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Featured Post | Perspectives | Revenue

The rise of tribal subscription marketing

“Democracy dies in darkness.” It’s an amazing rallying cry, a banner that supporters of The Washington Post flock to. As a tool for signing up potential subscribers, it has the benefit of setting out a core belief that many people share. It conditions the people who support (or profess to) democracy to consider The Washington Post an ally, by appealing to their emotions.

Creating that sense of belonging to a club is a key component of most subscription and membership marketing. You see it across most of the general news titles, from the offers made to “our readers” to the appeals to shared values. It’s even more obvious in the transition to membership rhetoric being offered by news titles, which have made that sense of belonging the central tenet of their marketing messages.

However, as digital subscriptions become the default primary revenue stream for many newspapers, the marketing messages they use to create that sense of kinship is changing. Driven by competition and an electric political climate, some publications are inverting that message. For many, the strongest sales pitch they can make to subscribers is not by setting out the values they stand for – it’s the values and people they stand against.

The changing nature of newspaper subscription

We’re entering the second stage of digital subscriptions. Many publications are altering their membership and subscription marketing messages as more people become habituated to paying for news online. The Guardian, for instance, made a considered decision to move from a message of survival to one of sustainability when it hit one million paying supporters.

Where once it was the sole preserve of the specialist B2B and information provider, now the viability of consumer-focused subscriptions is well established. As a hangover from those early days of B2B success, however, some newspapers still make the exclusivity of their articles and analysis the central focus of their subscription marketing.

John Barnes is the managing director of Sloop Media and a veteran of B2B publishing. He explains: “There’s been a swing back to quality journalism, which doesn’t happen by accident. It has to be funded everybody in the media is benefiting from that.”

Support quality

The Times & Sunday Times in the UK, for example, was an early entrant into the subscription space. The paper has always made the case that readers can only be assured of news quality by paying to support its journalists.

Even for publications without the prestigious history of The Times, the message that information must be directly funded through subscriptions is widespread. The Information, a tech-focused publisher that charges $399 annually for access, justifies its high price that way. Founder Jessica Lessin told the New York Times: “I’ve said this from the beginning, and I continue to say this, but you can’t give away what you expect the reader to find valuable.”

However, due to their positioning and the nature of their content, many news publications have found it difficult to justify using the exclusivity of their content as the selling point for a subscription. After all, in the age of information overload you’d be hard pressed to find a generalist newspaper that isn’t covering the same beats as many free-to-access online outlets. Consequently, they have made their political affiliation or stance the core of their proposition – for better and worse.

In the UK, for instance, The Daily Telegraph recently ran an advertisement for its subscription options that used its close ties to the UK government as the primary message. The current prime minister is a former Telegraph columnist.

Enemy of my enemy

Therefore, many newspapers have decided to lean into tribalism, making it clear that the best reason to support them is that they provide a bastion for a particular way of thinking. You see this most clearly in the messaging of the single subject newspapers, like the UK’s pro-EU The New European and Scotland’s pro-Independence The National. However, it’s equally true at many of the larger titles as well. Nobody’s abandoning the ideal of objectivity, but they’re making a particular slant central to their identity.

Barnes explains that “The big newspapers – the Guardian, The Washington Post – you know, the media organizations that have almost been singled out by Donald Trump… I think they definitely are playing that card of ‘who’s going to hold him to account unless we’re here?’”

The “Trump Bump” has been a boon for left-leaning papers, with the NYT in particular being singled out as the paper of choice for the swathes of the public who oppose him. (Though arguably, the publication has parlayed that into some smart investments in future subscription growth).

In a sense, what those publishers are doing is just an extension of what they’ve always done in print. After all, a particular political niche is practically a prerequisite in an incredibly competitive landscape. What’s changing is how explicitly some titles are making opposition to their competitors and politicians their sole marketing message.

In the UK, the 10-month-old Byline Times is a newspaper defined by opposition. It has made criticism of most other UK titles the way it appeals to disenfranchised readers.

What the others won’t say

Its executive editor Stephen Colegrave told me: “That’s a very strong part of our positioning. We launched originally with the positioning, which is on our masthead, of publishing what the other papers don’t say. So, we’ve had quite a strong position in terms of getting subscribers by actually welcoming people back to newspapers and acknowledging, like most of our audience, that we stopped reading newspapers a long time ago because we didn’t trust them.”

In particular, he singles out the fact that a handful of billionaires own the vast majority of UK newspapers as being of concern to a large enough proportion of the public to be worth launching a newspaper that explicitly is not billionaire owned. The recent outcry over the mere suggestion that a member of the Murdoch family might be about to take the role of Director-General at the BBC would seem to back up that assertion.

Adversarial positioning

That move towards more adversarial positioning isn’t just cathartic for the journalists at a title. There’s a commercial consideration too. As the latest Digital News Report from Reuters demonstrated, people are more likely to trust and (therefore pay to support) the titles with which they share political leanings. Freed from the need to chase scale, but now yoked to the need to create community to aid conversions, publications are fostering tribes.

Consequently, even as Byline Times moves into paid-for marketing, Colegrave believes it would be folly to change tack on its adversarial messaging. “We have to maintain the same positioning. It’s very, very important for us because that’s what Byline is, while also maintaining the newspaper as a central part of that message. So, it’s more about how we communicate that positioning to people who don’t know anything about us.”

