‘The duopoly are middlemen’: How publishers are building sustainable subscription models
The pivot to paid is in full swing. At Digiday’s Hot Topic event about memberships and subscriptions in New York City on Thursday, 150 publishing executives gathered to hear from publishers like The Atlantic, The New York Times and Bloomberg about how to build successful and sustainable subscription models. Up for debate were the challenges in resource allocation, how to personalize the customer experience and the danger of relying on platforms.
Below are the key themes that emerged from the day.
Meaningful retention metrics
Building up a subscriber base is reliant on understanding the audience. The New York Times has a centralized data team of 78 people; two years ago, the data teams for content, advertising and subscriptions were siloed across the organization. In order to scale the subscription business, the Times needed a central pillar for its data efforts.
According to Laura Evans, svp of data and insights, the cohort of subscribers the publisher acquired at the end of 2016 and the beginning of 2017 are retaining well. “What’s interesting about those subscribers is that the behaviors leading up to the conversion — we look at the frequency breadth and depth as signals — were just as predictive as those from subscribers prior to the Trump Bump. There was an increase in all readership at the time.”
How frequently someone returns to the Times is an important signal in determining whether they will subscribe, so getting people back through tactics like newsletters is a key way of converting them. In terms of retention models, the changes in how people are behaving send warning flags they could churn, for instance, someone who goes form reading eight to five articles a day is at a higher risk than someone reading once a week.
“You need to be able to defend and spell out the metrics that matter to you for everyone to get behind,” said Jed Williams, chief innovation officer of not-for-profit trade body Local Media Association, “because you’re allocating resource from something that’s already 80 percent of your business model.”
Risks to ad revenue can be mitigated
Putting up a paywall can throttle reach and so ad revenue. Managing how the two streams work together will inform the flexibility of the paywall. According to research by Mather Lindsay, CEO of Mather Economics, the most highly engaged users and those most likely to subscribe are a small percentage of the audience, but they generate a significant 9 percent of ad revenue, so targeting this group for subscriptions can jeopardize ad revenue. Having a flexible meter so the most engaged users get five articles for free and the rest 10, for instance, lets publisher manage the balance of ad and subscription revenue.
According to Mia Libby, chief revenue officer at The Daily Beast, launching its membership program this year has had no effect on its programmatic revenue. “Ad revenue is a short-term win versus the lifetime value of a subscriber,” she said, adding that the publisher will staff up in order to continue to build its pipeline.
“The sales team are talking more about time spent, but the industry still transacts on CPM. Memberships could accelerate this change. The jury is still out on whether or not it’s an effective measure.”
The promise and problems with platform dependence
While Facebook and Google have amplified their commitment to subscriptions through products, publishers are wary of how close they want to get with them. Platforms widen the acquisition funnel, but who owns the data is a key concern, as well as how successfully customers acquired through social side doors will retain.
“You can’t be a publisher and not be thinking about platforms, not marry with them. Facebook needs to be a marketing tentacle,” said Jed Williams, chief innovation officer of trade association Local Media Association. “All its products are used to deepen the one-to-one relationship.”
Platforms have motives for why they are building out these products, It’s worth thinking about how core subscriptions are to their business models. Google has more of an incentive for keeping close relationships with publishers.
But there are alternatives for publishers that don’t have the resource for their own check-out system. “The duopoly are middlemen. [Blockchain-based platform] Civil makes the relationship between the reader and publisher easier,” said Nushin Rashidian, co-founder of Cannabis Wire, which will soon start charging $1 a day to access a daily newsletter about the business implications on legalizing cannabis. “Readers are owners of the system too, so it’s a co-op model. If we publish nonsense, the readers will kick us out.”
Slack is fueling media’s bottom-up revolution
Publishing bosses loved Slack as a productivity tool, but it's now being used as the central forum for the media's bottom-up revolt.
‘It’s like telling a reporter he can’t have a Twitter account’: Reporters are starting their own newsletters outside of their employer
Salaried reporters and editors see side hustle newsletters playing the same role that blogs once did more than a decade ago.
Member ExclusiveHow Overtime is building sports media for Gen Z
In order to grow a substantial Gen Z audience, the content has to feel like it's coming from a friend, but beyond that, the media company also has to engage with the audience as if it were their friend too.
SponsoredFrom pop-up to permanent: Three trends driving digital transformation in 2020
By Dries Buytaert Brands have displayed rapid innovation over the past few years, building pop-up stores seemingly overnight to test new retail, product and marketing concepts. Now, as a result of COVID-19, something similar is happening digitally, with brands operating on compressed timelines to launch digital-first “pop-up” businesses — except unlike typical pop-ups these are […]
Member ExclusiveAd tech is in denial about Apple’s new app privacy rule
Some ad tech companies are determined they'll find a solution to Apple's recent IDFA updates -- threading more confusion into an already conflicted landscape.
South China Morning Post CEO Gary Liu on navigating a perilous time for Hong Kong
Alibaba bought the South China Morning Post in 2015, and brought the Hong Kong newspaper's paywall down shortly after. For SCMP CEO Gary Liu, who came on in 2017, that allowed the media property to have "far exceeded" the scale they'd set out to meet. The English-language paper went from 4 million monthly active users, when the paywall came down, to more than 50 million, according to Liu. Now, said Liu, "it's about when do we believe we have the right product for us to ask some audiences around the world to start paying for the South China Morning Post again?"