to license and control hundreds of photocopy bureaus in the country revealed to be an impossible task. Needless to say, these two barriers prevented Pasta do Professor from conquering higher skies. From his cockpit, De Carli kept the pro-ject in the air, but nothing appeared in the horizon to propel things up until 2008.

On 7 and 8 August 2012, the Frankfurt Academy will host the international CONTEC conference in São Paulo, Bra-zil. Contec is an international conference on literacy, education & children’s me-dia content and technology. Topics at the two-day event will include children’s and young adult media, literacy, education and technology. The conference will take place immediately before the national consumer fair Bienal do Livro de Sao Paulo (9 — 19 August 2012).

CONTEC BRAZIL

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And Pasta’s turbulent beginning happened despite the booming of the Brazilian educational market during the last decade. According to the Ministry of Educa-tion, the number of private colleges went from 1,004 in 2000 to 2,039 in 2009. And the number of Brazilian college students grew from 2,09 million in 2001 to 4,43 million in 2009 (see charts no. 1 and 2). As a result of this fantastic growth, some private universities became huge educational powers, such as Estácio de Sá Univer-sity. Based in Rio de Janeiro, Estácio de Sá opened its

capital in 2007 and had its management professional-ized. It decided to provide all books and materials to its students, but it was a herculean task to negotiate with so many publishers and get their fragmented content. Finally, someone tipped them: “Talk to De Carli, from Pasta do Professor.” It was probably the best advice Estácio could get.

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And that is when the catch-22 dilemma was solved for Pasta. Until then, it was hard to convince universities to adopt the system because the title selection was limited. At the same time, it was impossible to increase the catalogue if only a couple of universities seemed interested. When De Carli brought Estácio de Sá aboard the Pasta plane, no publisher could afford to stay out. After all, Estácio de Sá is one of the largest universi-ties in Brazil, with 260,000 students enrolled at this moment. De Carli needed almost a year to prepare the system for Estácio de Sá’s new demands. Since the uni-versity wanted to purchase the chapters and offer them to the students, a B2B logistics was necessary – a huge adaptation from the original plan. The solution was to find a printer that would produce the materials for Estácio de Sá with files provided by Pasta do Professor. Both printer and Pasta then act as suppliers and work together to have a controlled environment between them. Only one printer was authorized when the pro-ject was implemented in 2009, but Pasta do Professor and Estácio de Sá are now including other partners. “The B2B move was caused by Estácio de Sá’s necessi-ties”, explains De Carli, who is now trying to take the project to other large private universities in Brazil.

MEET BRuNO DE CARLI

You can meet Bruno at the CONTEC conference in Sao Paulo, Brazil.

7 — 8 August, Sao Paulo Brazil

www.contec-brasil.com

Or contact Bruno on LinkedIn

http://www.linkedin.com/in/brunodc

Join the conversation on the Frankfurt Academy Blog:

http://blog.book-fair.com/

category/academy/

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Estácio de Sá took advantage of the digital printing involved in the project and produces materials tailored for each student. So, depending on which classes a stu-dent will attend, he will receive a personalized set of book chapters divided by class and with his name wa-termarked on it. So far, Pasta do Professor has printed over 435 million pages, which is equivalent to 1,1 million books. Those 10 founding publishers have grown to 34 publishing houses and 70 imprints that provide content to the project. And the catalogue has just past the mark of 4,000 titles. For someone who gave up a commercial pilot career, Bruno De Carli is flying higher than he ever expected in the educational publishing skies.

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LICENCE TO TELL

“WhaT do you Think of This idea: PeoPle Paying for free sTuff?”

Cynthia Typaldos, CEO Kachingle

Kachingle began as a crowdfunding site for artists, journalists and bloggers. This sum-mer, with Kachingle Premium, the compa-ny will start offering freemium models to businesses. The aim is still the same: getting people to pay for stuff that’s free.

“What do you think of this idea: people paying for free stuff?” asked Cynthia Typaldos a few years ago. “That’s the stupidest thing we’ve ever heard,” her American colleagues answered. The German members of the international group reacted differently. “Great idea!” they shouted. “Let’s do it!” Today, Typaldos is seen al-most as the grande dame of crowdfunding – the gather-ing of mass donations from the internet community. The crowdfunding network she started is called Kachingle. It uses special donation widgets to distribute “social cents” to bloggers, journalists and artists on a monthly basis.

