When looking for ways to add value for premium subscribers, Harvard Business Review dug decades into the past. As Nini Diana, HBR’s director of consumer marketing put it, “Our archive is gold.”
For 100 years, Harvard Business School has created case studies that bring real-world business dilemmas to life for students, entrepreneurs, and professionals around the world. These case studies dissect real-life situations in which managers have to make key decisions. Often, they must do so despite having incomplete information, conflicting priorities, or the pressure of ticking clocks.
Harvard’s case studies often make their way into college lesson plans. Educators can access course packets to use in their teaching. “It’s an entire collection of solutions to almost any type of business problem,” Diana said.
Turns out that Harvard’s 640 ebooks and thousands of case studies provide such a valuable selling point that one in five subscribers opts to pay 50% more to access them. “Despite being written eight or 10 years ago, they still have relevance,” Diana said. “A superuser of our content can benefit from any of them.” And HBR has found it wise to focus on the needs of the superuser.
A valuable collection
Individually, most Harvard case studies sell for $8.95 per PDF and $15.05 for a printed copy. Ebooks are typically priced at$19.95 each. A five-ebook series on effective management — with titles including Getting The Right Work Done and Making Every Meeting Matter — sells for $90.
Certainly, some users are looking to solve a single issue, or for a very specific topic. However, HBR audiences generally face a wide range of business challenges and are interested in learning more. So, for just $18 a month or $180 a year, 20% opt for HBR’s highest-priced subscription tier. It’s the only one that includes access to a curated collection ofcase studies and ebooks. That price also includes HBR’s print magazine, full digital access, and full access to HBR.org’s archives.
Compare that to HBR’s entry level “digital” subscription, which offers access to HBR.org and its archive for $12 a month or $99 a year. For $12 a month or $120 a year, subscribers get full digital access to HBR.org along with six issues of the print magazine — but no case studies or ebooks.
The premium tier offers a superior value for the type of audience that has the greatest affinity for HBR. In fact, Diana said the offer has been appealing enough to convince 20% of new subscribers to ante up for more. The offer has been particularly effective for driving subscriptions outside of North America, according to Diana.
“As an institutional philosophy, we value print a great deal,” Diana said. Still, consumers who start with lower-priced digital-only subscriptions tend to skip the mid-tier offering when upgrading their plans demonstrating that it’s not print that’s the selling point. Rather, it is those case studies and ebook collections.
Updates and value building
While premium subscribers don’t get access to every Harvard Business School case study and ebook, editors regularly update the selection that is available to reflect current corporate conversations. Recent topics of focus have included Blockchain, Black business leadership, and building workforces for the future.
A new ebook is made available to premium subscribers each quarter. Premium users are able to access each title for a full year or until their subscription runs out.
Subscribers currently can’t choose their own ebooks. However, that is a potential change user feedback has put on the team’s radar. “We’re always trying to rethink the product mix without upsetting the customer experience,” Diana said.
HBR learned how much its audience values ebooks and case studies through extensive user research, Diana said. Case study and ebook access were the two benefits users said would be most valuable to them — and most likely to convince them to pay more for an HBR subscription.
They are “that thing Harvard can offer that no one else can,” Diana said.
The pandemic triggered further consumer reliance on media for entertainment, information, and social connections. As consumers reenter life outside the home, publishers are assessing how they will maintain strong post-Covid consumer relationships. Deloitte’s new report, Digital Media Trends, 15th Edition delves into this issue. The analysis identifies consumer attitudes and behaviors and how to best serve their needs to form a strong relationship. The research is based on the survey results of 2,009 US consumers in February 2021.
Consumers have multiple free and paid entertainment choices competing for their attention. Content and cost are key factors driving paid video subscriptions. Content, no cost, and ease of access are drivers for ad-supported video services. Consumers often assess subscription costs based upon their willingness to offset price by viewing advertising.
Nearly the same number of consumers prefer to pay for content as those that prefer ad-supported services. Interestingly, 40% of respondents prefer to pay $12 a month for a service with no ads versus 39% preferring a free service with 12 minutes of ads per hour. Understanding how ad-related preferences and expectations around personalization and privacy impact consumer choice is crucial to driving subscriptions, paid or not.
Consumer frustration and churn
The flip side of acquiring subscribers is retaining them. Listening to consumer frustrations is an important action step for all businesses.
Content they want to view is no longer available on the service: 66%.
They must subscribe to multiple services to access the content they want: 53%.
They find it difficult to access content across so many services: 52%.
A service fails to provide them with good recommendations: 49%.
Anchoring consumers in a customized user experiences with an ease of navigation builds audience engagement and prevents churn. The report states the churn rate for streaming video services remained constant at approximately 37% measuring from October 2020 to February 2021.
Impact of data economy
Consumers are wary of data collection. They want more oversight in the data economy and question the value they get from its collection. In fact, eight in 10 respondents (82%) believe they should be able to view and delete the data that companies collect about them. Further, 78% said providers are responsible for protecting consumers’ personal data. Looking to put controls in place, 77% say the government must do more to regulate data collection and its usage. Importantly, publishers should assess ad-related preferences and consumer expectations around personalization and privacy to inform their internal policies.
As media companies navigate their subscription practices, they must continue to keep consumer preferences in focus. An emphasis on data and analytics is key to create a personalized entertainment service for consumers. Further, a customized user experiences makes it easier for subscribers to find content they want to view. Improving the interface with personalization and ease of use strengthens the audience connection. As the competition for audience grows tighter, it’s necessary to take actions that support developing and maintain a strong relationship with the audience.
Streaming video has long been synonymous with Netflix. However, ad-supported services (AVOD) has started growing in share. According to Nielsen, a third of U.S. streaming households use a AVOD service today, and that viewership is only going to continue to grow this year.
Amid this growth, it’s worth looking at what successful AVODs are doing to break through the noise and succeed. Who better to learn from than Hulu, one of the original AVOD platforms? Here are some things that set Hulu apart from the pack and that other streamers should pay attention to:
Hulu’s tiered structure
Streamers that launched in 2020 bet big on gaining subscribers. So, they gave their platform away for free or in bundled deals. However, we’ll soon start to see subscribers question whether they really need every service they’re subscribed to, especially as the pandemic comes to an end.
Platforms that offer tiered options, including a much cheaper or free ad-supported version, will emerge victorious. With an ad-supported model, consumers are less likely to cut a platform when reviewing their entertainment budget. Hulu is ahead of the pack as it already has a tiered model with an ad-supported offering at a mere $5.99 per month.
