Professionals in all industries have become obsessed by data over the last decade. It is true that having a firm understanding of your data sets is key to growing a successful business. However, data for its own sake is never the answer.
The whole point of collecting data is to achieve something, such as optimizing subscription experiences to improve your conversion rate. Doing so leads to better value alignment, longer lasting customers and, ultimately, higher revenue.
But data that isn’t understood and actionable is a waste of an organization’s time. And the concept that data is gold dust has led many publishers to chase vanity metrics.
How to approach data
We advocate for a new outlook on the types of data that digital publishers have at their disposal. Working backwards from the outcome, rather than forwards from the granular metric, data can be prioritized into three buckets:
Performance data
The most important data is performance data. These are the metrics that tell you whether things are, generally speaking, getting better or worse. In turn, this is the data that you should call on when deciding to explore a new initiative.
If you don’t have performance data, then filling this gap should be an urgent business objective. Doing so allows you to report on the overall health of your business. For example, if your organization’s churn rate has gone up, you know you need to fix it. Similarly, if acquisition rates have tanked, you know the conversion journeys aren’t working. These insights are the very least you should be getting from your datasets.
Actionable data
The next metrics to turn your attention to are actionable insights. This data points you towards improvements you can act on immediately. These are high priority as they are the clearest and least risky levers you can pull to affect your performance stats.
For example, if no readers are reaching the end of a paywall meter, you know you’ve set the limit too high. The data is the average number of pages a visitor consumes against a meter; the action is to reduce the meter size.
Everything else
There is a plethora of datasets available. However, if the metrics don’t give you an overview of your performance, or provide you with an actionable route to improvement, they shouldn’t be prioritized.
You could call this bucket of data “vanity metrics,” or data that have diminishing returns. By this we mean data that might appear interesting in theory, but in practice needs so much contextual explanation that it becomes more time consuming than it is valuable.
Let me give you an example. Imagine a publisher that uses a metered paywall, allowing five free views per week. This publisher tracks their average number of free pages before subscribing, which is 30. What are the actions that the data points can trigger?
On its own, it’s just not enough data. The metric doesn’t distinguish between visitors who viewed all five free pages, six weeks in a row, from those who dabbled with the odd article here and there over the course of a year. To derive an action would require a lot more analysis, probably with data scientists. A different metric, average meter consumption, would be far quicker and cheaper to action. This data could immediately point to a misconfiguration in the meter.
How to approach data tools
There are a myriad of tools out there to enable news and media companies to collect, clean, manage and store their data.
Data solution red flags
There are two extreme ends of the same spectrum that digital publishers should avoid at all costs.
One of these is a black box. Solutions in this camp do not expose any data or allow you to export it to other systems. In other words, these tools may do the job, but exactly how they get to the output is unclear. Digital publishers need access to their data to take action on it. Ideally, the data is embedded at the point where decisions are made.
The other red flag is a company that offers a specific solution but is proposing to solve every pain point you have. We often see solutions that provide a rich dashboard that looks great. However, it may rarely be in practice because the data is either non-actionable or not holistic.
Does the perfect tool exist?
You would be hard stretched to find a holistic, actionable solution that covers all ground. In an ideal world you could build a data warehouse that combines business intelligence and actionable functionality, although this could be expensive.
In reality, best-of-breed solutions should expose performance data for their own domain. And – crucially – they should integrate actionable data into their UI at the point of action. The important thing is that this will guide users toward an informed decision.
Modern businesses need to experiment, iterate and A/B test in real time, without calling upon a team of engineers to implement changes. All readers that interact with your content should be tracked in a comprehensive and meaningful way, by a platform that then allows commercial decision makers to test and learn from different conversion strategies.
In short, a full-scale subscription experience platform should not only show you what your data looks like, but also how you can use it to improve the customer experience. Publishers that match deep industry knowledge with powerful technology solutions will take market share from those still relying on “one-size-fits-all” customer journeys.
Data provides the key to profitability, when done correctly
You need to have quick and effective reactions to underperforming aspects of your business. This means having holistic and actionable data locally situated to make changes effectively.
Those who approach the data conundrum with a creative, long-term mindset, and avoid being dazzled by vanity data and impractical tools have the best chance of success.