Born in 1950, the Silicon Valley entrepre-neur Cynthia Typaldos began her career as a product manager with Sun Microsystems. In the mid 1990s she took the plunge into the emerging internet eco-nomy by starting GolfWeb. After selling this successful online community for gol-fers to CBS Sportsline, Typaldos laun-ched another social networking platform, RealCommunities. The boom of Web 2.0 and micro payment solutions paved the way for the Kachingle concept of a crowd-funding platform; the prototype went online in 2008. Now, with Kachingle Premium, from summer 2012 the Moun-tain View-based start-up will be making inroads into the freemium sector.

Trending ToPicsCrowdfunding is a form of social payment in the blogosphere that was introduced a few years ago by companies like Flattr and Kachingle. Now, Kachingle plans to address B2B companies with a freemium model.

By Ansgar Warner

This in itself would be enough to earn Cynthia Typal-dos an exotic reputation in Silicon Valley. But that’s something she has anyway, for quite a different reason. The inventor and president of Kachingle is not only a woman, she’s even a middle-aged woman! Kachingle consciously tries to use the fact she’s different from the typical baby-boomers and MIT-nerds. Her official PR photo looks more like a family snapshot, showing Typaldos side-by-side with her dog Bunny. As you’d expect, Bunny has her own blog too – complete with a Kachingle widget – which can already boast a large

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number of followers. And that’s what it’s all about. With Kachingle, the share of the members’ contribu-tions that get paid out to providers depends in the respective number of users. A patented micropay-ment software automatically counts the monthly visits to each site and then makes sure the crowd-sourced funds are distributed proportionally. That’s quite dif-ferent from the Swedish crowdfunding network Flattr, where you have to consciously click on their button in a similar way to “liking” in Facebook.

Also unlike Flattr, Kachingle has never really succeeded in breaking into the mass market, either in the US or in Germany. While the Swedish competitor has already amassed more than 100,000 paying members, Kach­ingle is creeping along somewhere in the four-figure bracket. High-profile users of Flattr, such as the Berlin-based tech podcaster Tim Pritlove, earn around 2,500 euros a month thanks to the modest donations from the crowd. Highly popular sites like Wikipedia don’t even earn that in a year with Kachingle. For the crowd-funding principle to work the one thing you really need is a crowd.

But that doesn’t worry Typaldos very much. “There’s a great project called the Start-up Genome which has analysed successful start-ups” she says. “On average start-ups change their focus 1 or 2 times while they’re searching for market fit.” Of course, as an entrepreneur you still have to be willing to take risks. “I sold my house so I’d have enough savings not to have to take a salary for a few years, so that I could start Kachingle” says Typaldos. “It’s terribly risky. But I felt driven to build something worthwhile, and there is nothing more satisfying than working with my colleagues and getting real, live market feedback.” It’s that feedback that has now brought Kachingle to its first change of course. In future, the Californian start-up wants to put more en-ergy into targeting the market for freemium products. And once again it’s Germans who are encouraging the change.

“Avira, a German anti-virus software company, con-tacted us asking if we could help them convert more of their free users to paid users.” In Kachingle, Avira has chosen the ideal partner. After all, the freemium principle is also a kind of crowdfunding. Using freeware versions of popular applications companies maximise their reach. They then refinance their investments by selling premium versions of the software with addi-

© Kachingle, http://cynthiakachingletest6.blogspot.be/

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tional functionality or special services. As few as 5% of users paying is often enough to make this kind of busi-ness model profitable. However, the concept has always had its limitations. “We’ve looked at why people aren’t converting from free to premium” says Typaldos. “It has to do with the mental transactions costs. Do I really want this? What are the features that I get? Do I have to reach for my credit card again? There’s all kinds of barriers.”

Now, Kachingle Premium is there to provide the solu-tion – it’s a kind of turbo charger for freemium of-fers. The magic phrase is “virtual bundling”. Typaldos explains: “We’ve created a single subscription at a compelling price of five dollars a month. Once you’ve paid that it’s easy to use the premium version of any of these apps simply by going there”. To disburse the subscribers’ payments fairly to the different providers, Kachingle will use the same micropayment software that’s already proven its worth with crowdfunding. The decisive factor is how many times a month the cus-tomer uses each particular service. This means Kach­ingle Premium is also interesting for content provid-ers, regardless of whether it’s music, news or e-books being offered on subscription. If you use Kachingle Premium to attract a suitably large crowd to your web content, despite the low price of the subscription you can still expect much higher earnings than if you sell your own expensive subscriptions to a small number of customers. The way things are looking, this time Kachingle could really reach the critical mass, because Avira brings with them more than 100 million freemium software users. Rather than choosing to upgrade for 29 dollars a year, they now have the option of getting the same benefits for five dollars a month – plus the prospect of being able to use a lot of other interesting apps as well.

