Taking Cues From Other Digital Platforms, Newspapers are Getting More Creative with Getting People to Pay for News

By: Gretchen A. Peck

For newspapers, the shift from centuries of print and tried-and-true distribution models to the digital field has been monumental. It’s not hyperbole to suggest that every facet of the news publishing organization has been impacted, including how publishers woo readers and earn their trust and loyalty.

At the advent of the internet, the industry gave everything away. Newspapers got online the best way they knew how—by dangling free-content carrots before readers and putting their faith in the notion that advertisers would also remain loyal and follow them into the digital unknown. It hasn’t quite worked out that way.

Despite the time and resources the industry has thrown at its digital endeavors, there still remains a great uncertainty about how best to compel readers to pay for the reading experience and the service of journalism. 

Subscription A-La-Carte 

The New York Times just made news by announcing what feels like a significant and noteworthy change to its paywall structure—allowing non-subscribers access to only five free articles per month, instead of the 10 free articles it had been allowing since 2012.

Early on, 10 seemed to be the de facto number that the big newspaper brands were willing to “give away” in the interest of compelling a subscriber, but that figure has fallen.

“Surely, the New York Times made the decision based upon the analysis of behavior of their users and testing,” said Grzegorz Piechota, a Google digital news senior visiting research fellow with the Reuters Institute for the Study of Journalism at the University of Oxford. He’s also a research associate with Harvard Business School in Boston and will be speaking on “The State of Digital Subscriptions for News Media” at the INMA conference in London this year.

Grzegorz Piechota

“The modern metered paywalls are dynamic,” Piechota continued. “They open and close pieces of content, adjusting in real time to attributes of individual users.”

What that means is that the publisher can assign accessibility rules based on if-then scenarios—the user’s history with the brand or platform, or whether a breaking or public-interest news may warrant opening up access.

With his broad, international perspective, Piechota is able to offer some insight into what kinds of modeling appear to generate the most consistent results and long-term reader relationships.

“In general, I find that recurrent models, such as subscriptions, generate bigger revenue and are more profitable over time than pay-as-you-go models or iTunes-like a-la-carte models,” he said. “The publishers that enjoy the biggest success with digital subscriptions are those who have attracted loyal digital audience. By loyal, I mean users who directly access news websites or apps, and who established a habit to do it regularly. In most cases I’ve studied worldwide, direct access, frequency of visits and volume of usage are the most useful predictors of likelihood to subscribe.”

Piechota said that e-newsletters have been helpful in luring those habitual users, but there are other methods that are showing promise as well. He cited mobile notifications, daily 360 video stories and serial content, like a series on personal finances he’s been reading on the New York Times website.

There is also much to be learned from digital audio and video. “In both industries, subscriptions have surpassed a-la-carte models in the total numbers of users and revenue,” Piechota said. “In many markets, it is perhaps video services such as Netflix, and music services such as Spotify, that teach consumers that quality content needs to be paid (for)…Netflix and Spotify also raise the bar for news publishers as they shape consumers’ expectations about guaranteed multi-platform access, slick design and user experience, broad selection of content, multiple payment options, and they seem to set reference prices in consumers’ minds.”

Messaging the Membership

De Correspondent is a Netherlands-based news organization built entirely on a digital platform and serving up an ad-free experience for its readers. By the end of 2016, the brand had amassed more than 52,000 paying members. A year later, it boasts more than 60,000.

One of the ways in which De Correspondent may be a little different is that it messages its value proposition a little differently to its readers. With plain-reading, easy-to-digest infographics, they tell their paying members just how that money is being spent—how much goes to editorial staff, to paying for overhead, for technical development, office expenses, special events and marketing, taxes and other cost categories. In this way, readers not only have the visceral perception of appreciating the news they read, they can more easily appreciate all that goes into making it.

Despite the member numbers, no one is resting on laurels at De Correspondent. Co-founder and CEO Ernst-Jan Pfauth promised that the company continues to reimagine its member campaign, and that some changes are bound for late 2018.

Peter Doucette

The paywall at the Boston Globe has had a few iterations since the newspaper first announced it. Peter Doucette, chief consumer revenue officer, recounted its evolution: “The Boston Globe fundamentally believes that quality journalism is worth paying for, and has been an innovator in the digital subscription space since the launch of our premium website in 2011. BostonGlobe.com was designed and implemented to provide a great reader experience and leverages a subscription-first business model.

