Why the subscription model may not work for you

Subscriptions are great. In a time when ad revenue numbers are in decline and paper news outlets are struggling, they're helping a beleaguered industry feel its way forward.

After working with hundreds of newsrooms in their subscription strategies, and analysing mountains of data, we have a clear view on the uplift effect of smartocto. It could be up to 39% if you execute well on the actionable notifications.

Conversion is something which is quite rightly occupying the minds of conference rooms and board rooms. There is, however, a reality that we need to address: subscriptions probably won’t work for everyone. A number of factors are involved, such as audience loyalty, demographics, saturation of the market and the form the subscription model takes. We'll discuss these in detail further on in the article - and suggest some ways to help you audit your own approach.

Let’s start the analysis here:

The title of an article at Nieman Lab last year said it all: Even people who like paying for news usually only pay for one subscription.” These findings (a summation from last year’s Reuters report) show that even in countries where the percentage of people who pay for news is higher (and yes, if you’ve guessed that’s the Nordics, ten extra points for you), those people still tend to subscribe to only a single publication.

This means that even in somewhere like Norway, if people are only willing to pay for news from a single source, logic states that only a handful of publications are likely to benefit. And, as the larger media houses (like Amedia) report increased subscription rates, common sense suggests that other publications cannot possibly boast the same good fortune.

When you can get it for free, why pay?

Subscription fatigue is an entirely relatable predicament.

Last year, Reuters asked respondents to their annual industry survey which kind of subscription (online video, online music, online news) they would pick if they could only choose one. Just 7% said news.

It’s not surprising. Vast amounts of news and information are still available online for free, and – as Nielson points out – that’s sufficient for many people. The trouble is that because this news is available without cost, convincing readers to pay for a new product that does have a price tag attached is tricky.

It’s demographics

Here’s another problem. Reuters reported that in the US, most subscriptions are taken up by those with a higher level of education: on average this group is twice as likely to pay as those without. It’s the same story for those with higher incomes (three times as likely to fork out the cash) and those with “very high interest in the news” (a whopping five times as likely). It’s little surprise, then, that The New York Times is doing so well. In fact, subscribers to The Post and The New York Times account for more than half of those in the US who pay for news.

Furthermore – and again this from Reuters – subscriptions tend to work at the “quality” end of the market. So, again the likes of The New York Times are winners.

Let’s recap:

First off, there’s the number of people generally accepted as being likely to take out a subscription. That’s about 5%. Next, there are publications like Schibsted, who report they’re able to reach 80% of their market (though obviously they’re talking access, not subscriptions). Finally add in the fact that most people are only prepared to pay for one news subscription. What do you get?

When it comes to subscriptions, given the numbers on user behaviour, patterns of news consumption and expected uptake rates, the inescapable conclusion is that there isn’t that much room for growth.

Sure, some of the big names in the business are doing really well. But the more successful they become at signing people up to their subscription model, the fewer people are left to sign up for other publications.

It’s really not that rosy.

So, what’s to be done?

Here’s where we do a sharp U-turn. Buckle up.

This absolutely isn’t an article suggesting that the pursuit of reader revenue is futile. Far from it.

As Innovation Media’s Juan Señor said, “it’s inexcusable for a publisher today to not be experimenting with it, to not try to demand that people give you their data or their dollars. If you’re not extracting this from your readers today – their data or their dollars – you really shouldn’t be in publishing, let alone journalism.”

Let’s make a distinction. Subscriptions are unlikely to be the financial saviour that these jubilant articles about the big titles doing well suggest. They're only part of the solution. Several things are required of the modern newsroom to give them the best possible chance to succeed.

1. Loyalty is an excellent base on which to build subscriptions – can you track it?

Who are your loyal readers? What do they like? How do they behave on your site? How do you nurture loyalty and get more casual readers to become avid readers? Maybe it's time to sit down and think about this. But firstly – and critically – how do you measure ‘loyal’, anyway?

What does this mean? We’ve spent a lot of time working the data on this one, so the smartocto team think we’ve got this more than most: over a set period a loyal reader must have visited the site habitually, and this should remain true at any given point you measure it. If you look at their behaviour over the last two weeks, the reader should be coming to the site regularly – just like they would undertake any habitual action. If something is habitual, it has to be sustained. It’s not enough to look at regularity, frequency and volume.

