Publishers, intellectual property owners, app and game developers, and other licensing executives are wrestling with how to monetize digital content and distribution, as well as how to use digital media to spur purchases of licensed books and products, synergize physical and digital to sell more of both, slice rights among digital publishing and gaming formats, and more.

“The challenge for us is to take a mature form of media and make the transition to digital in a way that is compelling enough to compete against games,” said Ted Adams, CEO and publisher of licensed comic book marketer IDW, who spoke on the panel “Monetizing Digital Platforms” at the recent Licensing International Expo in Las Vegas.

Another panelist, Marc Mostman, partner at Most Management, which represents Twilight and the Hunger Games for licensing and formerly handled Angry Birds, noted that there are four main ways to monetize digital content. They are paid apps, advertising-supported apps, microtransactions (such as virtual goods), and licensed merchandise. However, the marketing value of an app is often the primary consideration for a licensor. “Part of it is to monetize, but it’s really about promotion,” Mostman explained.

Adams of IDW—for which digital distribution accounts for 10% of its business—noted that the company’s core channel remains comic bookstores, but that the audience for a mobile app or e-book can exceed tens or even hundreds of millions of consumers through Apple, Android, Nook, and other platforms. He cited the example of IDW’s prequel comic tied to the 2009 Star Trek film, which has sold well in digital form. “This reached way beyond what we can do in comic book stores,” Adams said. “It reaches the casual user who loves Star Trek.”

Several movie promotions through Paramount, Amazon, and IDW itself offered free IDW content to Star Trek fans, some introduced to comics for the first time. “A free download converts a lot of users to our paid catalogue,” Adams said. “We just want to get our content in front of new people. If people find out about us, even for free, that’s a win for us.”

While the promotional value of digital comics is proven, monetizing is more difficult. IDW saw sales explode when it lowered the price to 99 cents from $3.99 on the digital Star Trek comic during the weekend of the movie release. “Our digital consumer wants to get the content as close to free as possible,” said Adams.

Licensing and Digital Formats

For licensors, e-books are just one among many digital formats that help them connect with fans wherever they find content. “More is more,” said Amory Millard, executive v-p of brand and business development at Cupcake Digital, an enhanced e-book developer that holds licenses for Babar, Strawberry Shortcake, and several other properties in an interview. “It’s really okay to have multiple formats and platforms. You just want to make sure nobody overlaps.”

Most licensors of children’s properties authorize a number of digital formats including flat e-books (with voiceovers or other limited features), often through their regular print publishers; enhanced e-books with companies such as Cupcake or Ruckus; casual apps, including e-books and games, often with a mobile developer such as Oceanhouse, but sometimes with a print publisher; and more sophisticated gaming apps through gaming specialists. Decision-making on digital can be complicated, with the licensor’s publishing team, gaming division, and promotional/marketing staff all involved.

At Hasbro, the publishing team handles apps and e-books that are primarily about storytelling; interactivity, if any, is intended to drive the plot forward. Anything with levels or points is considered a game, as opposed to an e-book. “There are some gray areas, but we’ve gotten to the point where we know it when we see it,” Michael Kelly, Hasbro’s director of global publishing, told PW.

Still, as developers’ and publishers’ technological capabilities advance, those gray areas are expanding. “I’m not seeing a delineation or separation of [digital formats]—I’m seeing the opposite,” said Scott Chambers, senior v-p of worldwide media distribution at Sesame Workshop, which distributes e-book content on a variety of digital platforms and attributes about 15% of its publishing business to digital formats. “We give our old media teams the wherewithal and responsibility to reimagine their products in the digital space,” Chambers said. The company discusses apps and digital content in recurring meetings attended by more than 20 people from throughout the organization. “We want to work out any conflicts early in the process.”

From publishers’ point of view, the role of licensing is, above all, to attract new readers. “We’re looking for things that are really well established,” Adams said during the panel discussion. “We need that brand to bring people to us. We can’t build the brand for them.”