It’s not just the tiered model that set Hulu up for success, Hulu has also made a number of strategic and competitive partnerships to take on other streaming giants. Of note, in 2019, Disney acquired 21st Century Fox, which included the 30% stake Fox had in Hulu, giving them a 60% stake. This meant investment in original programming increased significantly.
Taking advantage of the rise in audio streaming, in 2018, Hulu and Spotify announced a bundling partnership that gave users a discounted rate to two very popular platforms. Finally, earlier this year, Hulu entered an agreement with ViacomCBS (rebranded to Paramount+) to include continued carriage in the live TV service of CBS broadcast stations. This also includes CBS Sports Network, Pop TV, Smithsonian Channel, and the CW, as well as continued distribution of Showtime as an add-on.
Hulu as a linear TV substitute
Network partnerships are key for making customers happy. One of the most critical factors of these partnerships is the turnaround time for linear television shows appearing on Hulu. This all depends on what network the show is from, and what type of subscription the customer has.
For example, Fox, ABC, ABC Family, and ABC News shows will generally be available the day after broadcast on Hulu, otherwise they are only available eight days after broadcast online. For a cord-cutting country, this is an invaluable value add. It is worth noting that this is separate from the live TV programming that the platform (which launched in May 2016). Even if the viewer doesn’t subscribe to Live TV, they will have access to new shows the day after they first air.
Content is hugely important on streaming channels. As we see other streaming services launch, it’s important to note the differences in content. For example, Netflix is known for offering the widest selection of movies. Hulu offers a larger collection of current-season TV shows and a smaller selection of movies. This means different viewership and advertisers know it. A full 60% of Hulu advertisers are not advertising on any other ad-supported OTT platforms. These stats tell us that Hulu’s advertisers are unique and that they find value in Hulu’s audience.
As the pandemic comes to an end and people head back into offices and social activities, now is the time for streamers to open an ad-supported tier, develop strong partnerships and differentiate their content offerings. Despite the change in the time spent at home coming soon, we predict that AVOD platforms like Hulu will only grow in popularity as a channel for marketers to reach engaged audiences. The lessons that Hulu can teach new streamers at this time are priceless.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
Subscription growth is expected to scale far more quickly than digital advertising. So, it is fair to say that many papers’ survival is predicated on perfecting a paywall strategy. To that end, subscriptions are becoming a primary consideration for publishers. According to PWC’s Media Trends 2020-2024 report, it is one of the few bright spots for newspapers, growing from $4.5bn in 2019 to $7bn by 2024.
As a result, few accusations raise hackles in digital news like the suggestion someone’s paywall strategy is wrong. We’ve seen that discussion play out many times between adherents of hard paywalls and the advocates for metered models. Now, though, there is growing sentiment that there may only be two or three big subscription players in any one niche. Consequently, rather than focusing on the terms of access, we are now talking about points of differentiation between what is included in each package.
At some titles, non-news products round out the subscription bundle, making it more appealing overall. For example, The New York Times’ Crosswords and Cooking products have long driven subscriptions. And they actually appear to be growing in importance to the company’s subscription strategy. In its latest earnings call, CEO Meredith Kopit Levien also confirmed that the Times’ plans to build a subscription service around its review site Wirecutter.
Few outlets have the funds or the products to be able to bundle additional products into their news subscriptions, however. The points of differentiation for most have to come from their core content. For regional publishers making a play for subscription revenue, that uniqueness comes from the fact that they are the only provider of local news in the area.
However, national titles must differentiate in other ways. That might be a star columnist, or an edition-based publishing method as we’ve seen employed by The Times of London. Or it could even be putting the core product – the news – outside the paywall itself. And that’s where we get back to the accusation that people are doing paywalls wrong. Indeed, putting news outside a paywall is a grievous, unforgivable sin to some in the industry.
High value, no cost
We saw that with the reaction to news sites like The Financial Times and The Atlantic making their coronavirus coverage free-to-access. That was despite arguments from some of us that doing so would benefit their subscription businesses in the long-term. Even so, putting critical news outside the paywall is hardly unprecedented. But what if a national title were to put all of its rolling news outside the paywall, and instead rely on old content to convert people to subscribers?
That’s exactly what the Daily Nation, Kenya’s largest national title, is planning to do. Per Nieman Lab’s write-up: “To read Nation articles more than seven days old … users will have to pay up.” Essentially, the value proposition shifts from free-to-access to paying for content that, in the world of digital news, is practically ancient. Subscriptions start at 50Ksh for one week, 150Ksh for one month, or 750Ksh for one year. (50Ksh is about 45 cents USD.)”
So, can an approach like this work? Can you effectively sell a “news” subscription where the content you’re charging for isn’t, well, new?
Deep dive archive
To answer that question, we need to look at other types of publications that have made access to archives the core tenet of a subscription.
Exact Editions operates a business that runs specifically on offering access to back-catalogue bundles, and a few years ago its managing director Daryl Rayner said: “A large proportion of our partners’ magazines are earning more from institutional subscriptions than they are from app sales in iTunes. It is an important market, not to be neglected.” I can’t imagine the propensity to pay for archives has fallen even as more people become willing to pay for digital subscriptions.
If not strictly news, these are news-adjacent articles, hopelessly out of date and yet hugely valuable. They are snapshots of a given time in history; small wonder that people will pay for access.
Beyond the back issue
Beyond the appeal to the consumer of archived feature writing, however, there is undoubtedly still inherent value in news archives. If there weren’t, there would never have been a drive to collect microfiches of old editions in libraries.
While it has done so with no eye to charging for access, the Internet Archive has digitized “almost the entire back catalog” of the Editor and Publisher. As Joshua Benton writes: “Newspapers’ archives are an incredible storehouse of information about the history of our country. And too many of those archives are, as E&P’s were, left crumbling in some storage facility or hidden away on unindexed rolls of microfilm.”
It’s a social service to archive these old stories, and doubly so at a time when digital news is frequently ephemeral. The half-life of news is infinitesimal. This was a concern as far back as 2009. And it’s only become more important as audiences wise up to the nature of digital news publishing. They appreciate having resources like this to the point that they will pay for it, as the British Library found when it began selling access to its archive of newspapers.
So, why is there reluctance to make these archives the core tenet of a news subscription as the Daily Nation has done, rather than hitching our future to up-to-the-minute coverage? It’s partly due to a discrepancy between what journalists and editors value versus what audiences consider worth paying for. I recently spoke to Ramus Kleis Nielsen, the director of the Reuters Institute for the Study of Journalism, about that dissonance. He argues:
“When news organizations who are turning to reader revenues are trying to sell subscriptions, that light is very focused on us and not very focused on the public that we aim and claim to serve. They are the ones who have to convince. You don’t need to convince me or journalists that what we do is important, or that we want more people to engage with it and even pay for it. You need to convince the people who aren’t doing it.”