It remains to be seen what will happen to that marketing message if the incredibly polarized political landscape cools down. Until then, however, the fact that newspapers are prioritizing converting smaller numbers of like-minded supporters over appealing to vast audiences across the political spectrum means that adversarial marketing is here to stay. If creating a community is key, then it’s as easy to do that through defining what you are against as what you stand for.

Revenue

Subscription motivation and acquisition tactics

As the art and the science of acquiring digital subscriptions has progressed, the use of advanced analytics to profile potential subscribers and target them with subscription offers has become standard practice. The early days of 20 articles-per-month metered access have given way to hybrid Freemium models that offer premium content to subscribers in addition to metered access to free content for non-subscribers. And certainly, balancing advertising and subscription revenue remains paramount to many publishers. This is particularly true for those with advanced programmatic advertising revenue capabilities.

My last post discussed the tactics for maximizing total digital revenue, audience, and advertising revenue, by using an intelligent paywall strategy. This post builds on that discussion with additional insights on how audience analytics add value to the subscription revenue model. The goal is to help publishers refine their acquisition strategies to reflect the motivations of different customer segments for subscribing. These same analytics can help publishers take steps to retain customers once they have taken the leap of subscribing.

Propensity to subscribe

Our recent work with publishers developing propensity-to-subscribe models has identified several reasons why individuals subscribe to digital content products. These factors have also been written about by the American Press Institute in their research on reader revenue that used surveys of recent subscribers.

These factors are often cited by many subscribers as their reason for subscribing:

  • Community – Refers to a reader’s interest in local news and events. 60% of the API survey respondents mentioned local news as a reason they subscribed.
  • Cost – Receiving a discounted offer at the right time is also a common factor in subscription decisions. 45% of the API survey respondents mention discounts or promotions as a reason.
  • Content – The desire to read content that the reader finds interesting. 40% of survey responders gave this as a subscription reason.
  • Contribution – Supporting local journalism, whether the reader is actively engaged with the publication or not, was mentioned by 31% of survey responses.

Key variables

In our econometric models of subscription propensity, these same reasons were identified as important for predicting customer behavior. Local news content is consistently one of the significant drivers of subscription purchases.

Offer price is also an important factor in our models of propensity to subscribe. Variables that are correlated with interest in content, such article page views, average time on site, and frequency of visits are important predictors. These statistical results developed on observed customer purchase decisions validate the stated subscription reasons in the survey data.

Harder to measure empirically is the influence of the contribution motive on an individual’s likelihood to subscribe. However, we do observe a consistent proportion of digital subscribers that have very low engagement following their subscription purchase. This behavior supports the belief there is a large audience segment that wants to support local journalism despite low engagement with the product.

Understanding value

As an interesting aside, there are precedents for people placing economic value and paying for resources that they do not use. Environmental economists measure the value individuals place on the fact that certain natural resources exist, such as the Everglades or Redwood forests, even though they may never see those resources or use them directly.

Understanding the motivating factors for subscribers is helpful for selecting acquisition and retention tactics to implement, and it helps explain why freemium models are replacing metered models at many publishers. For those readers motivated to subscribe by interesting content, premium content is an effective acquisition tactic as readers motivated to access a particular article will accept a subscription offer. Premium content also gives those wanting to contribute to the journalistic mission a low-friction path to subscribe relative to a multi-article metered strategy.

Pathways to subscription

For publishers that have had a premium content strategy, the trend is to increase the proportion of content categorized as premium. Le Monde recently shared they now have 35% of their content as premium, even though it may negatively affect advertising revenue. Schibsted in Norway has also increased the percentage of their content designated as premium.

We often find that less than half of new digital subscriptions are sold via a paywall. The other subscription sales come from newsletters, emailed promotions, and the “subscribe now” option on the site. Personalized newsletters and email promotions can focus offers on those readers who have hit the meter one or more times but not subscribed at the standard offer. Paywalls can provide this type of offer targeting, but there is a risk in having dynamic pricing on a site itself as many customers find this type of targeted acquisition pricing confusing. It is also hard to implement since many customers come to a site from different devices and browsers.

The current state of the art is deciding what content is premium to each reader at what time. There are a growing number of publishers using predictive analytics to assign content as premium based on its expected subscription conversion performance. However, most often the editorial staff are making these premium content decisions. Combining this tactic, dynamic premium content decisions, with an intelligent paywall can maximize subscription sales while still protecting advertising revenues.

My next article will describe how retention tactics that reflect these subscriber motivations can be applied to each customer segment to minimize digital subscription churn.

Industry-Research

Gen Z not only loves content, they pay for it

Media is embedded into the lives of Generation Z. This group, ages 14 to 22, are digital natives and socially driven. According to a new report from VICE Media in partnership with Ontario Creates, Gen Z: The culture of content consumption, media and pop culture have a significant impact on their identity. This study focuses on how Gen Z discovers, consumes and shares cultural content. This is defined as film and TV, art, lifestyle, gaming, music, and literature. (It excludes politics and hard news).

Three quarters of the Gen Z respondents (75%) report that original content is important to them. They like to hear about different topics and are open to storytelling in new and creative ways. Gen Z also likes to explore and engage in a variety of different voices and viewpoints. Their number one content preference is music followed by humor, memes/internet culture, gaming and food, dining and drinks.

Content discovery

Gen Z discovers content most often from personal recommendations from family and friends, music streaming services like Spotify and Pandora and from publisher websites.

