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Boletín Semanal mayo 12, 2019

New York Times Company continua aumentando las suscripciones en línea mientras crecen los anuncios digitales

With a promising first quarter, The New York Times remained on a pace to reach its goal of having more than 10 million paid subscribers by 2025.

By Edmund Lee

The New York Times Company on Wednesday reported first-quarter results that were better than expected, as gains in digital advertising and subscriptions outpaced the inexorable decline of its once-mighty print business.

The total number of paid subscriptions, including digital and print, topped 4.5 million, a high. More than 3.5 million people pay for the publisher’s online products, with the company adding 223,000 customers for its news, crossword and cooking apps during the quarter, a 29 percent increase over last year.

Revenue generated by online advertising was a bright spot. It rose 19 percent, to $55 million, helped by the company’s podcast business, notably “The Daily.” Revenue from the paper’s digital subscription and advertising businesses combined rose 16 percent, to $165.4 million. (The company does not disclose specific figures for its podcast business.)

The future of the company hinges on digital growth as the print newspaper becomes a specialized product for an ever-shrinking base of readers.

The Times has made steady progress as an online publisher. Last year, it generated more than $709 million in digital revenue, making it likely the company will meet a stated goal of $800 million by 2020. Earlier this year, Mark Thompson, the chief executive, set another lofty target: to increase the number of subscribers to more than 10 million by 2025.

“We had another strong quarter, and we’re continuing to optimize our business to deliver on our goal,” he said in a statement.

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The company is seeing positive results at a time when newspapers nationwide have been suffering. Last week, the bulk of The Times-Picayune news staff in New Orleans was fired after the paper was acquired from Advance Publications by a rival publication in Louisiana, The Advocate. Gannett, the publisher of USA Today and 100 other newspapers, has laid off reporters across the country and is fending off a hostile takeover bid.

Digital news organizations have also struggled in recent months. BuzzFeed laid off 15 percent of its work force, Verizon announced a 7 percent cut to its media divisions, and Vice Media eliminated about 10 percent of its staff.

At The Times, costs have continued to rise, in part because of increased spending on marketing to help advertise digital subscription products. The company spent $47.5 million on marketing during the first quarter, a 50 percent jump over the same period last year. That is likely to continue.

The company’s practice of offering heavily discounted promotions has attracted new subscribers, but has also lowered the contribution of each customer. In the first three months of the year, individual subscribers to the core news product generated an average of $11.94 in monthly revenue, significantly lower than the $14.95 the publisher took in per customer during the same period three years ago. Subscribers to the Crossword and Cooking apps, which are sold separately, have been paying a steadier rate.

Times executives said they expected the average rates of subscription revenue to decline modestly as part of the company’s overall strategy to reach 10 million subscribers by 2025. To do so, the company will have to sign up an average of 203,000 new customers every quarter.

Since the so-called Trump Bump at the end of 2016, when The Times booked a record number of subscribers after the election of Donald J. Trump as president of the United States, the company has generated an average of 200,000 subscribers each quarter. Maintaining that rate of growth will be challenging.

Major news events continue to be a driving force behind new readers, Mr. Thompson said on an earnings call with analysts Wednesday, and The Times plans to invest more in the newsroom.

“The mission of this company is to deliver great journalism to the world,” Mr. Thompson said. “We attribute the recent success of our digital strategy to the fact that this mission drives everything we do — including our investment decisions.”

The company separately announced the debut of a new site, Parenting, aimed at “parents who want help having and raising kids today.” The site is meant to be a stand-alone service like the Times Crossword or Cooking app, and The Times has the goal of turning it into another subscription product.

As The Times’s digital businesses grow, its print operation continues to diminish. Print advertising fell 11.9 percent, to $69.5 million, and print subscription revenue decreased 2.6 percent, to approximately $161 million.

Los micropagos pueden abrir una completa economía entre los anuncios y las suscripciones

As more publishers put up paywalls and ask readers to subscribe, they are also staring at the possibility of countering “subscription fatigue.” The recurring monthly payments—a lifeline for publishers—can be a drain on their audiences’ finances if they have to subscribe to every other site they visit. According to Reuters’ Journalism, Media and Technology Trends and Predictions 2019 only a small minority of consumers are ready to purchase new digital subscriptions. 