“It debuted as a hard paywall and over time has evolved to a meter-based approach. We have experimented with a number of models to drive subscriptions using levers, including the number of free articles and the duration of time for a reader to sample our content. The Globe does not allow exceptions to the meter, including from search, social media or private browsing,” he explained.

Doucette credits “quality and engaging content” and price as essential subscription drivers; however, he noted that there are other influences, as well.

“Other variables that we have found that resonate with consumers are being part of a community, as well as being an informed and engaged citizen,” he said.

Doucette has carefully observed other digital content brands and how they’ve inspired memberships. “I think quality and exclusive content that is relevant for your target customers is key,” he noted. “HBO is a great example here. Netflix has done a tremendous job in personalizing the experience, which drives customer engagement, as well as creating a binge-viewing behavior. Also, I think Spotify has done a great job with a simple and easy user experience that gets customers to access their content wherever it fits into their lives.”

When asked about the recent change to the New York Times’ model, Doucette said he wasn’t surprised by the announcement. The Globe has already come to a similar juncture with its own metered model.

“I think it makes a lot of sense,” Doucette said. “Many publishers have already begun to experiment with fewer free articles and are reporting digital subscriber growth. Last year, the Boston Globe lowered our number of free articles from five to two, and as a result saw our best year ever for digital subscriber growth.”

Behavioral Modification

One of the things that newspaper publishers may be missing is the distinction between “subscriptions” and “memberships,” said Robbie Kellman Baxter, founder of Peninsula Strategies, a marketing consultancy based in Menlo Park, Calif. Baxter is scheduled to deliver the keynote address,  “Media Leaders: Move Your Mindset From Subscription to Membership,” at INMA 2018.

“Subscription is more about pricing. You can use it as a tactic,” Baxter said. “And membership is about a mindset.”

The goal with membership is to solve a problem for a customer forever, to create a long-term relationship rather than an anecdotal one based purely on a price.

Robbie Kellman Baxter

Baxter began formulating this idea of a “membership economy” when she was working with Netflix more than a decade ago, and subsequently authored a book based on her findings called The Membership Economy.

“Newspapers have had subscriptions forever, but they don’t have a membership mindset,” she said. “They don’t put their members at the center of what they do, and in fact, a lot of news organizations actually have a real schism between the people who create the product, the journalists, the consumers and the readers. There’s even a sense that it’s a little dirty to care what your readers think.”

That’s not to say that most journalists or publishers don’t care about their readers and how they’re communicating information to them, but in relationship to how they formally compel readers to take out their credit card and opt-in, there is some disconnect, Baxter explained.

She offered an analogy. Think of bicycle manufacturers. Many of those products are made by bicycling enthusiasts themselves, who make the product for other people like themselves—serious bikers who appreciate how light a bike is, how sturdy, fast or tricked out it is. However, Baxter noted, the vast number of bike consumers are not those buyers. They’re mothers buying a bike for a child. They’re commuters who care more about safety or how to carry things with them on the bike.

“There can be tremendous honor in making a great bike for a commuter or a great bike for a family that’s optimized for that type of client. It doesn’t have to be that all bikes are optimized for 45-year-old cycling enthusiasts,” she said.

So, how can newspapers begin to think of subscribers as “members?” It starts with the mission, Baxter said. Though the platforms have multiplied, the mission for many newspapers has remained the same since they began printing to broadsheet, tossing papers on front porch steps or grabbing eyes from newsstands: To deliver invaluable information at a price.

For newspapers, there’s always been a theory that “exclusive” content was the most valuable, or that well-written articles are like the news cream that rises to the top. Baxter thinks that’s all wrong in today’s digital landscape.

“Some content is worth paying for, and other content is not. The quality of writing and the research does not determine the value, and I think that’s the first hurdle to get over,” she said. “Just because it’s well-written does not mean that I’m willing to pay for it. That’s complicated further by the amount of freely available news.

“I have news clients say to me all the time, ‘But our coverage is better.’ But I think that many people will acknowledge that and think, ‘Well, yes, it’s better, but I don’t need better if I can find a source that’s accurate, timely and free.’ So the next thing to figure out is what content has value, and to be brave about dropping some of the stuff that you’ve always done but no one is willing to pay for anymore.”