Because those of us who work in journalism focus on the now, on being first. And, therefore, we can lose sight of what audiences actually need: context. It’s natural that we should fear putting our most valuable content out there for free. This is why hackles raise whenever someone brings it up. But if what we value isn’t what audiences value? How can we know what they think is really worth paying for?
More crucially, those archives offer perhaps the most valuable point of differentiation from rivals. “Breaking” news is easily replicable online. And, while it’s important it isn’t necessarily uniquely valuable. What is valuable is the analysis – the context – built around that news. As with the viral “Who is the banana republic now?” column that the Daily Nation found drove subscriptions, that evergreen content – abundant in newspapers’ archives – is both differentiator and draw for audiences.
Physical and digital provisions are no longer silos in themselves, and are forming parts of a more unified strategy
Payments and subscription dates can be disconnected for greater flexibility
Offering the ability to pause subscriptions rather than cancel outright can reduce churn
Bundling products together to form more focused packages can be more enticing than the all-you-can-eat approach
Streamlining registration and payment journeys is critical to maximizing conversion
A common strategy in the publishing sector is to provide a certain amount of content for free. This might be a limited number of free articles, or content types/genres that is free to unregistered customers. Meanwhile, in OTT and SVOD, the general rule is to have content locked behind a paywall or have all content available for a limited free trial period. This is a commercially restrictive “all or nothing” approach.
An alternative value exchange would be to provide a metered registration wall. In this way, you offer customers the ability to watch selected content for free in return for creating an account and sharing their personal details.
For services that do not provide a free trial, this can help entice new customers who get the opportunity to see the quality of the service. For churned customers, it is an opportunity to bring them back in. It also generates an opportunity to increases customer loyalty through other strategies.
A common scenario within the publishing sector, particularly those publishers that operate physical delivery, is where customers wish to “pause” their subscription for reasons such as going on holiday, or a financial decision. These customers do not want to churn. In this “subscription holiday” approach, access and payments are paused for a set length of time agreed by the customer and the provider.
OTT, on the other hand, is either active or inactive. Customers who need to make this decision must typically cancel their subscription and then remember to reactivate. Once churned, they may choose not to come back at all. There are some services, particularly sports services such as BT Sport and Sky Sports, which offered to pause subscriptions in part of 2020 due to a lack of sports events. In the case of BT Sports, the payments could be halted, or donated to the NHS. Other sports-based OTT services offered payment holidays to their customers during this time.
For OTT Sports, this is helpful for retaining customers who would otherwise churn in the off-season. Instead, customers can be at ease knowing their subscription and billing will only be active when they need the service.
Bundling is the process of combining multiple products and offering them in a single package. Using customer data insights and personalization solutions such as Zephr, businesses can get clear insights into the reading and viewing habits of their customers.
This data can be used to identify products that often perform well together. Then, those products can be offered in a package to the customer dynamically as an acquisition incentive. For publishing, this could be discounted access to certain articles based on topic, a group of magazines, or relevant discounts on third-party services. For larger OTT providers, this can be access to specific categories such as kids shows or movies.
Express registration and checkout
Netflix offers a model example of easy signup. Provide an email address and password and the customer account is ready. Amazon and Now TV both have simple sign-up pages to get customers viewing their content quickly. The key element is reducing the amount of personal data collected at the point of sign-up. The typical registration flow will offer email and password, or Social Sign On. Long signup forms are rare in the OTT space.
Publishing can stand to learn from this lesson: Customers expect as frictionless a sign-up process as possible. Where metered registration walls are used, it is a good idea to put the single sign-up process in a prominent place, using SSO and email/password only.Ensuring the registration and payment appears on a single page also reduces time and friction, which can increase acquisition rate. Publishers and OTT providers based in the European Economic Area (EEA) should also be aware of regulations around Strong Customer Authentication (SCA) and factor customer identity checks into their billing journeys.
Best of both
Acknowledging that content does not have to be an all or nothing approach. Using data to personalize offerings and create bundled content tailored content is a great way to win signups from customers.
Physical and digital are no longer separate silos but are both key parts of the acquisition strategy. The popularity of video only continues to increase and is now the expected content format of any brand. The lines between OTT and publishing are continuing to blur. So, organizations that learn from this shift in expectation early stand to see major gains in customer acquisition.
Held virtually and expanded to five days, the 2021 edition of the member’s-only DCN Next:summit (February 1-5) was certainly unlike any that came before. Fittingly, CEO Jason Kint kicked things off by reflecting on all that has changed over the past year and, perhaps more importantly, what has not.
“Publishers have been covering three of the biggest stories of our generation, all intersecting at the same time,” he said. “Your ability to stay true to your brands and to the public trust, despite personal and professional obstacles, has been remarkable.”
Amid all of this, Kint reminded attendees that the industry will need to keep its priorities straight to fuel a stronger digital media marketplace. Indeed, a broad theme of the event was the many ways publishers are adapting to shifts accelerated by the pandemic by deepening their direct relationships with audiences.
Platform power plays
Constellation Research founder and chairman Ray Wang expanded on that topic in the opening session, an interview by BBC correspondent Larry Madowo. Noting increased competition from outside the industry, Wang called for greater cooperation among media companies.
“What we have is a fracturing in the marketplace, which is making it very hard to compete with the digital giants,” he said. “In order to succeed, you have to band together.”
Axel Springer CEO Mathias Döpfner told Axios media reporter Sara Fischer that the “immensely powerful position” of tech platforms will need to be addressed by regulators. At the same time, he shared an optimistic outlook for the future of journalism. Unlike the print-centric business he took over 20 years ago, digital journalism carries lower costs, he said, allowing media companies to invest more heavily in editorial.
“You have no deadline. You have unlimited space,” Döpfner said. “And you can combine all aesthetic forms of journalism. It can be video, it can be audio, it can be text, it can be all combined. I think we are still in the early days of digital journalism and its creative potential.”
Monopolies and media models
Döpfner added that there’s a future for both subscription- and ad-supported journalism on the web, and that many organizations will continue with a mix of both. The future of advertising, however, depends on the role of platforms.
On the contrary, NYU marketing professor Scott Galloway said the key to survival for media companies will be subscriptions. He said that giving content away for free to “innovators and algorithms” was “the biggest mistake journalism ever made.”
Interviewed by Henry Blodget, the CEO of Axel Springer-owned Insider Inc., Galloway added that regulators should further address platforms’ data collection capabilities to mitigate their harmful effects.