There were born to social platforms and it plays an important part in their content discovery. YouTube is their number one content source with Instagram as a close second followed by Facebook and Snapchat. TikTok is also gaining popularity. Gen Z tends to like content on social platforms, that is transparent, with few barriers between the creator and the audience. In order to successfully engage with Gen Z, publishers should experiment with different storytelling techniques on social platforms.

Multitasking

True multitaskers, Gen Z often has a second device in hand (60%) while watching shows and movies for entertainment. The second device is used to socialize, engage in another entertainment mode (e.g. gaming), or find complementary information on the content being viewed.  

Subscriptions

Nearly all of Gen Z consumers (90%) pay for their content with, on average, four different content subscriptions. Music and video streaming are the top paid services followed by console games, PC games and mobile games. Gen Z reports that they are willing to pay for content if it offers better quality (61%), better experience (56%), and is more convenience (50%). Only four in 10 noted the need for an ad-free environment. Gen Z is looking for a frictionless and personalized experience with their subscriptions. They like the idea of platforms curating high quality content for them.

Pop culture and media play an important role for Gen Z. To attract this generation, publisher’s content should strive to:

  • Embody diversity
  • Entertain as well as inform
  • Attract global representation
  • Empower and support unique voices
  • Ensure quality (advertising platforms are fine)
  • Promote discovery and engagement across platforms

Importantly, the content needs to connect with Gen Z on an emotional level and showcase authenticity. Gen Z is conscious of content brands and publishers should think about ways to establish their credentials with this generation.

Industry-Research

Reuters finds reader revenue critical for the future of media

Mobile and social media received a lot of attention this last decade. Major media trends included fragmented attention, intermediated media, and growing distrust in journalism. So, what will the next 10 years present? The Reuters Institute once again looks at our past and evaluates emerging trends to forecast what’s ahead in media in its report, Journalism, Media, and Technology Trends and Predictions 2020. Overarching themes for digital media in the next decade center on internet regulation, the re-establishment of trust in journalism, and creating a closer connection with the audience.

In addition, the report includes key trends and predictions for 2020 (see full report for the entire list).

1. The media business looks good; journalism less so.

The media business has a positive outlook but not so for journalism itself. While media executives feel confident or very confident about their company’s prospects in 2020, they feel less so about journalism in general. Their confidence for the media business centers on reader revenue and paid content, stable and growing income while advertising remains unstable. Further, the media business looks strong while consolidation is expected to continue. The latest in consolidation is a focus on keeping the editorial voice of the brands acquired while integrating back-end tech and data systems.

2. Digital leaders have mixed reviews for platforms.

Those surveyed are more positive about Google and Twitter than Apple, Facebook, Snapchat, and Amazon when it comes to initiatives to support journalism. Sixty percent of respondents rated Google as average or better while the other platforms were less favorable (it’s important to note that many publishers surveyed are currently or past recipients of Google innovation funds).

The overall sentiment from publishers regarding platforms is they want a level playing field where they can compete fairly and get proper compensation for their content and its value. Publishers in the EU are trying new intervention tactics to address these companies dominance. One example is the EU’s new copyright directive, aka the link tax. This policy requires platforms to pay for unlicensed content that appears in aggregated news services. France is the first member state to carry out the directive. Google reacted with displaying less content rather than pay. Courts will be deciding the next actions.

3. Reader revenue is a major focus for the new decade.

Executives believe reader revenue offers stable and growing income for news publishers. Half of those surveyed report that reader revenue is the most important revenue stream going forward. Subscriptions and memberships help publishers access reader information. In fact, many publishers rely on consumers login to their services for first party data. With new data tracking regulation in play and opt out ad-tracking browsers, publishers need to entice readers to register and login.

4. Audience growth, better measurement and ease of access will continue the growth of podcasts.

By 2021, US podcasting revenue is projected to grow by approximately 30% a year to reach over $1 billion. New formats are being explored from the recognized interview and chat format to new documentary formats.

Bigger audiences, better measurement, and easier access have combined to change the economics of podcasting. This is encouraging publishers to invest in creating more quality content and platforms to invest in better distribution and monetization.

Overall, the report finds that digital publishers seek to diversify revenue and strengthen user engagement with multiple touchpoints and products in the decade ahead. Newsroom have the added challenge of modernizing their presentation without compromising quality and trust and receiving proper compensation from the intermediates. While many industry challenges continue, publishers are well positioned to tackle these issues.

Advertising | Perspectives

Digital advertising trends that will dominate publishing in 2020

The digital advertising landscape is constantly—and rapidly—evolving. Both publishers and advertisers will continue to see shifts in their businesses in 2020 as new technologies gather increased market share. Those who can harness these innovations to forge stronger connections with customers will have an opportunity to stand out from the crowd and drive revenue.

Staying on top of industry trends is crucial for brands vying for consumers’ attention. However, it can be equally challenging and time-consuming. The team at Lineup Systems compiled a list of predictions for publishers to kick off the conversation. Here are a few of the key takeaways:

Publishers will optimize for voice search

As we gain clarity on which technologies and business models signal trends rather than fads, voice technology is first in line. Voice began generating buzz in the marketplace in 2019, and its growing popularity is undeniable.

“There’s a lot of potential surrounding voice technology, and how to monetize it is the next challenge,” says Sarah Hartland, marketing manager and editor of Lineup Systems’ industry blog, the Newsroom.