The practice of micropayments may have a solution to this problem. Some publishers think that asking readers for 10 or 20 cents per article would be too little to be financially viable. But it can serve as an additional source of revenue that keeps readers on the site and can also help drive revenues from advertising in the process.

Micropayments open up new revenue inroads and enable publishers to establish value with engaged users, creating a path to onboarding readers and converting them into paying subscribers.

Speaking at Newsrewired earlier this year, Dominic Young, the founder of microtransaction platform Agatesaid that subscriptions were a good model but they made a publisher focus on just 5% of its potential readership who would be willing to pay consistently. They were ignoring the 95% who may only see them as one of the several brands they regularly visit. 

A legacy publisher that has made “‘fairly good’ progress” with micropayments is Canadian newspaper, the Winnipeg Free Press. It was the first in the country to monetize its content through micropayments in 2015.

By 2018 the newspaper had over 40,000 paying digital readers, which includes over 7,000 digital subscribers (75% increase from 2016) and micropay readers each. Further, it had more than 26,000 activated print subscribers. It was selling about 892,000 articles per month at $0.27 per article.

Micropayment allows people to get into the habit of paying for news, and reinforces the value of the content because we’re saying that every piece of content has value.

Christian Panson, Vice President, Digital and Technology, Winnipeg Free Press

The publisher gets about a million visitors per month, and has a hybrid paywall with micropayments being a “small but important part of the system,” accordingto INMA.

It’s Vice President of Digital and Technology, Christian Panson comments, “Micropayment isn’t that silver bullet that will suddenly save publishers and keep them alive—but it can help, and as a tool, it’s quite effective.”   

Unlock “an entire economy”

The Free Press gives its readers a 60-day free trial after which they receive an offer based on their reading habits. Readers who consume more than 40 articles a month are presented with a subscription offer.

Those who read less than 40 articles per month are presented with the micropayment model where most articles are priced at  $0.27 each—the figure was reached after “research and deep analysis.” 

Panson says, “One model I thought was interesting was variable pricing. But it’s hard to make the judgment of how and what to charge and becomes a lot of effort. Increasing the US$0.27 by a few cents isn’t going to do much to add to our revenue, but it could be a trigger for more people to convert to all-access digital subscriptions.” 

Readers who buy articles with micropayments own their purchases forever. They can also ask for a refund if they feel that the article did not provide enough value—however, the “refund rate is very low,” according to Panson. 

The purchase process is frictionless, readers add their payment method once and after that, they can smoothly keep reading articles without going through the payment process. The publisher also has a solution for situations where a reader clicks on an article by mistake—it charges six seconds after the click, giving readers time to retract. 

There is an entire economy that exists between ads and

Panson acknowledges that micropayment is not a big revenue generator but he says it does well—“Allows for personalized debundling and is our upsell vehicle. Getting people across and then upselling them has been a very useful tool in getting new subscribers.” 

It’s just part of the sales funnel, as we call it. Our focus is really on building the number of full-time online subscribers, using micropayments as the way in the door.

Bob Cox, Publisher of the Winnipeg Free Press

The publisher tracks how readers are using its site, including those who frequently buy single articles. These users get targeted approaches and offers for full subscriptions. For that, the publisher has made significant investments in marketing personnel, including customer service staff. “Oddly, in the online world, the personal sales approach still works,” said Cox.

Recently, the Guardian announced that it had seen profits after 20 years, which included three years of focused effort on generating revenues from its readers. The Guardian’s model is unusual as it does not have a paywall, and asks its readers to support it through subscriptions, memberships, events and one-off payments.

Around 300,000 people made one-off contributions to the publisher in the last year alone. While there were other sources of revenue that came together to help it break even, micropayments played their role. Just like they do at the Free Press, as a “small but important part of the system.”

El grupo Prisa propietario de El Pais crea una marca que utiliza como herramienta para tranquilizar a los anunciadores cautelosos

Monetizing hard news has always been a thorn in the side of general-news publishers. For some advertisers, appearing next to a negative news article that describes a nasty terrorist attack or leans too much to one side of a polarizing political debate, will always be a hard no. But Prisa Media has a plan to alleviate that advertiser reticence.