Is there such a thing as a free lunch? For online audiences looking for news, metered and freemium paywalls offer a little taste of the feast that exists beyond the paywall. And if we’re honest, savvy online audiences know that there are ways and means to get at the content behind those paywalls for free, too.
But for the publications that are looking to monetize digital audiences through a paywall, how much to give away for free is an inevitable discussion. Beyond the public service implications – such as The Atlantic and The Financial Times making much of their pandemic information free-to-access – the point at which the paywall kicks in is a constant consideration for digital media companies. Consider all the attention The Economist received for reducing the number of articles readers got for free – from five to three – back in 2019. At the time its MD of global circulation Marina Haydn said the focus was on providing “value over volume.”
It’s a constantly evolving conversation. Better, more accurate modelling tools allow for flexibility of paywalls based on user habits and demographics, so even within the same publication there are different amounts of “free.” Similarly, there are many sites where the “cost’ of access isn’t monetary, but instead the time and data cost of handing over user information at the registration wall.
There are as many options as users, and often multiple in use across the same publication. But which content is always free at certain publications, and is there best practice for what should always be free in different publishing verticals? How do hard news, B2B and B2C shake out?
Always free
According to the Reuters Institute “more than two-thirds of leading newspapers (69%) across the EU and U.S. are operating some kind of online paywall.”
There is an excellent argument to be made that most news content online should be free to consume at the point of publication. In the article ‘The Truth Is Paywalled But The Lies Are Free’ Nathan J Robinson states that while news paywalls are justified, we need to reappraise that in light of the new economies of disinformation online.
Given the number of recent revelations about the role of advertising-based outlets in disseminating disinformation, it’s more important than ever that we examine how news sites can act as a bulwark against that trend.
Despite these concerns, of the largest quality news publishers online only the Guardian has a direct audience revenue model and also remains free. But there are other digital publishers that are primarily user-funded that make free news at point-of-consumption a core pillar of their offerings.
Eurogamer, the UK-based consumer news and analysis site, recently launched its own subscription or ‘supporters’ service. Notably when announcing the move its editor-in-chief Oli Welsh was clear that the content that was free-to-access would remain so; its new content would be “additive”:
“One thing we decided very early on was that we didn’t want to lock all of our work behind a paywall. We wanted to keep it freely accessible to everyone. So, inspired by the example of The Guardian (as well as of some of our competitors), we’ve created this supporter program where subscription is entirely optional, but comes with a bunch of (hopefully attractive) benefits, ad-free viewing first and foremost among them.”
That additive model is very similar to that of The Independent, which also creates subscriber-only content while allowing the majority of its content to be free-to-access. It brands the content behind the paywall as ‘Independent Premium’ – which matches Eurogamer and many other titles using the partial paywall model.
Similarly, back in 2016 the Telegraph abandoned its metered paywall in favour of its current model, which has certain types of content that are always free. It then has a premium option on top and certain perks of registration that encourage users to sign up.
Nor does the free content necessarily need to exist in the same medium as the paid-for content. Quartz, for instance, still offers its newsletters for free while gating some content on its site behind the paywall. It currently has around 27,000 subscribers.
For news publishers of any stripe, then, the option is there to have a certain amount of content that is always free. That could be, as with the Guardian, from a purely ethical perspective or, as with Eurogamer, because other revenue sources afforded by free access are still a big part of the overall mix.
Never free
This is the easy one. Many of the most well-known subscription success stories have a hard paywall at their heart. In fact, in many cases, any free content that isn’t purely promotional is anathema to their publishing strategies.
That’s especially true for B2B and business information publishers, which mostly never lost sight of the value of their own expertise. Despite that, even among news publishers the hard and fast paywall remains notably rare. Of the biggest subscription success stories, only the Financial Times, The Wall Street Journal and a handful of others really embody the hard paywall ethos.
It is, as has been pointed out, a fantastic option if you have a rich seam of proprietary information or data, or occupy such a rarefied niche that few if any competitors exist alongside you.
Free enough
Consumer-facing magazine brand Condé Nast has ultimately said that it wants all its brands to be paywalled. That’s a huge bet upon the ability of titles – mostly based around lifestyle and hobbies – to convert people to paying readers, and on the back of a metered model. But it’s not a contention without some supporting evidence.
