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It does not come as a surprise that most digital publishers look to the New York Times for subscription strategy advice: On February 6th, The “failing” New York Times posted digital revenue of $709 million for 2018, based largely on its 3.4 million digital subscriptions. It also bucked expectations when it came to its ability to attract new subscribers. The NYT added 265,000 new digital subscriptions in the last quarter of 2018, which it calls “the biggest gain since the months immediately following the 2016 election.” As a result, the paper has set itself the new goal of having 10 million subscriptions by 2025.
This all suggests that while the “Trump bump” was a reality, there is more to the NYT’s success than simply being the target of The President’s ire. In an interview with Ken Doctor, the NYT’s Chief Executive Mark Thompson attributes much of its success to steady investment in the newsroom – which he calls a “very simple, old-fashioned model” – through having the highest number of journalists on staff in the paper’s history.
The vast majority of news publishers, however, do not have the coffers of a national title. Later in the interview, Thompson acknowledges that the NYT has unreplicable advantages when it comes to adding staff. However, the New York Times is employing a strategy that more publishers can and should emulate: It’s giving its news away for free – to 3 million students.
Premium value
On its face, the idea sounds crazy. Back in July of last year, the NYT’s ‘The Truth Is Worth It’ advertising campaign made paying for high-quality news the responsibility of the public. Its press release stated that its research had “found that seventy-three percent of U.S. news consumers who pay and subscribe to a news source say that it has never been more important to support quality journalism.”
That rhetoric has also been employed by publications including The Times of London, the Guardian, New Statesman, and others as they market their own paid-for news products. Even local and hyperlocal publishers are increasingly pushing the idea that, while “news” is readily available for free online, quality news needs to be paid for.
In fact, the NYT is making a bet on free as a long term investment in demonstrating the value of quality journalism. As with the growth in its newsroom headcount, this is an investment the NYT is making in its future. And, while there might not be straightline attribution between these free subscriptions and total revenue for the foreseeable future, it is a smart bet that it can convert some readers who might never have paid into lifetime subscribers.
It’s a clever strategy for a number of reasons. However, it all builds upon the idea that free subscriptions for a particular demographic can convert a proportion of people –0 who otherwise might never pay for digital news – into regular subscribers.
Subscription satiation
While young people are more likely to pay for news than previous generations, there is a hard cap on how many news subscriptions they can afford. The latest Digital News Report from the Reuters Institute for the Study of Journalism found that just 14% of people globally currently pay for online news. And it’s vanishingly unlikely that the majority will pay for more than one subscription. Additionally, the price of an annual news subscription can take a back seat to entertainment services, though this is not a phenomenon unique to young people. Competition for those 14% of people, then, is going to be fierce.
(The NYT’s scheme is currently limited to students in the United States. However, the increasingly international NYT plans to open it up to international students as well, where the propensity to pay for news is typically lower than in the US).
So by offering the subscription for free, the NYT is effectively betting that it can create a relationship with enough students to make the scheme worthwhile. Having that preexisting relationship with a potentially lucrative audience is vital: With more players entering the subscription space, it’s unlikely that more than a handful of truly international publishers will be able to sustain themselves solely with the revenue from the 16% of people who are willing to pay for news in the US.
Those subscribers are a rare commodity, and getting young people on board early could mitigate some of that conflict with the NYT’s peers.
Retention costs
The Axios piece that trumpets the NYT’s 3 million student subscriptions contains a telling quote from Hannah Yang, head of subscription growth at the paper: “We already have high retention, but I think this could make it almost bulletproof.”
It’s a vote of confidence in the NYT’s ability to retain subscribers, but it’s also tacit acknowledgment that the cost of acquiring new subscribers far outstrips re-upping the contracts of existing ones. By some accounts, it costs up to five times as much to acquire a new subscriber than to retain an existing one.
While it’s never been explicitly stated, that is presumably the main reason behind similar subscription schemes at at The Financial Times, and sharply discounted student pricing from The Times of London. From an acquisition point of view, it’s far cheaper to reignite an existing relationship than forge a new one from scratch.
Corollary benefits
Having an extra 3 million subscribers – particularly younger ones – on the books also has a beneficial impact on the NYT’s relationship with advertising. Brands are keen to reach as many people as possible, and younger demographics are highly desirable to some. So, while marketing subscriptions relies on having the depth of content that the NYT’s expanded newsroom offers, marketing products and commodities requires reach.
Additionally, having data on those self-selected subscribers is invaluable. Thompson makes this observation, both in the Nieman Lab article and in the press release, noting that “we are more attractive to the world’s leading brands than we would be if we didn’t have a digital subscription business. That’s why we’re growing our digital advertising business.”
Having those logged-in users also allows the NYT access to user data that allows it to refine its publishing strategy and the types of content it highlights to interested readers. Over the course of the last few years, The Times of London has been using exactly that sort of data to reduce consumer churn by appealing to their favourite aspects of the subscription. The greater the sample size, the better the refinements. Therefore, 3 million extra subscribers equals a huge amount of data points.
From a purely altruistic point of view, too, offering subscriptions to those who might not otherwise be able to afford one fulfils the journalistic remit to inform the public. That was explicitly the reason the FT announced it was extending its free access to FT.com to 16–19 year olds globally.
The downsides
In a recent episode of the Media Voices podcast, we discussed the practical difficulties of other publishers trying to emulate The New York Times. It has, after all, a number of inherent strengths that most newspapers simply won’t be able to replicate.
In particular, it has a profitable business that allows it the luxury of both investing in its newsroom and the time to let those free subscriptions percolate and, eventually, have a chance to develop into full subscriptions. As a national title, it also has strong brand recognition, and can reach students from coast to coast.
Some other publishers, particularly local papers, simply don’t have the time to let those experiments play out. They also may not have enough students or other potential future subscribers in their patch to make it worth their while, and consequently we are already seeing many local publishers iterating on a hard paywall model rather than letting a particular demographic in for free.
Ultimately, it all comes down to whether free student subscriptions allow a newspaper to bypass that hard cap on propensity to pay for news. If reducing the friction of onboarding, deepening the relationship with the user during their free trial, and using their data to support other parts of the business adds even a few percentage points to the number of people who will re-up that subscription, the endeavour will have been worthwhile.
By Chris M. Sutcliffe—Independent Media Reporter@chrismsutcliffe
Republished with kind permission of Digital Content Next, advancing the future of trusted content