It’s clear that the next generation of consumers will search for and buy products primarily through voice technology. By 2022, 55% of households are expected to own smart speakers. And voice searches are estimated to make up half of all online searches. Voice is on track to become a $40-billion channel. This means publishers need to optimize their digital content for voice search to get ahead.

“It’s very positive that publishers are having discussions around voice even if they haven’t quite nailed down how it’s going to generate revenue,” Hartland says.

Publishers will get increasingly creative with subscription models

Subscription models will continue to be relevant in 2020 and present exciting opportunities to reach audiences. Publishers need only look at the profound impact the direct-to-consumer model has had on the retail industry for inspiration and motivation.

The impressive success of subscription models can be largely attributed to personalization. The curated nature of subscriptions helps alleviate the overwhelm that consumers often experience when faced with too many choices. As a result, people are willing to pay for personalized experiences that one-off purchases simply can’t deliver.

Publishers are taking cues from the subscription box model and creating their own offerings. The New York Times kids’ print subscription is one example of an effort to get children away from screens and build brand loyalty. The Seattle Times is one of several media outlets selling subscriptions on Groupon, while The Financial Times bundles its print and digital content for a set price.

Publishers who make the effort in 2020 to understand how their audience wants to consume their content will reap the benefits of the subscription model trend.

Data privacy regulations will benefit brands

Data privacy regulation is top of mind for advertisers and publishers alike due to the California Consumer Privacy Act (CCPA), effective on January 1, 2020. Compounded with Europe’s General Data Protection Regulation (GDPR) and ePrivacy Regulation, this new law signals that data privacy is an issue the digital advertising industry must continue to grapple with. Therefore, it’s time for publishers and advertisers to get creative.

“Because publishers can no longer rely on third-party data, they have to find or build new consent management platforms with first-party data in mind,” says Tiffany Kelly, digital product manager at Lineup Systems.

It’s crucial that publishers diversify their revenue streams and clearly articulate their value to consumers in exchange for opt-in consent. This will help mitigate the impact of consumer privacy laws on their businesses in 2020 and beyond.

Contextual targeting is part of the solution, because unlike audience-based targeting, it reduces the need to use personal data to reach people and has resulted in purchase intent increases of up to 63%.

“We have to recognize this shift as a positive thing,” says Hartland. “Nuances like double opt-ins and cookies can be a pain to figure out. But it will ultimately lead to some exciting long-term benefits around industry leadership, audience loyalty, and data quality.”

Getting in the game is the only way to win

It’s true that as new technology enters the marketplace, it brings challenges with it. However, brands that can adapt can make this work to their advantage in 2020. Publishers and advertisers who can find creative ways to harness the capabilities of new tech will have an opportunity to strengthen their relationships with consumers and drive revenue.

For seven more trends that will dominate 2020, plus a list of ways you can keep up throughout the year, check out Lineup Systems’ free white paper on digital advertising trends.
Featured Post | Revenue

The state of news subscriptions – and a newsworthy approach worth considering

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.”

Smart paywall strategies

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.

Who pays?

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.”

Subscription plus

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.

Industry-Research

Publishers have reevaluated their platform relationships

As 2019 comes to an end, we see that publishers have reevaluated their relationship with technology platforms. According to the Tow Center for Digital Journalism’s new report, Platforms and Publishers: The End of an Era, news publishers no longer expect scale and ad-based platform products to earn significant revenue or bring audience growth. Publishers recognize that monetizing traffic from posting a news story on Facebook is not a sustainable business model. Tow’s year-long research included 42 interviews with individuals from 27 news organizations (representing national and local outlets, national and local digital natives, broadcast, audio, and magazine), six platform companies, and one foundation.

Selective partnerships

According to the Tow report, this new publisher sentiment is a complete departure from a year ago, when publishers were still hopeful about partnering with platforms to help sustain the news business. Today, publishers report that they are examining internal business strategies and the rise of reader revenue to further revenue diversification (e.g. live events and podcasts) to regain control of their audiences.

Publishers are thoroughly assessing which platforms fit their needs best and identifying the necessary requirements for the platforms to meet. Tow’s research identifies four key explanations as to why publishers are more selective today about platform partnerships. They:

  1. No longer feel they are missing out if they choose not to partner with a platform
  2. Have seen insignificant return on investment from previous platform partnerships and products
  3. Better understanding of the extensive integration costs and expense of supporting third-party products
  4. Have greater recognition of the conflicting business models between publishers and platforms

Little fanfare for new platform products

Publishers note that platforms are closely following subscription growth in the marketplace and now offer their own subscription products. Last year Apple announced and launched Apple News+, a magazine and news subscription service at $9.99 a month. In their deal with publishers, Apple takes 50% of the revenue and the remaining is left to be divided among participating publishers.

Google rolled out a product called Subscribe with Google (it takes in the range of 5 to 15 percent of the revenue); and Facebook launched a paywalled version of Instant Articles. However, unlike previous rollouts of similar offerings, these overtures received little fanfare from publishers.

Platforms investment in relationship

Further, publishers recall Google’s and Facebook’s “goodwill initiatives” to help build stronger relationships with news publishers with healthy skepticism. In January 2019, Facebook committed $300 million to local news projects. In March, they kicked off with their first local news summit as an effort to address newsroom operations. At the same time, Google announced its commitment to local news and started a boot camp for eight local subscription publishers.

Then in May, Facebook announced that it was bringing its Digital News Initiative stateside by funding projects to help generate revenue and increase audience engagement for local news. And, in September, Facebook awarded “Community Network” grants, to support initiatives that connect communities with local newsrooms. Even with these significant investments (in the range of $1.0 billion in total) publishers remain very skeptical about the platforms’ commitment to journalism.