This is important because it’s one thing for a fresh, enthusiastic, new reader to devour all the content available every day for two weeks, but it’s quite another to have a reader reliably read articles every other day over a four, five, or six month period. The latter persona has clearly developed a habit.

There’s a reason we like to keep coming back to this point. It’s not just that the definition is groundbreaking (because frankly it is the first of its kind) – it’s because it recognises that other approaches to loyalty don’t base their calculation on the fact that loyalty is – at its very core – a human behaviour.

Once you understand who this band of merry, loyal readers are, observing how they interact with content is likely to be really informative – and indicative of how other, potential loyal users might behave also.

And, to draw this neatly round again, if your readers can sustain a habit, it’s more likely they’ll be able to sustain their subscriptions also. Boom. That’s the crux of it.

2. Befriend the data

Data is your friend. No, not in a frenemy kind of way. It’s the kind of friend that doesn’t mind terribly that you’ve ignored it these past years. It’s just glad you’ve finally decided to invest in the relationship.

‘Knowing’ your audience means communicating and engaging with them, but it also means understanding how they read what you publish.

It’s an absolutely essential part of any newsroom’s toolkit. It has the power to reveal, prove, challenge and inspire all at once.

Many might find the prospect intimidating, but don’t prejudge today’s analytics solutions by last decade’s UX. They should be designed with newsrooms in mind, because they can. If they don’t, give us a call. We believe data needs to look attractive and easy to understand. That's why we put design first, to make sure that the information most important to you will get the attention it deserves.

3. Time to review and upskill

What’s that saying? “If nothing changes, nothing changes”.

The way newsrooms are structured matters a great deal. Data and editorial should talk to each other, just as sales and marketing should speak to each other. Collaboration not only strengthens your company, but it also joins the dots.

If we compare ourselves to our peers we risk becoming a dime a dozen. We need to focus on what is required to support the needs of our newsroom, our readers and our raison d’etre. By all means take inspiration from those high-profile success stories, but let them be a guide, not a prescription.

New upstarts have an advantage over established newsrooms of old, and it’s simply that they're not wedded to long-accepted ideas about what newsrooms ‘should’ look like. They have the chance to experiment with structures, and layouts, and reporting lines. Whatever your set up, it might be time to check back in with your readers, see what they require, if their needs have changed, and [re]organise accordingly..

4. Reader revenue takes many forms

Subscriptions don’t have to look like a monthly debit from your bank account. ‘Membership’, for example, sounds like something more than money-for-access, so the reader may also view the transaction differently (like an investment rather than a subscription). Perhaps paying for content through one-off donations, via a micropayment tool like Axate, or as part of a bundle seems more attractive. Perhaps your publication might suit a combination of these approaches. Nobody’s saying that one solution is the panacea: there are many ways to make it work, so find the way that suits your audience best.

One last thing…

Smaller newsrooms will likely find it harder to monetise than their multinational counterparts. They certainly face challenges in order to do so. But you absolutely don’t have to be the NYT to make it work. If editors truly understand their audiences and produce content that is specialised and targeted enough to be considered worth paying for, it shouldn’t matter what size your readership is.

But how do you come to understand your audience and the content that they’d be willing to pay for? We'll recap here:

1. Firstly, find out who your loyal audience is and how they behave. When are they online, what type of articles are they reading, and how often do they visit your website? Data is essential for this, so dive into the numbers. If your Google Analytics data isn't saying enough, you may need a more robust tool. Head on over to the Reports section on our smartocto features page to find out how metrics can help you understand your audience better.
2. After that it's time to review the performance of your stories and adjust if necessary. You could also use smartocto Tentacles for A/B testing of your headlines to get to know your audience. What tone of voice do they respond to?
3. Lastly, ensure that your monetisation strategy suits your content and your audience. As we said, it may be that a set monthly payment or traditional ‘subscription’ isn't the way to go. Look into other options as well, such as a pay-per-read or different subscription tiers. Be creative and show your audience that you know and understand them.

And, if you need help figuring any of this out, you know where to find us.

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