Aaron Harris for the Toronto Star
Case Studies

Toronto startup pushes to sell innovative paywall system to major US media companies

Vital Stats
Name:
SlimCut Media
Owners:
Damien Véran and Thomas Davy
Website:
slimcutmedia.com
Field:
Media/online publishing
Employees:
Nine
Active:
Three years
Offering:
Three-pronged approach to monetizing online content that promotes the sharing of content through social media
Core customers:
Online publishers and media companies

It’s a question that has been daunting online publishers for nearly two decades now — how does an industry that has become synonymous with free content get back to the point where people are willing to pay?

Damien Véran, president and co-founder of SlimCut Media, may not be the first to come up with what he deems a “revolutionary” resolution, but the Toronto-based startup has definitely turned some heads with its take on monetizing the online media world.

“That transition to the web has definitely been difficult, but it’s a very exciting time,” Véran says, his French accent filled with optimism. “It’s moving very fast and what we see today is going to be very different from what we’re going to see tomorrow.”

Launched in 2011, SlimCut aims to become a global leader in content access through its three-pronged hybrid platform, which marries paywalls, video advertisements and loyalty points.

But first it needs to figure out how to break into the U.S. market.

The unique multi-faceted platform lets readers choose whether they want to pay for subscription or watch a video ad before being able to read a story or view content. Or, they can wrack up loyalty points by visiting regularly, sharing articles or commenting, and they can redeem those points for access to more content.

“We are the only one doing the three in one,” says Véran. “By integrating all of them you can give the choice to readers on how they want to access the content.”

The start-up, which now has nine employees — four in Toronto and five, mostly engineers, in Paris — caught its first big break in 2012 when Postmedia adopted its platform for the National Post and the Financial Post.

After a relatively slow period, SlimCut has seen a surge in interest over the past quarter, landing clients in Canada, Europe and Brazil. Quebecor signed on to use the platform with its weekly and regional publications in Quebec, and St. Joseph Communications is working with SlimCut for its online magazines.

“We have six publishers, most of which have signed on in the past three to four months,” says Véran.

With the exception of The Globe and Mail and Torstar Corporation, SlimCut seems to have locked down a large swath of the Canadian market.

But despite such rapid growth, Véran admits the real test is breaking into the U.S. – specifically the large New York-headquartered media conglomerates like News Corp.

“The market there is ten or fifteen times the size of Canada’s,” Véran says.

SlimCut caught a lucky break earlier this year via the Canadian Digital Media Network (CDMN) Outbound Soft-Landing program, a program run by the federal government which helps connect startups with resources in other countries and regions.

SlimCut received $4,000 in funding to put towards hotels and transportation while pitching to new clients in New York. A separate media trade mission through the Canadian Consulate in New York introduced them to a number of the top executives in American media.

Out of those trips, SlimCut signed two contracts: one with a newspaper and one with a TV company, smaller players which haven’t yet been named.

But so far the big players aren’t biting.

“(With) big ones like that it takes time to demonstrate sales and establish relationships with the publishers,” he says. “We don’t know how to get the visibility in the saturated market when we’re not in New York.”

The company isn’t sure whether it should continue to have an executive travel for meetings, or set up a satellite office and hire staff stateside. It’s already spread thin with a small staff divided between France and Canada.

And the challenge is a little more sophisticated than just renting an office space and putting a salesman at a desk.

“There’s administrative concerns like contracts, lawyers and understanding green cards,” Véran adds.

But the status quo isn’t likely to work in the long-term.

“The travel involved in internationalization can be really difficult,” says Becky Reuber, a professor of Strategic Management at the University of Toronto’s Rotman School of Management. “And it sounds to me like there’s quite a sales cycle involved in terms of getting customers.”

Reuber points out that the tougher challenge will be convincing U.S. executives that SlimCut has “the” solution online publishers have been waiting for with only proof of concept in Canada.

“The companies in New York are going to have a different cadre of organization they’re going to pay attention to, companies they’re familiar with,” says Reuber. “That’s the hard work, that’s why they need someone in New York who can tap into that (knowledge) and leverage it.”

In the meantime, Véran hopes that when they announce their newest clients, it will boost their profile stateside.

“We’re starting to get traction in the U.S. We’re not just some small company still trying to get our foot in the door,” says Véran. “Right now we believe we have one of the best solutions there is.”

EXPERT VIEWS

As Interviewed by: Rosemary Westwood

SlimCut has a relevant, specialized business that is internationalizing at an impressive rate. The challenge is in enticing the major media empires in the United States. There are a few options here: 1) network as a foreign org in the USA; 2) partner with a smaller U.S. company to gain clients; 3) license your product/brand to a U.S. organization; or 4) establish an American subsidiary. The first two options have the highest potential upside with the lowest potential downside: lowest in terms of risk and a priori investment. Networking and partnering are great solutions for organic entry into the U.S. market — it’s still all about who you know. This strategy can be taxing in terms of travel, though has more immediate feedback mechanisms to monitor potential successes or dead-ends. Whatever the strategy chosen, it is important to do business like the locals and to make sure that both product and process come across as relevant, effective, authentic. With initial U.S. customers, don’t be afraid to invest — meeting scale demands will require financial outlay and risk, though this is typically rewarded by American customers in terms of referencing and word-of-mouth.

by Brynn Winegard - SEEC

The American market in general doesn’t much care what’s going on in Canada, or anywhere else for that matter. Unfortunately for companies like SlimCut, the insular nature of most U.S.-based companies, including, perhaps ironically, the media industry, means a tough row to hoe for someone breaking in. The reference clients they have are good, but Véran needs to break new ground fast, in unfamiliar territory. The quickest path to success is likely to hire a VP of business development to round out the executive at SlimCut. A successful top management team usually has a CEO with strong business acumen, an operations executive to get the job done once sales are made, and a VP of sales or business development who has strong domain knowledge. The latter is missing in this case. They need someone who has the contacts, the pedigree and the industry insight to get them quickly through the key doors and mow down the objections. Green cards, contracts and lawyers are not a big issue because they should be hiring an industry veteran, who is probably already a resident of the NYC area.

by Brad Poulos - Ryerson

The age old question: How does a young Canadian startup break into the U.S. market? There are some concerns here, not the least of which is the intellectual property, which he’ll have to be very careful to protect. These are big guys — the media moguls they’re meeting with — and if they decided to steal his ideas, he wouldn’t be in a great place to protect them. Right now, he’s going into these big Wall Street offices and it looks like, number one, you don’t have the reputation, and number two, it would be easy to rip you off. It’s nice he’s getting these connections with the Canadian government, but that’s not the reputation you want when you enter the shark tank. He needs more clout behind him. SlimCut already has a global presence. Small, but growing. I would focus on building that presence outside North America, gaining strength and experience in how to then go into the U.S. market and feel safer. Then, when he does enter the American market, open a satellite office in New York, have an American corporate name, and hire a big gun, somebody who has connections, is well known in the industry and will represent him as a big player with a great idea.

by Deirdre Fitzpatrick - GBC

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