Publishers reinforce the basics

Publishers think a lot about the future. Undoubtedly, the platforms and their role in the online information ecosystem cannot be ignored. As seen in the Tow report, publishers present their new awareness in pragmatic terms. They are regaining control of how they publish and how they bring in revenue. Importantly, while publishers are not abandoning the tech platforms, they are much more carefully evaluating platform products in terms of business models, audience growth, and the editorial relationship.

Industry-Research

Research confirms healthy consumer appetite for digital subscription products

A new research report, Connecting the Dots: Digital Subscriptions – Media Subscribers’ Motivations & Preferences, reinforces our findings earlier this year that the subscription marketplace is vibrant and growing. The News Media Alliance, Star Tribune, and the University of Minnesota Hubbard School of Journalism and Mass Communication research echoes the findings in our DCN Digital Subscription Economy report, which was released in September.

Both reports used online surveys to collect information on consumers’ willingness to pay and motivations for subscribing to news, entertainment, and sports content. DCN conducted its survey among a national sample of 1,000 U.S. adults while the News Media Alliance research sampled residents of Minnesota, with 497 respondents. Regardless of the sampling different methods, both studies produced similar findings in terms of consumer appetite for digital subscriptions in the marketplace.

Number of paid media subscriptions

The News Media Alliance analysis identified that the average household subscribes to on average almost four paid subscriptions across newspaper (print, online, or app), streaming music, streaming movies, streaming television, and magazine (online or app). More specifically, the average household pays for about 1.3 news subscriptions and approximately 2.5 entertainment subscriptions. The DCN Digital Subscription Economy research reports similar findings, on average, subscribers pay for 4.3 different digital media subscriptions.

Digital subscription spending

The News Media Alliance research reports that consumers are willing to spend, on average, $636 per year, or $53 per month. Almost exactly to the dollar, the DCN research found that digital consumers are willing to spend $54 per month on average or a total of $648 per year. Importantly, the News Media Alliance research also focuses on local news media. Readers of Star Tribune, the leading major newspaper within Minnesota, are willing to pay $70 per month, compared to subscribers overall.

Video subscriptions drive value

Connecting the Dots finds that spending on entertainment content is a key driver of subscription spending in general and has an important relationship with spending on other types of content. It’s no wonder, according to Brian Wieser, global president, business intelligence, GroupM, with Netflix, Disney+, Apple TV+, Amazon, NBC’s Peacock, and AT&T’s HBO Max could each average around $5 billion on content in the U.S. Interestingly, the News Media Alliance research shows that the more money that respondents spend on entertainment, the more likely they are to spend on national and local news.

DCN’s Digital Subscription Economy report also concludes that streaming subscription value is driven more by video streaming services than by live TV streaming, digital audio, or digital print subscriptions. In fact, when respondents were asked if they had to choose only one type of paid digital subscription to receive, 36% of replied video and 33% replied television. This was by at least a 2:1 margin compared to other digital media subscriptions services (i.e. Live TV, magazine, music/podcasting/radio, newspaper, print and sports). This value-topping source of entertainment is fueled, in part, by big-budget original productions with significant publicity. This drives “must have” status, Fear of Missing Out (FOMO). It is also increasingly impacted by bingeing behavior, which affects the finding that video streaming subscriptions (movies and television) lead in ultimate value.

Both studies show a robust and rapidly growing digital subscription marketplace. It doesn’t appear that consumers are anywhere near reaching a tipping point of “too much” spending or “too many” services. Importantly, both studies provide publishers with insight into the dimensions of consumer value to help inform their subscription strategies, offerings, and messaging.

Featured Post | Innovation

Watch out, streamers: Disney+ just can’t wait to be king

In the amount of time it takes the average TV viewer to contemplate subscribing to a new streaming service, five new streaming services have appeared.  

That last part’s not actually true. But given the way streaming services keep popping up, it’s likely closer to accurate than either we or our wallets would like to believe. That said, there’s only one such service looming on the immediate horizon that’s capturing the attention of viewers in virtually every age demographic. Slated to make its grand debut on November 12, everyone is watching out for Disney+.

The origins of Disney+ date back to August 2016, when The Walt Disney Company acquired a minority stake in BAMTech, a spin-off of MLB Advanced Media, the digital media arm of Major League Baseball. A year later, they upgraded to a controlling stake in BAMTech and on April 18, 2018, Disney subsidiary ESPN kicked off their streaming service (ESPN+).

Picture this

By that point, however, Disney had long since seen the potential in constructing their streaming offering. They began setting things in motion, having already swiped back the rights to the Marvel and Star Wars movies from Netflix and set a deal to acquire 21st Century Fox’s entertainment assets.

If you’re wondering what this means in terms of content available on the Disney+ service, just sit back and spend the next three hours and eighteen minutes (give or take a few seconds) watching this trailer. As its title helpfully explains, it offers a glimpse of “Basically Everything Coming to Disney+ on November 12.”

And we’re back!

No, we don’t think that you actually watched all three plus hours. However, we suspect you couldn’t resist skipping around enough to see how much Disney, Marvel, National Geographic, Pixar, Star Wars, and other programming Disney+ is bringing to the table – and to your screen – when it bows next week.

