FIPP has released a new report in collaboration with London-based media consultancy Blaize. The report, Paywalls – How to start your subscription strategy, provides an overview of the strategies that publishers across the world are applying to create sustainable subscription revenue from readers.
It emphasizes the role of customer centricity and building personal relationships with readers. The report presents examples from the Guardian, the Financial Times, The New York Times and The Economist among others, to illustrate its theories on how a better understanding of readers has created additional subscription revenue sources for these publishers.
Our brands and broad print distribution are no longer enough. The Internet requires media companies to build personal relationships with readers. Our ability to capture interaction data at scale, turn it to insight and leverage it broadly across our organization will define our success.Troy Young, President, Hearst Magazines
According to FIPP President and CEO, James Hewes, “Publishers serious about launching a subscriptions strategy should look no further than these examples to learn from those who have already broken the barriers.”
The best practices for launching a subscription product, according to the report, are:
Identify and invest in your value proposition
“Compelling reason to pay for access”
Arvid Tchizhel, Senior Product Development Director at business consultancy Mather Economics says, “Simply launching a paywall on the existing suite of products built for an advertising business model does not give the user a compelling reason to pay for access to the site.”
The Guardian is a unique case study for this report as it does not have a paywall. It’s value proposition? Free and independent journalism. Yet the newspaper which was in the red for a long time recently showed profit. This was the result of a sustained three-year campaign during which the publisher appealed to its readers for support to keep its journalism free and independent.
Altogether, the newspaper has been able to convert 900,000 users from 170 countries into donors. The key was in the messaging and ease with which readers could support the publisher. Besides the promise of free and independent journalism, the Guardian gives its donors added incentives like discounts to its events, newsroom tours, and insight into the editorial process.
Apply data-driven customer lifecycle management
“Advanced analytics is now key”
A robust reader database is the bedrock of a publisher’s relationship strategy with its readers. Most publishers build this by gathering usage data through their digital and print businesses. The next step involves ongoing analysis of the data to synthesize usage trends, and surface the trends that have the potential to create new revenue opportunities.
Advanced analytics is now key to acquisition, activation, and retention. The future of paywalls will be automated based on data-driven insights.Grzegorz Piechota, Researcher-In-Residence at INMA
The Economist uses a machine learning tool called Lytics to leverage its exhaustive database of audience data. The tool applies behavioral scoring and predictive modeling to recommend stories.
The strategy has helped it create personalized and engaging experiences for readers and increase dwell times. It has led to an 80% decrease in the cost of customer acquisition and a 3x increase in digital subscriptions since 2016.
The Financial Times uses data to analyze user activity. According to the publisher, the most reliable metric is RFV, an acronym for recency, frequency, and volume.
It helps the FT understand the engagement level of each user, which in turn, informs how they are targeted with content and advertising. The FT uses the MyFT product to deliver personalized content to its readers. It helped the publisher grow B2C users from 2% in 2016, to 54% in 2018.
Align the organization
“Aligned around a common set of goals”
Tchizhel writes, “Many media companies are siloed in their operations which cause unneeded friction in building a great subscription product.”
Marketing, technology, advertising, content producers, and finance must all be aligned around a common set of goals and key performance metrics to successfully build and maintain a subscription product.Arvid Tchizhel, Senior Product Development Director at business consultancy Mather Economics
Some of the successful publishers mentioned in the report have emphasized the role of cross-departmental teams in the success of their subscription strategy. For example, according to Ben Cotton, Executive Director of Subscription Growth at The New York Times, cross-departmental teams work on the same problem, including editorial, engineering, design, and marketing.
Amanda Michel, Global Director at the Guardian, credits a cross-disciplinary membership team that covers technology, marketing, editorial, and user interface as one of the keys to their success.
Further, The Economist has teams of data, marketing, circulation, product and editorial specialists aligned with the goals of acquisition and retention.
Get the right technology
Technology that fits the strategy
The idea is to get technology that fulfills the requirements of the strategy, rather than fitting the strategy to the constraints of a toolkit provided by an external vendor.
According to the report, it’s critical to assess how the content management system, customer relationship management system, subscription/paywall system, user authentication, checkout/payment processing, and analytics tools will execute on the strategy before starting with a subscription product.
For example, The Times UK wanted to use email to retain subscribers. It built an artificial intelligence-powered subscription product called James, the Digital Butler.
The tool was used to send 14.1M personalized emails to readers over a year. It built a targetted audience and helped the publisher reduce churn by 49% on a base of 117,000 subscribers.
Think of the user holistically and make impeccable UX
“Crucial that we make a good first impression”
The report states that newspapers that have improved the user experience have seen increased engagement and revenue. For example, reducing the number of steps in the legacy checkout processes has a measurable impact on digital conversions.
It says that a publisher (not identified) reduced the “dozens of fields required for checkout down to five and observed the conversion rate grow 15% overnight.”
According to the FIPP Global Digital Subscription Snapshot 2019, The Economist has the highest digital subscription numbers in the magazine industry.
The report attributes its success to the ever-improving digital subscriptions operations, cross-departmental teamwork aligned with the customer and acquisition goals, and above all, the high-quality journalism that the brand is reputed for.
Additionally, first impressions also play a key role in the publisher’s acquisition strategy. Denise Law, Head of Product at the Economist, says that the publisher invested heavily in the development of economist.com and a new app. According to Law, these are the products that are best positioned to attract and retain subscribers.
He says, “Many people use it to sample our journalism before deciding whether to subscribe. It is crucial that we make a good first impression.
“That is why we are focusing more resources on optimizing our readers’ first visit to the website, in addition to improving basic things like speed, navigation, and performance for regular visitors.”
Don’t forget your print subscribers
“Product change rather than a customer stop”
Lastly, Tchizhel suggests publishers to not overlook their print product. He writes, “Some newspaper publishers hastened the demise of the print product and lost potential revenue by not offering options to subscribe to a print+digital offer on the website.”
He adds, “Engaging print readers to activate their digital access will also help build loyalty and make the eventual shift from print to digital a product change rather than a customer stop with new digital acquisition costs.”
“The key is to move from a product-driven strategy to being customer-centric,” concludes Tchizhel.
Click here to download the FIPP report:
Paywalls – How to start your subscription strategy
Download WNIP’s comprehensive new report—50 Ways to Make Media Pay—an essential read for publishers looking at the multiple revenue opportunities available, whether it’s to reach new audiences or double down on existing super-users. The report is free and can be downloaded here.