Baxter also noted she hears from journalists who frequently tell her that they have built “it”—great content, admirable journalism, invaluable to the community—and yet readers still aren’t willing to pay for “it.” Thus, this is the reason why so many non-profit news organizations launched in the past decade; they’re filling in that need without the constraints of needing to turn exponentially greater profits.

For newspapers strapped with both tasks—putting out exceptional journalism and making a profit for publishers or shareholders—it may mean a lot more experimentation with newsroom focus, how information is communicated and delivered, what platforms they should be investing in, and how they’re going monetize the content in a way that builds those long-term relationships with readers.

Baxter stressed that there’s a lot to learn about changing consumer behaviors from digital music and digital video. When we spoke for this article, both HBO and Netflix had just reported that 2017 had been a record-setting year, in terms of cross-platform subscriptions, meaning subscribers can watch from whatever devices they choose, whenever they choose.

It’s important to give due credit to their content, including some award-winning, wildly popular brands. But it would also behoove publishers to pay close attention to how much of the credit should also be given to the clever ways in which these businesses have partnered with others—for example, rolling out special bundled incentives to consumers, much like cable companies have crafted introductory offers with free premium channels like HBO.

“What they’re doing is looking for a new way to pay for it, so they’re all doing a land grab,” Baxter said. “With Spotify or Pandora, they’re trying to change the habit. Instead of having you listen to CDs or buy songs one at a time for 99 cents or whatever the cost, they want you to stop thinking about music in that way entirely. They want you to stop thinking of music as something you own, and start thinking about it as something you access. That’s a change in behavior…

“I would argue that the New York Times was giving 10 articles a month away as a tactic to get people to change their behavior…It wasn’t about price point. It was about demonstrating value to the readers, who may think they’re not accessing the newspaper that often in an average month, but lo and behold, every month the reader bumps up against that paywall, until finally realizing, ‘I guess I am reading the New York Times online a lot.’ The justification to a ‘freemium model’ has always been to change the behavior and to drive subscriptions. Now, they’ll do it with five free articles.”

In addition to keeping close tabs on what’s happening in digital video and audio, Baxter recommended publishers watch the Washington Post closely in the coming year, citing the “deep pockets” of Amazon and owner Jeff Bezos as giving that newspaper a leading edge and the luxury of membership experimentation.

Before serving as the American Press Institute’s (API) director of reader revenue, Gwen Vargo worked in publishing, where audience was the daily focus. There, understanding print readers were far more complex; in fact, it was nearly opaque, Vargo recalled. Publishers were able to conduct surveys and host focus groups, but what they were able to glean was unsophisticated compared to the digital behavioral data of today.

One of the continued struggles that newspaper publishers are facing is how to convert print subscribers to digital platforms.

Gwen Vargo

“As far as account activation campaigns go—moving readers from print to digital—I  think there’s a lot of runway. There’s a lot of work still to do,” Vargo said. “The challenges that publishers are going to have moving forward is how to maintain print and have it be profitable. I think it’s something that every publisher is wrestling with.”

Comparing subscription modeling to a funnel, Vargo said that social media channels are “a great top to (it).” For example, social media posts can drive e-newsletter opt-ins, which can ultimately lead to subscription sign-ups.

Vargo is bullish on the New York Times’ and others’ approach to metered content. “It makes sense to me,” she said of the reduction in free access. “The Times has been intentional about creating their subscriber-first strategy a few years ago, and I think this is part of that. Their digital subscriptions are outpacing print now, and it puts them in a position where they can create more demand around their paywall, more friction. When you’re lowering your meter, you are confident that more people will subscribe.”

Vargo also spoke about the cultural shift over the past year, with readers more inclined to pay for digital news because they better understand its value and importance.

When asked if this might be a “bubble” that will burst, leaving newspapers clamoring for digital readers anew, Vargo said it’s not likely. “I think (the upward trend) will continue, because there’s been a realization—especially with local newspapers—that newspapers are in a unique position to serve their communities, so I’m cautiously optimistic.”

Gretchen A. Peck is an independent journalist who has reported on publishing and printing for more than two decades. She has contributed to Editor & Publisher since 2010 and can be reached at gretchenapeck@gmail.com.

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Published: March 12, 2018

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