Subscribe now

Unsurprisingly, The Walt Disney Company is making it very easy to secure subscriptions to Disney+ as they prepare for rollout. They’re also providing ample incentives to give it a try, whether it’s the 7-day free trial membership, the streaming bundle of Disney+, ESPN+ and the ad-supported version of Hulu for $12.99 a month. There’s also the deal where Verizon is offering 12 free months of Disney+ to all new and existing 4G LTE and 5G unlimited wireless customers as well as to existing Fios Home Internet and 5G Home customers.

Yet the question remains: Given all the other streaming services out there, will viewers really be champing at the bit to add Disney+ to their “collection” come November 12?

Watch it

Here are five reasons why Disney+ looks like a must-watch:

1. Disney+ is the new “Disney Vault.”

In the past, whenever Disney has decided to reissue various films, they’ve done so in an ostensibly limited-edition fashion. They assure consumers that, at a certain point, they’ll stop production and the film will  go “back into the Disney Vault” until such time as they decide to reissue it again. Disney+ is already being viewed as a virtual vault. However, viewers can access their favs whenever they want…for a nominal monthly fee, of course.

2. If you like Star Wars and Marvel movies, it’s now the only place you can stream them.

As we mentioned above, it wasn’t a good day for Netflix when they found out that they were going to be losing not only the Disney movies they’d had in their catalog but, indeed, the Star Wars and Marvel stuff, too. One need only look at the top box office blockbusters of the past decade to see how valuable those franchises are. And that’s not even contemplating the drawing power of the new original Star Wars and Marvel series that Disney+ is adding to their programming roster.

3. Those 21st Century Fox entertainment properties? Yeah, that includes The Simpsons.

Yes, yes, Avatar is in the mix, too. And that’ll be a big deal as we get closer to the release of Avatar 2. But Simpsons fans are a devoted bunch. Remember that FXX’s earlier deal with the series resulted in some record-setting programming and a great deal of viewership. However, giving those fans the opportunity to secure access to more than 650 episodes of the series – and the movie, too! – in an ad-free environment is enough to make them shout, “Gimme, gimme, gimme!” and subscribe post-haste.

4. The “come for the classics, stick around to see what’s next” rollout plan.

Disney+ certainly isn’t shirking on offering interesting and high-profile new programming straight out of the gate. This includes a Toy Story spin-off series (Forky Asks a Question), a new Star Wars series (The Mandalorian), and an extension of the High School Musical franchise with a tongue-twisting title (High School Musical: The Musical: The Series). However, Disney+ also has some deals on the horizon that strengthen the appeal of its debut. They’re understandably confident that no one will walk away from the service when they know they’re going to be getting a Monsters Inc. sequel series (Monsters at Work), a second Star Wars series that has Ewan Macgregor reprising his role as Obi-Wan Kenobi, and no less than eight new Marvel series.

5. Even setting aside the aforementioned sign-up deals, the standard monthly price is still a steal.

Of course, the definition of “a steal” is relative. That said, consider this: Disney+ is $6.99 a month, whereas Amazon Prime is $8.99 a month, Netflix is anywhere from $8.99-$15.99 depending on which plan you have, Hulu is $11.99 a month, and HBO Now is $14.99. No matter how you slice it, Disney+ is a bargain.

We can’t say that November 12, 2019 will be remembered as the day the sun set on Netflix and rose with Disney+ as the new king of streaming. But it’s evident that there’s a tussle on the horizon that’s going to put the battle between Simba and Scar to shame. And, hey, the good news is that ringside seats only cost $6.99 a month!

About the author

Will Harris has a longstanding history of doing long-form interviews with random pop culture figures for the A.V. Club, Vulture, and a variety of other outlets, including Variety. He’s currently working on a book with David Zucker, Jim Abrahams, and Jerry Zucker. (And don’t call him Shirley.)

Industry-Research | Revenue

Navigating nine consumer paths to digital subscriptions

People are motivated to subscribe to their news digitally for a variety of reasons. It’s a personal path that often takes time. Some people are driven by a topic of passion. Others subscribe to support journalism, yet others opt to subscribe because of a lifestyle change. In the Paths to Subscription Report, the Media Insight Project , an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research, identified nine distinct paths to subscriptions based on consumer motivations and conditions. This study surveyed 4,100 recent subscribers to 90 US local newspapers to understand their motives and mindsets at the time of the deciding to subscribe.

The nine paths to subscriptions:

1. Digital Paywall Converters

The majority of these subscriber groups (61%) buy a digital subscription because they hit a limit of free stories they can read online and wanted unlimited access. Demographically they tend to be younger, high-income, highly educated, male, and Democrats. This group is twice as likely to subscribe to large metro papers as other subscribers. Improving the user experience of the subscription sign-up page, especially a short frictionless experience,  may help to increase conversions in this segment.

2. Topic Hunters

This segment is highly interested in one or two particular subjects, which helps drive them to subscribe in order to access this content. Topic Hunters are often so engaged in content of interest that when they hit the meter limit, they immediately opt to subscribe. They tend to be highly educated. Publishers may see a lift in conversions by promoting and messaging specific topics of interests like politics and sports with a direct call to action. 

3. Locally Engaged

This group is interested in content about their community. They want to be locally informed. In fact, all Locally Engaged subscribers report accessing local news is important to their decision to subscribe. Similar to Topic Hunters, the Locally Engaged are interested in news alerts and email newsletters regarding local government, their neighborhood, and other local civic news.