MEET CYNThIA TYPALDOs

Contact Cynthia on twitter

@typaldos

or on LinkedIn

http://www.linkedin.com/in/

typaldos?_msplash=1

or vie the Katchingle Blog

http://blog.kachingle.com/

Join the conversation on the Frankfurt Academy Blog:

http://blog.book-fair.com/

category/academy/

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At the planned launch this summer, the company already expects to have 150 million users and as many as 20 different apps, as they’re already holding talks with a number of other companies. To meet the new challenges, Kachingle needs to build up its staff con-siderably from the original core team of about a dozen. Instead of more “family friendly” meetings about fi-nancing, they’ll also need a real investor who can pro-vide some venture capital. The Silicon Valley ecosystem should prove very helpful in that respect. “We wanted to understand the freemium market better so we cre-ated the Freemium Meetup,” says Typaldos. “More than 125 participants have signed up for the meetings. All of these knowledgeable people coming together to talk about the freemium business model helps us get the word out about Kachingle Premium. It helps us learn more about the market, and of course the attendees all share and gain knowledge too.“

This time, Kachingle shouldn’t find the going quite as hard as it was with pure crowdfunding. The Americans are already accustomed to premium flat rates, though they come at premium prices. For 79 dollars a year, for instance, Amazon Prime members get free access to streamed videos and can borrow e-books for no extra charge. In Germany, things look a bit different. In terms of flat rate offers, this self-proclaimed Land of Ideas is still rather more of a service desert. Which is one more reason for the Germans to come out again and say, “Great idea! Let’s do it!”

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vice – from anarcho-Punk To a global brand for youTh culTure „We understand the youth“ –

with this pledge, the media firm Vice has gained the favour of brands such as Nike, Smirnoff and others. It all started as a free city magazine. Even today, nearly all the content of Vice – videos, texts, music, books, films, TV – can be had for free. How does that work?

In the words of Benjamin Ruth, CEO of Vice Deutschland, Vice is a “life style”, a “mouthpiece for the youth”. According to its own figures, the media enterprise reaches 15 million people per month around the world. Online videos are the driving force behind the brands, but there are also significant text elements. There are about 3,000 fans, or “contributors”, mobilised around the world, who send ideas for good stories to the local editorial teams – or who produce them them-selves. Founded in 1994 in Canada, it all began as a free city magazine. Today, Vice produces editorial content in 34 countries.

Benjamin Ruth (38) is the founder and CEO of Vice Deutschland. Since 2007 he‘s also managed the operations of Vice TV Deutschland. The TV business produ-ces material not just for Vice‘s own on-line platform, but also for a large number of broadcasters in Germany and further afield. Benjamin Ruth has a masters degree from the London School of Econo-mics and an MBA from Instituto de Empresa in Madrid.

Benjamin Ruth © Lars BorgesBy Nina Klein

serendiPiTyChance encounters are often the most productive. At least that’s what many people say when they talk about the Frankfurt Book Fair. That’s why we’re going to try to simulate a “chance encounter” in every issue of FAQ in the form of a surprising perspective on the publishing industry. In this issue, we’ll take a look at Vice, the omni-present all media brand.

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Alexander Lewin (37) has been head of marketing for Vice’s TV productions in Germany since 2009. As well as licensing and commissions, he is also responsible for online syndication of the company‘s own content. Lewin graduated with a BA from City University Business School and completed a Masters at King‘s College, London

Alexander Lewin

Nearly all of its roughly ten editorial boards have set their own standards for how youth culture functions in the age of the internet. For example, the online plat-form Noisey, launched in 2011, has been hailed as the “MTV of the internet”; Motherboard shows the future of technology, and for the Creators Project, Vice is cooperating with Intel to provide a virtual network for artists from Afghanistan to Zimbabwe. The US media brand Fast Company recently presented Vice as one of its “creative disrupters”. That’s because, since it re-ceived about 50 million US dollars from investors such as The Raine Group, MTV founder Tom Freston and the advertising empire WPP, Vice has been on a solid path of growth. It is setting up eight new editorial brands, including a news channel produced by young people for young people: Vice News.

Items that may at first glance seem (at least to the over-40s) to be trashy, sex and rock ‘n’ roll pieces, turn out – when you click on “News” – to be original and courageous stories, told in the style of the web and the digital native. Vice won the respect of the establish-ment at an early stage: the film “Heavy Metal in Bagh-dad”, about the only metal band in Iraq, was screened at the 2009 Berlinale, and the TV reportage “Wild Germany” has just recently been nominated for the German TV award, the Deutsche Fernsehpreis. Besides these prizes, Vice has also just collected five Webby Awards, and that is – in the words of one employee on the Blog –”one more reminder that when it comes to stuff on the internet, we are the only media makers that matter”.