POLITICO antitrust reporter Leah Nylen and Yale economist Fiona Scott Morton then explored potential regulatory remedies to the anti-competitive practices of tech companies. Scott Morton encouraged media companies to help educate regulators on the impact of “dominant advertising intermediaries,” such as Google.
“These markets for digital advertising are not something that most people understand,” she said. “It requires effort on the part of the affected parties to help move the conversation forward and push regulators in a direction that’s good.”
“There’s plenty of room for other digital journalism outlets to survive and thrive,” she said.
“We’re still in the early days of the pay model. It wasn’t that long ago that everybody said things like ‘digital news wants to be free.’ Some of our journalistic competitors are having great years for subscriptions. We look at all of that as making a market.”
To build on the 2.3 million digital subscriptions the Times sold in 2020, Kopit Levien said the outlet will be investing in covering live and developing news. Additionally, she suggested that publishers should work to reduce their dependence on third-party data to help create better digital experiences for subscribers.
Meeting audiences whenever, wherever
CNN chief media correspondent Brian Stelter sat with CBS News president Susan Zirinsky for a discussion on how the pandemic has accelerated shifts in the TV news business. Gone are the days of holding major scoops or interviews for primetime, Zirinsky said. Even broadcast news must adapt to a 24/7, cross-platform model.
“We want to give people facts,” Zirinsky said. “We want to share information. This is really what it’s about: being on every platform that is available, taking our unique content and putting it in as many places as a consumer is.”
One of those rising platforms, audio, was the topic of conversation between Gimlet Media head of content Lydia Polgreen, Pineapple Street Studios co-founder Jenna Weiss-Berman, and Recode’s Kafka.
While advertising remains a lucrative source of revenue, Polgreen said the medium needs some advancement in terms of measurement and audience-based selling, similar to other formats. Weiss-Berman added that the mechanisms for connecting ad buyers with content creators need development. Both agreed that there is still tremendous room for growth. The next big challenge will be reaching people who don’t currently listen to podcasts.
“If you look at the research, podcast listening has tripled since 2014, in terms of share of time, but only from 2% to 6%,” Polgreen said. “In a world where audio is completely on-demand, the possibilities are pretty endless.”
The future of media and journalism
Elsewhere on the program, Snap CMO Kenny Mitchell and Clubhouse CEO Paul Davison each explored growth strategies for their respective platforms. They also touched on the importance of creator relationships and the intersection of content and community.
Julia Angwin, editor-in-chief and founder of The Markup, took attendees behind the scenes of The Atlantic’s highly successful COVID tracking project. Staff writer Alexis Madrigal, who co-founded the project, reflected on the many challenges involved in merging numerous disparate sources of data to meet a critical need for information in the early months of the pandemic.
Angwin noted that the project exemplifies the tangible benefits that journalistic endeavors can provide to the public, particularly when providing information that might be “politically inconvenient.”
On the final day of the Summit, Stacy-Marie Ishmael, editorial director at The Texas Tribune, led a lively conversation with 2PM Inc. founder Web Smith and The Washington Post’s VP, commercial, Jarrod Dicker, on the future of media. In line with the trends, the discussion largely focused on the rise of independent creators.
“Twitter and other platforms have enabled individual people to build their own reputation. It’s created an entirely new landscape,” Dicker said. “Creators can see what their individual value is. I think that’s a change in the discourse.”
New year, same values
In closing, Kint said that, despite adapting well to a virtual event, he hoped to see everyone back in Miami for the 2022 DCN Next: Summit. In the interim, he advised those in attendance to focus on three key things: strengthening bonds with audiences and partners, understanding the core needs of both, and emphasizing agility in response to change.
“Every member of DCN has a direct and trusted relationship with their users and advertisers,” he said. “Our Summit is the one place where, in the comfort of a closed-door environment, surrounded by others who share our values, we can also share our successes and vulnerabilities.”
Nobody ever said subscription success was easy. Yet over the last few years, the press in the U.S. and U.K. have had some things stack up in their favor. Political heat triggered a slew of signups as did frenzied interest in trustworthy information around Covid-19. And audiences, particularly younger ones, have generally become more willing to pay for subscriptions.
It would be premature to suggest that any of those trends is nearing its zenith. However, publishers are always trying to attract the next great swath of subscribers.
Unfortunately, competition for those audiences is only going to become fiercer. The majority of financial reports from news brands — large and small — over the past year have made plain that advertising revenue is in decline. The New York Times’ latest report, for instance, states:
“Digital readers were the only growth business for The Times. Every other unit fell. As online subscription revenue rose 34 percent, to $155.3 million, print subscriptions decreased 3.8 percent to $145.7 million. And advertising sales, once the lifeblood of the newspaper business, dropped 30 percent, to $79.3 million.”
The proportion of people paying for a digital news subscription is up across the board. Notably, younger audiences are far more likely to pay than those over 55. Those are both excellent indicators of the future health of subscriptions. It’s less clear, however, that there will be enough subscription revenue to go around, especially in the short term. Many vital papers will – grim as it sounds – probably not last to reap the benefits of these positive trends.
So, where are the successful publishers seeking out new audiences?
A common tongue
For the most part, media companies have — due to a lack of resource and local knowledge — tended to focus on their core geographical markets. Many have bureaus or access to wires within other countries to draw from. But few have made them a focus of revenue growth.
Where it has occurred, it’s typically been media brands in countries that share a common language. The Guardian overreached itself with its launch of Guardian U.S., but is forging ahead in Australia. Earlier this year The Economist redoubled its efforts to become a name brand in the states.
Magazines have made the leap too: The Week Junior’s launch in the U.S. was predicated in part on the shared language. The title’s chief executive Kerin O’Connor said that: “The first week actually has been fantastic, we’ve sold 1,000 subscriptions. I mean, I think that’s incredible for a product that no one’s ever seen in America. I know it’s a big country, but that is a hell of a starting statement in terms of the enthusiasm that we’re feeling for this product.”
Breaking language barriers
On other occasions, foreign expansion makes sense when there is significant lexical similarity between countries. El Pais, the second-largest Spanish-language newsbrand, has a limited presence outside of Spain, with English-language inserts in titles including The International Herald Tribune. Despite that, in 2013 it launched a Brazilian Portguese site in an attempt to grow its audience outside its home nation, an effort that has led to El Pais brand becoming the second-most used news site in Latin America last year.
The practice of launching in countries without a shared language is more common among well-resourced English titles. In 2016 it was widely reported that Forbes, among others, were eyeing France as a target for expansion. Given Forbes’ model of providing a platform for writers, it’s unsurprising that expansion using its existing platform is continuing.
