Licensing and syndication fees are a notable source of revenue for digital publishers, especially for those with English-language content and a globally known brand. For example, NiemanLab estimates licensing and affiliates now account for roughly 10% of revenue for The New York Times.
Syndication has recently been a hot topic thanks to Apple News+ and the debate around whether joining it is an opportunity or pitfall for publishers. Whether big tech platforms will be a profitable partner for publishers remains to be seen, especially given the numerous past failures. But there is another overlooked opportunity in licensing that has proven to be a great source of new users and revenue for digital content companies: mobile operators.
What are others in the digital ecosystem doing?
Subscriptions for music and video streaming services are today 25x more popular than news subscriptions (~500 million to 20 million paying users). If streaming companies excel at converting free users, it makes sense to look at what they’re doing differently. In licensing, the most glaring difference is mobile operator (telco) partnerships.
Music streaming services are working together with telcos in over 60 countries and video streaming services in over 80 countries. The majority of these partnerships focus on product bundles, with the goal of acquiring new users and converting them into paying customers down the line.
Bundling means packaging together multiple products and selling them for one fixed price. In case of streaming bundles, the music or video service is included in the monthly fee which also pays for phone calls, data and messaging.
Streaming companies have heavily utilized such bundles, but very few examples come to mind on the publishing front. Singapore and Sweden stand out as exceptions. At the same time, streaming and digital publications are not that different, both being digital entertainment services, consumed in small chunks throughout the day, and using a subscription model. Why then have streaming companies found success with it while publishers have not?
The main reason is that most publishers simply have not tried it out. Telcos are usually risk-averse, which means their business development teams rarely reach out to new segments unless their competitors have done it first. Why should publishers take the first step?
Telco bundles: new users, visibility and subscription revenue
Telcos work with 3rd party companies and bundle their products with the goal of selling more of their own services to existing customers and retaining them; or acquiring new subscribers. Competing with other telcos in the market on the basis of call and data pricing alone has shown to be a slippery slope. This means something else has to be offered to get the consumer interested and stick around, and that’s where the bundle offer comes in.
In case of bundled streaming services, additional free access to the service is added to the plan. If you buy Spotify Premium directly, you get 1 month free; but if you buy it together with the telco package, you get 6 months for free. This additional discount motivates consumers to upgrade their telco contract but also gives the streaming service an opportunity to showcase their premium offering and features to a new user base.
Both upselling to existing customers and trying to grab those of competitors with offers that contain bundled content require significant marketing investment from the telcos. Dedicated landing pages, advertising, social media promotions, retail assets and SMS campaigns are the most frequently used ones. From a streaming service (or digital publisher) perspective, a bundle partnership means an (almost) free marketing campaign by some of the biggest consumer-facing companies in their respective markets.
The second benefit of telco bundles is the integrated user authentication and billing capabilities that they have built out, thanks to having bundle partnerships already in place. When a standard license reseller tries to sell a digital publication, they still need to authenticate the user and bill them through flows full of friction: e-mail based accounts and credit cards. Telcos instead use the consumer’s mobile identity to identify them, give them access to content and eventually charge them for it, once the free trial runs out.
Telco bundling is not a magic bullet
Launching marketing campaigns in partnership with telcos will not resolve the challenge that digital publishers are facing in converting a free audience to paying subscribers alone. However, it does provide an additional user acquisition channel that – based on the experience of streaming services – is one that should not be easily cast aside.
Mattias Liivak, Head of Marketing, PayRead
About PayRead: PayRead lets digital publishers identify and charge users through their SIM card, the most widely available digital identity globally. PayRead reaches more than 3.1 billion consumers in 100+ countries and gives publishers the tools to get rid of friction in their paywalls. PayRead is built by Fortumo, the mobile technology company working with publishers including Schibsted, Magzter, and Readwhere, as well as other leading digital merchants such as Google, Spotify and Amazon.