The big question of how all this high-quality content can be financed, and refinanced, is not that easy to answer. One source of funding is through work com-missions and the sale of licenses. They are also cooper-ating increasingly with platforms, such as in YouTube’s “Original Channels”. This is an attempt to provide a professional programme to compete with the big cable TV broadcasters, and Vice is already involved with two channels. Another revenue source is Virtue Worldwide, the advertising arm of Vice, founded in 2006. Dell, Vodafone, Warner, Nike, Adidas and many other large brands are among its clients. And the “Encyclopedia Project” is soon to start – an online community that will provide access to the youth target group for pur-poses of market research and crowdsourcing, on behalf of B2B clients. BLOG

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In a talk with Benjamin Ruth, CEO of Vice Deutsch­land, and Alexander Lewin, who is responsible for marketing Vice‘s TV content in Germany, we tried to find out more about the exciting rice of Vice.

FAQ: Vice originated in the punk movement and it‘s well known for being „different“. What motivates you personally to do your job? Besides turnover and profit, are there other motives at play?

Benjamin Ruth: If it was only about turnover and profit there’s no doubt that 99% of the 700 employ-ees around the world would go and work elsewhere – including me. Vice is an interesting company because it’s unconventional and it’s continually developing. The Vice approach is classless. As a medium, its stands for values, such as freedom of opinion, that are impor-tant to enlightened people, and which these days are becoming ever more important.

Alexander Lewin: The company is growing at a rapid speed, and of course it’s exciting to be a part of it... Vice is the voice of a new generation. It’s a kind of lifestyle, an internal attitude. One of our key values is authenticity. We never falsify anything. We’re the com-plete opposite of scripted reality.

FAQ: More than anything else, Vice’s subject matter is provocative. Is “sex & drugs & rock ‘n’ roll” the main motto for your work? Or how would you describe the typical Vice approach to journalism?

Alexander Lewin: To begin with we really were only interested in sex, drugs & rock ‘n’ roll. Then, as we moved around the world, we became more interested in politics and news. We don’t take sides, but we do get fully immersed. When reporting a story, we always try to show the point of view of those on the other side as well. We tell the most honest story we can.

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FAQ: How would you describe your business model to an outsider in four sentences?

Benjamin Ruth: We are a media company that produces content and distributes it. Under the umbrella brand of Vice, we produce different content verticals that are shared using different channels: print online, TV, events, books, music and film. We’re financed by our media sales in different forms, or through the sale of licenses to partners like Canal +, HBO and YouTube with whom we cooperate. Our business model is traditional, but our activities are very progressive.

FAQ: The driving force behind the success of Vice is its content – which is mainly videos, but also text. How do you pay for this content, and how does it refinance itself?

Alexander Lewin: We started to put our video content online in 2007. We then produced a lot of content very quickly – more than 50 different shows, which adds up to more than 600 hours. We continue to make a lot of content today – and it’s still expanding. Just for our music channel Noisey, which launched in 2011, we produced more than 270 videos in one year for the beta version. That’s possible because we have a pres-ence everywhere, and we have access to a network of contributors – our fans – who provide us with a lot of creative inputs.

The next step came in 2009 when we also edited and licensed this content for TV. In a short space of time we managed to secure some prestigious broadcasters as our clients, for example the BBC, Sky, Canal +, ZDF, Pro Sieben and arte. As well as traditional licensing deals, we also take on commissions. An example of that is Wild Germany, which we make for ZDFneo, or The Vice Guide to everything for MTV. In 2012, we’re launching Vice News for HBO.

In the field of branded entertainment we develop content together with brand name companies. We get a lot of requests for this kind of thing, because the behaviour pattern of generation Y has changed. The youth target group is migrating to the internet. They’re mainly interested in being entertained by the brands. Traditional advertising doesn’t work any more.

FAQ: How do you manage to keep your journalism separate from your corporate content and marketing? What demands do you make of content?

Benjamin Ruth: We divide content from advertising very strictly. If a brand has been involved in produc-ing an item, this is clearly indicated. There’s no hidden product placement, no covers are bought, there are no cosmetics tips etc.

FAQ: What will your business model be in five years time?

Benjamin Ruth: The business model won’t have changed, though the mechanisms and activities certainly will have.

MEET BENJAMIN RuTh AND ALExANDER LEwIN

You can meet members of the Vice team at the Frankfurt Book Fair.

Contact Benjamin on LinkedIn

http://www.linkedin.com/pub/

benjamin-ruth/15/b43/b29

10 — 14 October, Frankfurt Book Fair,

Frankfurt am Main

Join the conversation on the Frankfurt Academy Blog:

http://blog.book-fair.com/

category/academy/

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