Others might well follow suit, as titles increasingly try to leverage their brands to launch in new territories. In September, the London-based newspaper The Independent (no stranger to capitalizing on its brand) announced plans to launch Independent en Español, a new website created to serve the Hispanic audience in the U.S. and other Spanish-speaking markets.
In doing so it seeks to take advantage of an extremely lucrative new audience, as the InPublishing write-up makes clear: “According to recent data from the Selig Center for Economic Growth, Hispanic consumers have a buying power of $1.5 trillion – larger than the GDP of Australia, and a 212% increase in a decade.”
While The Independent’s focus is on brand partnerships and advertising, other subscription-based publications are making similar moves. As the pressure on advertising revenue becomes more acute, I would be shocked if more publications did not take the plunge and launch subscription products in other countries.
The early movers in that space, with significant brand recognition, will be the key beneficiaries. The titles that have the benefit of being primarily published in the English language could even eschew translations, as The Washington Post did when it launched the still extant Today’s WorldView in 2017 to grow its international subscriptions.
A wider funnel
Of course, publishers should not neglect any opportunity to build their domestic subscription bases. The proportion of people willing to pay for digital news specifically tends to hover around the low double digits in many countries. As a result, news publishers are widening the top of their marketing funnel in an attempt to bring as many people into the fold as they can.
That’s especially true when it comes to attracting young audiences. The vast majority of digital subscription titles offer student subscription prices. They do so with the tacit understanding that they are taking a hit on present revenue while investing in future subscribers. Student subscriptions are nothing new, but the breadth of titles aimed specifically at professionals, like The Financial Times, offering them widens all the time.
Creative product offerings
Nor is it always quite so mundane as a discount. The New York Times uses its flagship The Daily podcast as a free introduction to its content. Four million daily listeners to the podcast alone offers a huge audience for marketing messages, particularly used in partnership with adjunct products like newsletters. I’ve written before about the value of other subscription products as additive value to the total package, with Crosswords and Cooking both adding significantly to The Times’ total subscriber base.
The same is also true of other titles. Publications like The Guardian use non-news products to introduce people who might not pay to support news alone to the subscription mentality:
“There were notable increases in the number of people subscribing to the premium version of The Guardian’s mobile phone and tablet app, plus people subscribing to the Daily edition and the new Guardian Puzzles app. About half of the regular contributors are from outside the UK, aided by growing numbers of readers in Australia, the US and across Europe.”
One thing that all these products have in common? They skew younger than traditional news and information. Younger people are more habituated to pay and could provide greater lifetime value than older audiences. Small wonder, then, that media outlets are trying to appeal to as many of those people as possible. Between new products and new territories, newspapers are looking ahead to mitigate any potential slowdown of subscription revenue growth.
The coronavirus pandemic has disrupted every sector of the global economy, and digital publishing is no exception. The virus and the resulting lockdowns have depressed ad spend and changed consumer behavior. It has also forced publishers to rethink foundational aspects of a business model that was already under pressure. For many publishers, the pandemic has increased these pressures and accelerated trends that were already on the horizon. In particular, it has hastened the need to shift to a greater reliance on subscription revenue.
In recent years, publishers have worked to diversify their revenue streams. However, the pandemic has challenged this revenue remix as advertising rates have fallen precipitously and live events remain off the table for the foreseeable future. At the same time, media companies have seen spikes in traffic as consumers seek out information about the virus or new content to pass the time in lockdown.
We spoke to two leading digital publishers that have been successfully navigating this period of change. We discussed how the pandemic has impacted their subscription programs, their strategies for converting new readers into paying subscribers, and how they plan to maximize retention.
Two reader revenue models
Corinne Osnos manages Audience Strategy at Vox Media. The digital publisher operates a portfolio of properties across multiple verticals and has not historically relied on reader revenue. Vox Media maintains a diversified revenue model across its portfolio that includes advertising, branded content, and commerce across print, digital, audio, and video content.
Last year, however, Vox acquired New York Media, which is heavily grounded in reader revenue from subscriptions. New York Magazine and its related digital properties – like Vulture, The Cut, and Intelligencer – use a metered paywall through which they allow readers to sample a limited amount of content before prompting them to subscribe. In April, Vox Media rolled out a reader contribution model on Vox.com to better leverage reader revenue for the network.
Emilie Harkin is Executive Director of Customer Growth at The Atlantic, a news, politics, and culture media brand. Launched as a print magazine in 1857, The Atlantic has extensive experience with reader revenue having relied primarily on subscriptions along with live events to support itself for over 160 years. In September of 2019, it rolled out a pay model for its digital property for the first time. Like New York Magazine, The Atlantic uses a metered paywall that gives readers a chance to try before they buy.
How they’re gaining
Both publications have seen significant traffic and subscriber growth since the start of the pandemic. According to Harkin, The Atlantic has seen subscriptions rise steadily since March, with growth outpacing pre-pandemic projections. She attributes this additional growth to the decision the magazine made in March to exempt its coronavirus content from the metered paywall. They provided readers with unlimited access to The Atlantic’s in-depth reporting on the virus.
“We felt really strongly that ungating our Coronavirus coverage was a public good,” Harkin said of the move. For now, The Atlantic plans to keep essential COVID coverage ungated indefinitely, replacing its paywall meter with hyperlinks that direct readers to a hub that aggregates all the magazine’s coronavirus coverage. Despite the decision to steer this new audience toward more free content, Harkin still credits The Atlantic’s pandemic journalism with driving growth across the magazine.
People “wanted to see what The Atlantic had published about the Coronavirus. But we also saw that people did move from the Covid coverage to other areas of the site.”
New York Magazine is also seeing substantial subscriber growth in the time of Coronavirus. When asked to compare subscriber gains during the pandemic to pre-pandemic projections for 2020, Osnos points to April, during which the magazine saw its single largest month of subscriber growth on record. They added roughly three times as many subscribers as compared with the same period in 2019.
Vox Media is also leaning into member-only virtual events and community building to drive growth during the pandemic. “This week, we announced the launch of “Inside New York.” The new subscriber-only event series gives our readers an unfiltered behind-the-scenes look at our magazine. “We also launched Pivot Schooled, a first-of-its-kind virtual event series bringing New York’s award-winning Pivot podcast to life,” said Osnos.
“As we scale for a larger audience, we’ve remarketed our Vulture membership program to foster a digital community. We’re utilizing the program to deepen brand appreciation and grow paid subscriptions.”