4. Social Media-Mobile Discoverers

These subscribers engage with their newspaper and its journalists on social media and read the articles on mobile devices. Demographically this group is much younger than the others and tends to be slightly more female and more likely to identify as a Democrat. The Social Media-Mobile Discoverers are also likely to follow individual reporters on Twitter, Facebook, and Instagram. Publishers can message these readers to like, follow, comment, and share articles to fully engage these subscribers.

5. Journalism Advocates

This group is motivated to subscribe because they want to support journalism. Nearly all Journalism Advocates report they value supporting news organizations and like that it keeps a check on political leaders. Demographically, this group is younger and more digital-focused than others and are also likely to identify as a Democrat. They are also more likely than other groups to live in urban areas and subscribe to large metro papers. Similar to the Digital Paywall Converters’ path to subscribing, this group values unlimited access to content.

6. Life Changers

This group decision to subscribe is due to a transition in their life. These subscribers may have just moved to the area, started a new job or encountered a change in their lifestyle allowing them more time or money to sign-up for a subscription. Importantly, publishers should target readers who are new to the geographic area, recent graduates, retirees, or someone with a new job or promotion.

7. Coupon Clippers

This group is driven to subscribe because they value coupons, “I subscribe to get coupons and ads…not the news” or “… coupons, but then I actually started reading it.” Publishers can engage this segment by promoting a newspaper’s coupon section. Digital coupons should also be tested for a positive user experience impact on  subscriber conversion and engagement.

8. Print Fans

This segment, while they prefer print, now access their news subscription digitally as well. Print Fans tend to be female (56% vs. 46% of other subscribers) and more than half live in the suburbs. Publishers can promote the print edition to this segment but also attract them digitally by providing exclusive content of interest online.

9. Friends and Family

This group subscribes as part of the social circle in their lives. Often friends or family introduced them to a new publication. Friends and Family look for high-quality and interesting articles in their subscription package. A great way for publishers to engage and attract this group is through referral programs, where subscribers can refer friends or family in order to receive a discount or a free gift.

The Media Insight Project offers insight consumer motivates to sign up for a subscription. While subscribers value quality journalism there are also many other important drivers of subscriptions. Some factors sit in the background and take time for a person to act on, while others immediately trigger subscriptions. Publishers need to understand the segments of potential subscribers in detailed to maximize on opportunities for conversion

Advertising | Perspectives

How publishers are rethinking audience in a user-first world

On September 25, Vox Media acquired New York Media — the company behind my former employer, New York Magazine. Vice Media acquired Refinery29 on October 2. And five days after that, news broke that digital media company Group Nine had reached an agreement to acquire publisher PopSugar.

The long-expected digital consolidation is finally upon us. Media companies, it’s clear, are looking to survive by getting bigger in an effort to increase revenue and better compete by way of sheer scale. By expanding their audiences, they hope they’ll be able to build a more sustainable revenue model.

But is that necessarily true?

There’s nothing wrong with chasing scale or growing your business through intelligent mergers. (Piano recently took that route too, acquiring Cxense.) However, for media companies, growing overall audience doesn’t necessarily mean increased engagement or enhanced revenue. Not unless a critical percentage of that audience is made up of loyal users.

Identifying (and keeping) loyal users 

At Piano, we often define “core audience” as those users who view at least 10 pages a month. If 5% of your audience or higher visits that often, that’s solid performance. However, if that number falls below 2%, there’s work to be done to drive deeper engagement and grow that share.

Building your core audience — and their engagement — is key to reaching your overall audience and revenue goals. And that starts with putting users at the center of your site experience. The media companies that Piano works with — companies that have made reader revenue the centerpiece of their businesses — understand that better than most. After all, they’ve realized that they need to build relationships if they expect users to pay.

So, what lessons can digital media companies learn from leaders in subscriptions? And what other opportunity does a user-first digital landscape present?

Understanding what your audience values

What do your most loyal users read or watch on your site? Which topics resonate with them most? Are their preferences different than those of mass, one-off users? 

A successful user-first strategy starts with knowing how your site’s core audience behaves and understanding what users are looking for when they get there. Both are key factors that contribute to subscription conversion, and audience data like this plays a large part in driving strategy. However, while data explains a lot, our customers find that talking to users is just as important. 

Asking users what they value about your content, website and brand, either through surveys or one-on-one interviews (ideally both) can give you an idea of unmet needs and what you could be doing that you aren’t yet. It helps develop an understanding on how they see you compared to a competitor and recognize the opportunity in those differences. And as you work to understand your users, you may begin to identify different segments of your core audience — along with the different content habits, demographics and benefits they gain from your brand. 

And that’s the kind of information that’s critical to the next step of building a user-first strategy: defining the customer journey.

Defining the customer journey

At Piano, we’ve developed a model for the customer journey that can be applied to both media and other types of business. It helps define the milestones of increasing user engagement and key conversions you want to drive along the way. This is what it looks like:

Of course, these generalized milestones are applied differently from brand to brand. Business Insider and The Daily Beast, for example, both use registration as a sampling tool. They offer temporary access to premium articles in exchange for registration. In that case the Known stage of the customer journey becomes an important milestone, with a set of specific tactics employed to target active users who might not be ready to subscribe, encouraging them to register and experience paid features.

That highlights another essential element of this approach: considering the “next best action” you want your users to take to move them from one step of the customer journey to the next, then using small nudges, “micro-experiences,” to move them along that path.