The Spanish and Portuguese-language media group, which owns national newspapers El País and Cinco Días, has created a tool that uses machine learning to create contextually relevant and brand-safe audience segments across approximately 200 million ad impressions El País generates every three weeks. The newspaper generates more impressions than this, but this is the amount the team has ring-fenced as suitable for the tool, according to Pedro Ventura, director of technology on data and monetization, at Prisa Media.

“News can’t be happy all the time; that’s the reality,” said Ventura. “We’re general news, so like the Guardian or Le Figaro, we cover a broad spectrum, and, of course, much of that is terrorist-related news or the Catalonia conflicts. Some advertisers just don’t want to be near that.”

But the way hard news is currently defined is too blunt, he added. For instance, a story about a lost child that’s been rescued shouldn’t necessarily be lumped in with hard news and not open to advertisers that want to appear alongside content that evokes a feeling of happiness or satisfaction with the reader. Currently, verticals in which many advertisers are particularly sensitive to any hard-news item, like telcos and luxury, simply don’t advertise across a large proportion of El País.

The publisher has a dashboard that isolates the articles — of the 15,000 articles published each month on El País — that are potentially risky for brands. To determine how people respond emotionally to its articles, the team worked with market research firm Cocktail Analysis to monitor the responses to articles supplied by 2,000 participants. That data is then fed into the algorithm. This method will be used for the next year. “Having that human element is important in order to train the algorithm,” added Ventura.

So far the publisher has created 32 audience emotions and created “happiness” segments among others, to put advertisers at ease. It will charge a higher fee for those that want this option on top of regular targeting. So far, it has pitched the tool to some major brands that have shown interest, and tests will start in the coming months, according to the publisher.

Publisher tools like this are welcomed by agencies. “A machine learning-driven approach presents an opportunity to capitalize on the power of context at scale while ensuring brand safety,” said Ryan Storar, svp and head of media activation at media agency Essence. “We’re keen to understand the effectiveness of solutions such as this at scale in terms of delivering brand outcomes.”

It’s not always a clear-cut response. Responses to political topics like Brexit or others like government corruption can have polarizing effects and are subjective. That’s why the team will track the responses of between 20 and 30 participants for each article. If responses are split they will create an average across the responses, and feed that back into the algorithm. If the responses are too polarized the team will dismiss any impressions around the article.

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Such a large technology investment is a lot for a legacy media publisher to shoulder. The media group applied for additional funding from Google’s €150 million ($167 million) Digital News Initiative. Publishers can receive up to 1€ million ($1.1 million) for large projects, €300,000 ($335,000) for medium ones, and €50,000 ($56,000) for smaller prototype schemes via Google DNI. Prisa won the middle-tier category, which will fund 70% of the entire project, according to Ventura.

Prisa dedicated four developers to the project, and worked with 10 people externally spanning expertise including data engineering, data science and staff from Cocktail Analytics and tech consultancy Indra.

Although Prisa Media and El País generate subscriptions revenue, advertising represents the majority. Digital ad revenues accounted for 53% of total revenue in 2018, and grew 13% compared to the previous year — while print advertising dropped 11.5%, according to the company’s last financial statement. In 2018, Prisa Group, which spans several continents including Europe and Latin America, and includes radio stations, generated €228 million ($255 million) in the first nine months of 2019.

While general-news publishers have always wrestled with the challenge of monetizing hard news, the continued decline of print advertising, alongside the competition from Google and Facebook for digital display advertising revenue, makes finding alternative product solutions to appeal to cautious advertisers critical, added Ventura.

Publishers have experimented with different ways of addressing the challenge of monetizing hard news for years. Developing new lifestyle and entertainment or sports verticals is the well-trodden route, in order to open up inventory for advertisers that feel safer targeting ads around articles in those environments. More recently, a string of publishers, including the New York Times, ESPN and USA Today, has also rolled out ad products that they claim can match ads to people in certain moods. The BBC has also experimented with tracking emotional reactions to ads for years to prove the value of its branded content.

In time, Prisa hopes to develop English- and French-language versions of the tool, which it can then license to external publishers, potentially opening up a new revenue stream.