How they are maintaining
While growth remains steady, both publishers are taking steps to ensure that they retain these new audiences post-pandemic. The unusual circumstances driving the growth mean that it’s difficult to predict what will happen when life starts returning to normal. Osnos and Harkin aren’t leaving anything to chance. Both are rolling out new email marketing and reader communication strategies to cement their connection with readers.
“We’ve been working on deepening our subscribers’ relationship to our brands through onboarding and engagement campaigns. But we’ve not seen churn definitively tied to economic or editorial reasons thus far,” said Osnos. “Our largest successes for mitigating churn are often the direct results of improvements to our billing and renewal communication series. We find that transparency with matters of account and expanding our subscriber benefits with events, supplemental content, and other benefits have provided the greatest results when retaining subscribers.”
According to Harkin, The Atlantic will also emphasize communication and reader connection. “We really value the relationship with our readers. We’re constantly evolving and developing our retention plans through email welcome series and onsite experiences as well as how we talk to people throughout their life with email marketing and on social media.”
A new normal
It is unclear how long Covid-19 will be with us and which of the changes to daily life and reader habits will persist once the virus is contained. What is clear is that, in the near-term, publishers’ reliance on reader revenue will be greater than at any other time in the digital era. The work publishers do to grow subscriptions today, and to retain those subscribers as the situation evolves, will determine how well-positioned they are to survive and thrive.
As for Osnos and Harkin, both expressed the belief that the success of their efforts ultimately rests not in the hands of marketing or revenue teams, but with the quality journalism of their respective publications. As Harkin puts it, “What people ultimately subscribe to is your journalism. So, as long as the quality of your journalism is there, and the quality of your marketing reader relationships match the quality the journalism that you’re producing, you’ll have a pretty winning combination.”
Travel industry intelligence site Skift has become the latest publisher to put membership at the forefront of their business. CEO and founder Rafat Ali announced the launch of Skift Pro on Twitter, saying that “Skift is now officially a Subscription-First business information company.”
Skift joins a growing number of publishers turning to reader revenue as a way to diversify revenue streams and mitigate the impact of the coronavirus pandemic on other aspects of the business like events and advertising.
We spoke to Skift co-founder and Chief Product Officer Jason Clampet about the details of the launch, how it sits alongside its other products, and why this is such an important shift for the niche travel publisher.
Laying the foundations
Skift Pro has been in the works for over a year. The publisher already has two existing subscription products: Skift Research, which does deep-dive reports, data and analysis on travel industry trends, and Skift Airline Weekly, a subscription product dedicated to aviation news and analysis. The two products were faring well. However, Skift had een eyeing examples from other B2B companies like Digiday and Business of Fashion, which made subscription models a more central part of their strategy to build business resilience.
The first task the team had to tackle before adding another subscription product into the mix was to bring everything into one payment platform. “We built our own database to store users and details about the payment process so that everything was seamlessly tied together,” Clampet explained. This meant that subscribers to multiple products would be able to manage their subscriptions in one place.
In the last week of February 2020, Clampet held a big team meeting where he walked everyone through Skift Pro. In particular, he told the team how excited they were to be launching it on March 16th. But March 11th would be Skift’s last day in the office.
“We decided not to launch Skift Pro at that point,” said Clampet, aware of the potential scale of lockdown disruption to the travel industry. “Instead, we did a Guardian-style contribution model. We said, “Hey, we’d love direct reader support. You can make a one time gift or a recurring gift.””
Spurred by the success of the contribution model, Skift then introduced a ‘Pay what you want’ model to their new online events and webinars, using the payment system they had built to support subscriptions the previous year. As the initial shockwaves of the pandemic settled, Skift Pro’s launch moved to the top of the agenda.
Despite the initial delay, Skift’s decision to launch a membership product marks an important shift in the publisher’s relationship with its readers. Rather than simply adding another revenue stream into the mix, Skift Pro will help build business resilience and audience engagement, as well as strengthening their editorial work.
“It’s become a centerpiece of how we think about our readers and customers,” said Clampet. “Hopefully it’ll be a much more significant part of our revenue, but it’ll also allow us to tie things together better.”
Clampet believes that Skift Pro members will be more deeply engaged with the brand, from attending events to reading its analysis and reporting. In turn hopes that he and the team will be able to learn more about them. “It’s a way for us to have a better insight into who our users are, and then serve them better,” he explained.
This plays a key part in the presentation of Skift Pro as a membership product rather than a straightforward subscription. Skift Pro goes beyond just access to stories online. It includes additional content and events, as well as a custom newsletter which will start up in August, for $365 a year, or $1 a day.
“We want it to be more than just a newsletter in your mailbox every day. It’s about being actively engaged with other things beyond just reading,” Clampet said.
Launching in a pandemic
Following the delay, deciding when was a good time to finally launch Skift Pro was a subject of much internal discussion. Skift’s other major revenue streams are from its content studio, which works with travel brands to develop bespoke content for them, and its events. Both have suffered as a result of coronavirus, making reader revenue a more urgent consideration. But the travel industry as a whole is also under immense pressure, with many furloughed or laid off.
“It’s hard to know what is a good time right now for anything,” Clampet explained. “The reality of business is that direct from consumer revenue is vital to just about any media business.”
“We also know that the people who are still at companies in Europe and Asia, which is waking up again. They need actual information to do their jobs better and make smarter decisions. We’re still here providing that, so in that sense, it is a good time [to launch].”
A new route
Skift Pro may be live, but the team aren’t resting on their laurels. Clampet’s main goal for the membership is that people are really happy about their decision after signing up, and that is going to require some changes to the product as time goes on.
“The launch is just the very first phase for us. We need to be constantly evolving the product experience,” he emphasised. “What it is right now is going to be very different from what it is a year from now, and hopefully we’ll have made a lot of smart decisions.”
This is a very important lesson that other publishers with subscription or membership products can learn from. For Skift, the launch is not the end of the road. It’s the starting point of a product which will change and grow as they focus on the reader response, and how they can best serve those needs.
Over the past decade, the nonprofit news model has offered some hope while traditional news outlets struggled to keep afloat. Without the need to rely on advertisers and instead making money through fundraising and memberships, nonprofit news outlets have proliferated.
But recently, that hope has flickered. The worldwide Covid-19 pandemic, or coronavirus, triggered a tsunami to batter an already troubled industry. With advertisers losing money and pulling ads from news outlets, media companies are furloughing and laying off workers. And, in some cases, publications are being shut down temporarily or entirely.
How will nonprofit news outlets fare in the face of this pandemic and the economic downturn that follows? Perhaps better than traditional news outlets. New York Times columnist Ben Smith went so far as to advocate letting the for-profit model fail while supporting nonprofits instead. However, even with booming readership and engagement, nonprofits are concerned about how an economic recession will affect donations and fundraising, and ultimately, their future.
