Inside Schibsted’s goal to reach $115m in reader revenue by 2020
Update: An earlier version of this story incorrectly stated that Norwegian paper Aftenposten, rather than Bergens Tidende, has around 70% of content behind the paywall.
Nordic publishing giant Schibsted Media has made big strides in driving its subscription business. Now, after seeing strong growth in digital subscriptions, it has set its sights on driving 1 billion NOK ($115 million / £91 million) in reader revenue by 2020.
The publisher set this ambitious goal internally in 2017 after reaching 500 million NOK ($57.5 million / £45.5 million). Talking publicly about the milestone, Tor Jacobsen, svp of consumer business, said it is on track to meet that target.
Schibsted owns a number of newspapers across Norway and Sweden, spanning a mix of demographics and paywall models. Some, like Norwegian tabloid Verdens Gang and Swedish tabloid Aftonbladet, introduced paid products more recently in 2011 and 2003, respectively.
Across the group, Schibsted has 1.3 million subscribers, 800,000 of which are digital. This accounts for roughly 40% of Schibsted Media’s revenue and is its dominant source, advertising is slightly less than this, and while it’s growing, that growth has slowed.
“Our main focus is on revenue,” said Jacobsen. “It’s easy to increase subscriptions if you give it away for free or at a lower price. We follow the subscriber number closely. You can pump up the numbers but the revenue isn’t lying.”
Over the last two years, the publisher has gone through different evolutions on its journey to 1 billion NOK. In 2017 the main focus was customer acquisition, later this shifted to retention. Now, there’s a lot of focus on pricing, packaging, user experience and additional products, all the while keeping a steady hand on churn.
Still, having different brands — each with their own paywall model — throws up its fair share of complications and the central cross-functional consumer business team draws on what they can learn and adapt between titles. “We don’t use the term ‘centralize,'” said Siv Tveitnes, evp, News Media. “For us, the common functions are very close to all the news brands. This builds strong shared competencies and attracts the best talents.”
Tabloids VG and Aftonbladet both have large audiences and are primarily ad-funded so have premium models where an additional 15% of the content is paid for. Schibsted also has meter models where some articles are free, and hybrid models with meters and additional paid-for content. For Norwegian paper Bergens Tidende, up to 70% of the content is behind the paywall.
The conventional thinking around paywalls is often that if general news is available elsewhere then people won’t pay for it. Schibsted has found early indicators suggest the opposite. On Swedish daily Svenska Dagbladet, internal algorithms — triggered by traffic growth — flagged to editors that an article about Canadian psychologist Jordan Peterson should be behind the paywall. Similar articles would have been readily available elsewhere, yet the piece was that week’s top-performer for converting readers to subscribers, according to Jacobsen.
“We’re finding that if you want to see that article on a specific brand, you’re connected with it and that brand is important to you,” he added.
Although for reach-driven models like VG the algorithm has to be based on different triggers, like similarity to topics that have historically converted readers, otherwise all content would be behind the paywall.
In terms of pricing and packaging, six months ago Norwegian newspaper Bergens Tidende offered only one subscription tier at 199 NOK ($22.84 / £18.11). It now offers three tiers: 219 NOK ($25.14 / £19.93), 279 NOK ($32.03 / £25.40) and 329 NOK ($37.77 / £29.95). The majority of people choose the middle one, which bundles in e-paper and archive access as well as one additional login, all relatively low cost for the publisher.
“That’s human behavior,” said Jacobsen. “The results are great, churn is not higher. These new bundles and products are solutions we’re looking at more going forward. You can have a bundle strategy or [one] where you pick and mix. We are looking at both for where we can upsell opportunities for different target groups.”
Because of its many brands, Schibsted can experiment with a wide mix of additional paid products, similar to how The New York Times has seen revenue and subscription lifts from its cooking, crossword and parenting offshoots.
Norwegian tabloid VG already has a paid-for club around weight loss, and the health sector is ripe with opportunity: Jacobsen said it’s thinking about opportunities around fitness, healthy eating, weight loss and education.
The publisher will also invest more in rights for sports and popular events like the Oscars, although popular rights are expensive so it will have to strike the right balance to keep it economically viable. But there’s evidence it works: Schibsted bought the rights for a match featuring Norwegian boxer Cecilia Brækhus, which was shown at Norwegian local time 4 a.m, and attracted 3,000 subscribers.
Managing churn is an ever-present concern for subscription publishers. Through testing, Schibsted found that for subscribers who share their subscription with their families the average churn rate is a lot lower. This has led it to offer subscription sharing in more of its products. Jacobsen said that annual churn is on average between 8% and 10% depending on the title, but like a lot of publishers, this drops when people have been a subscriber for over 100 days.
In Norway, there is a higher propensity to pay for news. Reuters Digital News Report found that around 35% of people in Norway made some form of payment to news in the last year, the highest of any market. For contrast, around 18% of people in the U.S. made some form of payment.
To keep growing, Schibsted will have to work out where the subscriber ceiling is for the Nordics, but for now, the growth in digital reader revenue is encouraging.
“Most revenue will come from our core editorial products but new subscription products will take a bigger share of our growth in the coming years,” said Jacobsen. “We try to work after a CAN model: Core, Adjacent and New, where we have a 70-20-10 split of focus.”
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