In a user-first world, building deeper user engagement means considering the value exchange between the user and business. What action do you want the user to take? What’s the benefit to them? What are you asking in return? If you ask for permission to track them, for example, does that enable you to improve their reading experience by only showing articles they haven’t read yet? Are you making that benefit clear?

GDPR and the coming California privacy rules require sites to ask permission for tracking, but few sites are doing more than disclosing what’s being tracked. There’s a missed opportunity to use human language instead of legalese and take it as a moment to build a relationship.

Lastly, the specific tactics also define the metrics to focus on. In the case of the two sites I mentioned above, the exposure rate (the proportion of users who see a registration offer) and the conversion rate (of those exposed, how many register) are both key metrics to measure and understand.

In the Piano database, there’s a pretty wide range of exposure rates, but registration conversion rates are fairly stable — 2.2% for the bottom quartile and 3.4% for the top quartile. If you have enough audience, even a 1% conversion rate can bring in a lot of registered users. If subscriptions are a goal, then exposure rate, conversion rate, revenue per user, retention and customer lifetime value are all crucial metrics to consider.

Building user-first revenue

If you get the user journey and value exchange right, you open up a world of opportunities to drive revenue. For subscriptions, donations and memberships, certainly. But less obviously, direct, trusted reader relationships become more valuable for advertising too. 

That value hinges on publishers collecting first-party data and capturing user consent to track and display targeted advertising. Insider and Mediahuis in Belgium have each developed in-house solutions to create rich first-party profiles of users. Their approach primarily uses behavioral data on content consumption and extending their reach via lookalike modeling. They also allow advertisers to bring and match their first-party data to refine that targeting.

Diving a little deeper into the current ad landscape, increased privacy regulation and consumer awareness, plus changes in web browser cookie policies have made publisher-user relationships both valuable and essential. Valuable because publishers can build trust and encourage users to log in, allow tracking and even volunteer data in the right circumstances. Essential because without it, programmatic ad revenue drops, as browsers squeeze out third-party tracking.

Focusing on user relationships also opens up other product possibilities. Some other innovative examples we’ve seen: Austrian publisher Russmedia developed a gamified “Landlepunkte” points system to encourage user engagement, with points redeemed for swag, digital coupons and local event tickets. It dramatically increased user registrations, logged-in users and articles per user. Amedia in Norway turned 73 local newspapers and a national obsession with local professional soccer teams into a national live streaming sports network.

That’s the type of value a user-first strategy can bring. That and the loyalty obtained from users who intuitively know they live at the center of the experience you offer. No matter how big (or small) your company is.

About the author

Michael Silberman, SVP Strategy, leads Piano’s Strategic Services team, helping clients develop reader revenue strategies and drive success and revenue on the Piano platform. He joined Piano in 2018 after 10 years building the digital media business at New York magazine, and earlier, as one of the top editors launching and growing MSNBC.com in the early days of the consumer Internet.

DCN-Research | Research

New DCN research explores consumer appetite and satisfaction for digital subscriptions

Digital Content Next (DCN) has released findings from its new research, DCN Digital Subscription Economy*, that indicate a healthy and rapidly-growing digital subscription marketplace. The DCN study surveyed 1,000 U.S. consumers regarding the array of direct-to-consumer paid digital subscription offerings across numerous media sectors and genre.

On average, digital media subscribers are paying for more than four unique subscription services. And two-thirds of subscribers (64%) perceive high value in connection with their subscription(s). Consumer value is high no matter how much they spend, how many services they have or how much they earn.

The market is transitioning with several big-brand entrants like Disney+, Apple TV+ and HBO Max joining the booming marketplace. However, it doesn’t appear that consumers are anywhere near reaching a tipping point of “too much” spending or “too many” services.

Streaming subscription value is driven more by video streaming services than by live TV streaming, digital audio or digital print subscriptions. This is fueled, in part, by big-budget original productions, significant media publicity, “must have” status and consumer’s attraction to bingeing content.

Value also appears to be driven more by consumers enjoying the ability to choose from among a variety of streaming services than by desire to shed their cable service. For those who continue to subscribe to cable, their driving reason is that they’ve always had it and are “used to it.”

Subscription spending

A majority of digital media subscribers are not immediately sure how much they spend on their digital subscriptions each month. This is another indicator that they have not yet reached a sense of over-spending. When asked to think about and to calculate their monthly spend, their $54/month average expense suggests a willingness to add to their news and entertainment budget. In other words, pricing of many of the most popular digital streaming subscriptions – particularly video subscriptions – seems to be perceived as reasonable and affordable, at least for the time being.

Drivers of subscriptions

Across the board, subscribers of all digital media types (video, audio, print) prize their control(direct, personalized, anywhere/anytime access) above everything else. Propensity for show bingeing, a manifestation of control, also means consumers are frustrated when complete seasons of what they want to watch aren’t available. Content discovery appears to be a non-issue with just one-quarter of video streamers (28%) reporting difficulty with discovering video content worthwhile to view.

DCN will continue to track this dynamic and shifting marketplace of digital assets consumed à la carte to provide publishers with insight into the dimensions of consumer value and to help inform their subscription strategies, offerings and messaging.

* An abridged version of the findings from the DCN Digital Subscription Economy Study is accessible to the public. Please note the full 48-page DCN Digital Subscription Economy Study is only available to DCN members. If you are a DCN publisher member, please be sure to log in or register to access this special members-only research, which will appear below this notice once you have logged in.

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