The promise of nonprofit news
Traditional news outlets began wrestling with declining revenues long before coronavirus spread throughout the world this winter. Although digital traffic has either increased or leveled off, advertising revenue continues to fall. Pew Research Center’s most recent State of the News Media Report found that ad revenue dropped by 13% from 2017 to 2018, continuing a trend that began in the early 2000s.
Further, the number of newsroom employees in the newspaper sector was essentially cut in half from 2006 to 2018. The number of newsroom jobs dropped by 36,510, according to the Pew report.
But nonprofit news organizations sketched a different picture of the future, offering the news industry a sense of hope. “It may be one way to start to repair the loss of trust in and public engagement with journalism in North America,” wrote University of British Columbia associate professors Alfred Hermida and Mary Lynn Young in Nieman’s predictions for journalism in 2020.
Journalism philanthropy quadrupled over the past decade, according to a 2019 Media Impact Founders report. Today, more than 230 nonprofit media organizations are members of Institute for Nonprofit News (INN), an organization that began with 27 members in 2009. Over two-thirds of INN’s members have launched in the past 12 years. INN’s members also employ about 3,000 staff, including 2,000 journalists, according to the organization’s 2019 Index.
These nonprofit outlets have provided necessary and often resource-heavy journalism that newspapers with dwindling funds might struggle to take on, especially watchdog and investigative reporting. Many nonprofit organizations cater to local audiences or report on niche topics, such as gun control, the environment, or education.
Certainly, many nonprofit news outlets earn some revenue from advertising and corporate sponsorships. However, these organizations rely most heavily on memberships and donations from individuals, families, and foundations. In the past, foundations provided the majority of the funding for nonprofits. However, the 2019 INN Index found that individuals and families contribute now about 40% of nonprofit funding. That same year, foundation funding dropped below 50% for the first time.
Even some for-profit news organizations have integrated strategies from the nonprofit model. The Guardian made an operating profit in 2019 for the first time in two decades after pulling off a financial turnaround strategy. This was, in large part, thanks to donations from more than one million readers.
Of course, nonprofit outlets have not been the deus ex machina to single-handedly save the news industry. Journalism scholars have pointed out the shortcomings of a nonprofit business model. These include the risk of catering to elite donors rather than publishing stories for a wider audience. Larger nonprofits also tend to fare better than smaller organizations, which may struggle to raise enough funding.
Enter the pandemic
When coronavirus spread — first to Asia, then Europe, and then the U.S. — it dealt a serious shock to the news industry. Digital traffic to news websites increased significantly, with anxious visitors reading about the growing number of coronavirus cases, troubles with virus testing, and best practices for health and safety.
Despite this boost in page views, advertisers faced with their own losses have hit the brakes on many ad campaigns. They’ve also intentionally reduced the number of ads on digital news websites due to concerns about appearing next to coronavirus news. Buzzfeed News found that advertisers stopped over two million ads from showing up on news sites in the first three weeks of March.
Nonprofits have faced consequences too, although they haven’t been so catastrophic.
High Country News — an independent magazine based in Colorado has maintained its nonprofit status for decades. Like many other news sites, it has seen a considerable increase in online readership of late.
“Every story that we’re putting out on COVID-19 has just blown up. There just seems to be a huge appetite for those stories,” said Paige Blank, associate editor at HCN who is now leading the coronavirus coverage at the organization.
The number of users in March rose about 48% compared to the same time last year, and the number of new users also increased by nearly 53%. Plus, visitors are not just reading stories, but also becoming more engaged.
“The tip form has been getting a ton of responses from our readers,” Blank said. “We’re actually able to gauge what people are worried about right now. And we’re using those tips to tailor our coverage for our readers.”
But will revenue follow?
But whether that traffic and engagement can translate to sustainable revenue is unclear. So far, HCN hasn’t seen an uptick in donations in March. The magazine hopes to harness the traffic by launching an online fundraising campaign in late April, said Laurie Milford, development director at HCN.
Still, the magazine delayed a 50th anniversary campaign which it expected to raise $10 million this year. (The campaign gala is now scheduled for June 2021.) Overall, HCN expects to see a 25% reduction in general fund receipts in 2020.
HCN’s predicament is pretty representative of what most nonprofit organizations will be grappling with in the coming months, according to Sue Cross, INN executive director and CEO.
“It’s a mixed picture, she says. However, the situation “appears quite a bit better than the situation for for-profits,” Cross said. “(I’m) hearing of really significant increases in individual donor support. But some others that had a lot of events/sponsorship revenue or advertising income are hurting… For most, their community position and funding are up now, but uncertainty remains about future grant funding.”
Not all bad news
When it comes to for-profit news outlets like the Guardian, which also largely rely on reader donations, reader contributions could potentially act as a sort of cushion, softening the pandemic’s severe financial blow. However, thus far, it’s unclear how much of a difference reader donations will make.
In March, the Guardian received about 2.17 billion page views, far bypassing its previous record of 750 million pageviews last October. And the increased traffic appears to be increasing financial support from its online readers, according to editor-in-chief Katharine Viner. However, mid-March the Guardian announced a projected a loss of £20 million over the next six months from declining advertising and newspaper sales, which has led to furloughs and pay cuts.
Indeed, many news organizations hope that readers will see the value of their coverage during the coronavirus crisis and, despite the economic uncertainty, donate. Case in point: Chalkbeat, a nonprofit that focuses on education news in cities like Chicago and Detroit, gained $1,700 in just one week after an appeal for financial contributions
Chalkbeat has focused its reporting over the past month on how schools are dealing with the pandemic. Traffic tripled in March, according to figures from editor-in-chief Bene Cipolla. Like at HCN, Chalkbeat readers have been involved in spurring content; by the end of March, Chalkbeat had published 20 stories based on the responses to callouts asking for reader questions.
Instead of running its annual spring campaign, the organization is treating the COVID-19 crisis as a campaign unto itself. This means sending out weekly appeals, which resulted in significant donations and 21 new members after one week, according to Kary Perez, senior marketing manager.
In addition, “we have also been approached by lots of people asking us to come to their communities,” said CRO Maria Archangelo. “When they see the kinds of information that we are able to deliver to Detroit and Memphis, they realize what their communities are lacking.”
The future is less certain when it comes to Chalkbeat’s philanthropy partners and major donors, who are dealing with the pandemic consequences on their own terms. Archangelo hopes that donors and funders will realize the importance of Chalkbeat’s coverage once the pandemic has passed, and will continue to provide funding.