On the back of WIRED going behind a paywall in 2019, its editor Nicholas Thompson said that: “I think it can work for every Condé Nast brand. I don’t think it can work for every brand. Think about Forbes, which has this very lucrative contributor network. No one’s going to subscribe to the contributor network, in part because there isn’t really an identity or a style or a voice – why would you subscribe to that?”
But the ability of free, premium content to act as an antennae for potential future subscribers shouldn’t be overlooked. For both the freemium and metered models – which are neck-and-neck alongside one another in terms of popularity in the EU – that free-to-access content puts readers at the beginning of the funnel to a full-blown subscription.
If you have ever hit the paywall on an article I have written (there has to be at least one of you), today is your lucky day!
That’s especially true for consumer magazines, which rarely occupy the sort of rarefied niche that would enable a hard paywall. Over the course of the pandemic research from Jellyfish found that UK tech and gaming titles saw a rapid growth in digital subscriptions (268% YOY) – of which most have a metered paywall model.
It would be foolish to say that the never-free model works best for B2B exclusively, or that a metered model is the definitive best for consumer magazines. There are exceptions to each rule, and often the individual brands themselves play around with which content is free at any time.
Streaming TV may have killed cable － but where do we go from here? After the pandemic-induced streaming boom, consumers are cancelling subscriptions at record rates. As viewers grapple with rising prices and an explosion of subscription services, OTT players should embrace the potential of ad-supported streaming in order to survive an increasingly competitive market.
OTT on the up
The OTT (over-the-top delivery of TV and film via the internet) industry is booming. In 2017, approximately a third of U.S. adults cited streaming services as their main means of consuming television. Double that for people aged 18-29. During the pandemic, streaming television has continued to display incredible growth. In 2020, screen time overall was up almost a third on the previous year. Viewers watched streaming services, such as Netflix, Amazon Prime Video, and Disney+, for one hour and 11 minutes per day. Also, 12 million people joined a service they had never used previously. Three million of those viewers had never previously subscribed to any TV streaming service at all.
A changing paradigm
The mass adoption of streamed OTT services coincides with a fundamental change in the television business model. While television has traditionally been funded largely by advertising, most streaming TV platforms have instead opted for a subscription-only model. For traditional TV providers transitioning to streaming, this choice is understandable, given the abundance of legacy technologies that cannot easily be switched towards an advertising-based SVoD. New players like Netflix, by contrast, have made a strategic decision not to offer an ad-supported subscription.
OTT overload
The subscription model appears to be working well enough for Netflix, the undisputed market leader. The problem lies in the explosion of alternative streaming platforms. In 2020, the average viewer was subscribed to nearly eight streaming services, compared to six in 2019.
Netflix raised the prices of their memberships in 2020 and may well do so again. The result is that the monthly cost for consumers of streaming tv is increasing, as both the prices and number of services go up. There is an inevitable tipping point where paying multiple subscriptions becomes too expensive for the viewer and they will choose to let some go. Many have already crossed that threshold: 36% of Americans plan to cancel streaming subscription services in the next 12 months. And the most common reason – by far – is the price of service.
Ad-supported gains ground
Although subscription dominates, ad-supported streaming services have seen substantial growth during the pandemic. Research by Deloitte found price to be a key factor in consumer streaming decisions. Most consumers (65%) want cheaper ad-supported streaming options (up from 62% pre-Covid). And, of those who did, more than 50% preferred ad-only streaming. Sixty three percent of respondents in a PwC survey said they would be willing to sit through more ads if it meant cheaper subscriptions. Providers offering ad-supported streaming now include The Roku Channel, IMDb TV, Discovery plus, CBS, and Hulu, to name a few.
Sell smarter ads
Part of the appeal of the subscription-only model lies in its apparent simplicity. For established television providers, transitioning their advertising model from cable to digital presents many technical challenges. For those providers who have embraced ad-supported, a combination of white-glove and programmatic ad sales are the norm.