For Chalkbeat, HCN, and all other nonprofit news organizations, it’s difficult to calibrate the full impact of COVID-19. But for now, compared to the rest of the news industry, nonprofits seemed to have maintained a level of resilience in the wake of coronavirus’ brutal blow.
Doggedly following the pace of the duopoly and facing falling print revenue, they anxiously watch as an increasing number of rivals drop out. And let’s face it, the route has only continued to slope uphill.
The next great hope is in digital subscriptions. Over the course of 2019, revenue growth was strong for many of the larger publishers that have been investing in subscription marketing and retention. The New York Times – effectively the poster child for news subscription success – reported its highest ever subscriber total in August: 4.7 million paid subscriptions across digital and print, of which close to 3.5 million are digital. Times’ CEO Mark Thomson said: “We’re making steady progress toward our goal of reaching 10 million total subscriptions by 2025.” A big part of that, as we’ve previously reported, is by converting young people to paid subscribers.
Meanwhile, the Guardian achieved its ambitious break-even target of financial stability by mid-2019, as 655,000 regular monthly supporters and a 300,000 one-off contributions buoyed their balance sheets. This suggests that readers do not necessarily even expect exclusive content to pay what is effectively a subscription in all but name. Similarly, Wired has claimed success after introducing a paywall in 2018, announcing a 300% increase in the number of digital subscribers.
Nor do the titles need to be international in scope to make successes of paywalls: a few years after launching a digital subscription the Shawnee Mission Post has over 2,500 subscribers. That’s more than enough for a local title that employs three people full-time. In the UK, too, more regional titles are launching paywalls as well. Some of JPI Media’s newspapers with larger circulations are currently trialling paywalls, too.
Overall, WAN-IFRA’s World Press Trends report found that: “Digital news subscriber numbers worldwide have increased 208% over five years to 2018 and are expected to grow by a further 13% in 2019.”
Small wonder then that so many news
publishers are following the leaders and attempting to make digital
subscriptions a larger part of their business strategy. There are countless
examples of investment into smart paywalls, better retention efforts, and into
data tools designed with the sole intention of signing up users.
That’s not to say that erecting a paywall is a guarantee of survival. Joshua Benton’s in-depth look into the L.A. Times’ disappointing subscription results in July makes it clear that if even one of those areas of investment is neglected, the result is that a publisher can be left running in place. They face failing to sign up sufficient subscribers or worse, a loss of existing ones.
A fear of fatigue
But the real shadow that falls across any conversation about paywall success is the term ‘subscription fatigue.’ Despite encouraging signs that readers have not yet reached this critical tipping point, the worry looms large. Essentially, it’s the tacit acknowledgement that audiences only have so much disposable income, that people are far more likely to subscribe to multiple entertainment products than a single news one, and that the people who have already subscribed were effectively the low-hanging fruit.
That last point was referred to in Wired editor-in-chief Nick Thompson’s one year paywall retrospective. He said, “We don’t know if they’ll resubscribe (please do); we don’t know if they’ll ultimately pay higher prices (please do); we don’t know if it’ll be as easy to get the next batch of people to join (please do).” Of those concerns, it’s the latter which is the most pressing.
In the UK, for instance, only 7% of people currently pay for a digital news subscription (a tiny increase over the previous year). On the face of it, that gives publishers a lot of headroom for growth. However, they’re up against competition for finite disposable income with entertainment services like Spotify, Netflix, Disney+, PlayStation Plus, etc. According to the latest Ofcom Media Nations report, for instance: “Netflix, Amazon Prime Video, Now TV and Disney Life – increased from 11.2m (39%) in 2018 to 13.3m (47%) in 2019.”
That’s broadly in line with other findings,
which demonstrate that people are far more likely to prioritize entertainment
content over news. In fact, WAN-IFRA found that younger people – on whom many publishers are pinning their
hopes – are less likely to prioritize a news subscription: “Just 7% of under 45s
would pick news over everything else for the next year, compared to 15% of
those 45 and over.”
What is news?
With relatively sluggish growth for news
subscription numbers and the implication that it is seen as a luxury for young audiences,
can publishers combat the
potential “subscription fatigue” among audiences and
prove they are as vital as an entertainment subscription? For most audiences,
the reality for the foreseeable future is that entertainment will be prioritized. So, is it just that
publishers need to reappraise what a successful ‘news’ subscription looks like?
A report by researchers at the University of Minnesota’s Hubbard School of Journalism and Mass Communication, in collaboration with the News Media Alliance and the Star Tribune, found a positive correlation between people’s willingness to pay for entertainment and news. Their findings suggest that people’s increasing willingness to subscribe to entertainment is a tide that floats all boats.
It follows, then, that the way younger
audiences think about subscriptions to both entertainment and news is similar. And, ultimately, they want unique
content in a format that suits them best.
Bridging the divide
For instance, a paid-for subscription to something like a news podcast could help close that divide between entertainment and news. Media analyst for the Reuters Institute for the Study of Journalism Nic Newman recently told me: “Publishers are really finding it hard to reach and engage with younger audiences. It’s not ‘news’
For instance, a paid-for subscription to something like a news podcast could help close that divide between entertainment and news. Media analyst for the Reuters Institute for the Study of Journalism Nic Newman recently told me: “Publishers are really finding it hard to reach and engage with younger audiences. It’s not ‘news’ [that’s the problem], it’s about how you create content that is interesting, engaging, fun… But is also meaningful, and to me that’s where the daily news podcasts are hitting all those spots at once.” Notably, NYT CEO Mark Thompson has discussed spinning its flagship title The Daily off into a paid-for product in its own right.
In France, Le Monde is experimenting with a blend of news and entertainment content, with its three new podcasts being explicitly in service of squaring that circle. As Digiday’s Lucinda Southern notes: “French news publisher Le Monde has launched three podcast series adapted from investigative articles that have been successful at driving high numbers of new subscriptions.”
So, it’s still vanishingly unlikely that every large-scale news publication will be able to sustain themselves through subscriptions alone. Many are already investing in non-news products to attract people to the top of the funnel. It’s also true that the first ones out of the starting blocks have an early mover advantage.
None of that is to say that news publishers
should give up and transition entirely to entertainment content. Instead, they
should be considering that the young people on whom much of their subscription
success or failure rests are demonstrably interested in news content. Unfortunately, the
vast majority of how that is currently presented on doesn’t necessarily convert
or retain them.
Rather than attempting
to push the fast news-based content that adds value once people are past the
gate, publishers need to re-evaluate what types of content will lure younger
audiences through in the first place.