However, a new approach is also gaining popularity: self-serve advertising platforms. Inspired by the walled gardens of Facebook and Google, self-serve ad platforms allow OTT providers to sell their ad inventory through a branded, automated marketplace. This allows them to tap into the massive SME ad spend that currently drives digital ad growth. SMEs increasingly favour self-serve solutions, and for OTT brands with their own platforms, less value is lost in the infamously murky “black box” programmatic supply chain.
Roku, for instance, sells home screen banner ads, Roku screensaver ads, and video ads via their self-serve platform Roku Ad Manager. Ad Manager is designed to be a smarter, simpler, and more cost-effective way of managing channel promotional campaigns within the Roku ecosystem. It is just one of an increasing number of self-serve platforms popping up among OTT brands.
The other important aspect of ad-supported streaming is that it’s not simply a return to the dark days of regular, irritating ad breaks (as still found on linear TV). OTT providers that adopt ad-supported models are innovating the user ad experience to make it more effective and less obnoxious. Hulu, for instance, runs pause ads. This non-disruptive, non-intrusive user-initiated ad experience appears only when viewer presses pause when watching content. That’s a far cry from the ad breaks of old, and an indicator that ad format innovation is an essential part of the new streaming experience.
Ad-supported is inevitable
As OTT prices and the number of platforms continue to rise, consumers are increasingly looking for flexible, low-cost alternatives to meet their streaming needs. For OTT providers, offering only subscription models means that they price themselves out of the market for cost-conscious cord cutters.
We are not likely to return to the days of constant ad breaks and linear TV. Rather, the future lies in the flexible middle ground where consumers can pick and choose from a selection of price models: subscription, ad-supported, or a hybrid of both. OTT providers need to embrace ad-supported streaming － the sooner, the better.
About the author
Johan Liljelund is the Executive Vice President at DanAds based in Sweden. Johan is an entrepreneur with more than 20 years of experience in developing technology towards the media industry and a pioneer in the digital advertising industry enabling publishers to streamline and efficient their internal processes on a global market.
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.
Driving subscriptions
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.
They make up the revenue because CTV is very attractive to advertisers today given its popularity among consumers. Hulu has been able to take advantage of this trend with major brands. Our platform found top advertisers on Hulu during February 2021 include DraftKings, Samsung, Mercari Mobile App, Verizon, Kia, Taco Bell, T-Mobile, TurboTax, HelloFresh and Geico.
Hulu’s innovative partnerships
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.
FULL TRANSCRIPT
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.
Paywall packages
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.
National Geographic, for instance, recognizes that its back catalog is hugely appealing to potential subscribers. In fact, it made a separate landing page for those who are primarily interested in its archives as opposed to jumping in via a new issue. Esquire sells access to its back issues dating back to the early 1930s, as a standalone service, as does Motorsport with issues back to 1924.
The New Yorker includes transcribed versions of its old articles in its metered model. In addition to its own plans for a paid-for archive Playboy is launching a podcast series based on its historic interviews.
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.
Value proposition
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.
There is a lot that the OTT and publishing industries can learn from each other in terms of acquisition strategies. With a bit of adaptation, each could improve customer signups in unexpected ways.
Ultimately, both industries focus on selling content direct to consumers. And there is significantly more crossover than there would have been 10 years ago, as video and online media have become the most common form of content consumption. OTT Market growth is expected to grow by 14% in 2021 and new digital subscription orders rose 420% in 2020 against the previous year. This provides the impetus for organizations on both sides to take advantage of this period of continued growth, and many of the strategies of one industry can be adapted and applied to the other.
Key Takeaways
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
Free content
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.
Subscription holidays
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.
Product bundling
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.”
Sara Fischer in conversation with Mathias Döpfner
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.”
The pivot to paid
Meredith Kopit Levien in conversation with Peter Kafka
The subscription economy took center stage on Friday, when Recode senior correspondent Peter Kafka interviewed newly promoted New York Times CEO Meredith Kopit Levien. Pushing back on the notion that the Times was becoming too dominant a player, Kopit Levien suggested that the organization is helping to create a market for paid journalism.
“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.”
Peter Kafka in conversation with Jenna Weiss-Berman and Lydia Polgreen
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.”
Web Smith, Jarrod Dicker, and Stacy-Marie Ishmael
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.”
Under pressure
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.”
