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Asociación Técnica de Diarios Latinoamericanos

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Boletín Semanal mayo 12, 2019

Today’s news publishers are facing difficult situations, among them selecting the best membership model suited for their consumers. One anticipated model that made its appearance earlier this year was Apple News+, the successor to Texture, which the company bought out last year and plans to close at the end of this month. The platform includes more than 300 magazines, a handful of digital natives, but only three newspapers: the Wall Street Journal, Los Angeles Times and Toronto Star.

Although the Apple bundle might be what consumers are looking for, news publishers are extremely wary of joining.

Damon Kiesow

Damon Kiesow, Knight Chair in digital editing and producing at the University of Missouri School of Journalism, agrees that news publishers should be wary. “If you look at the (Washington) Post, the (New York) Times and others, they’re not in, and they’re very vocal about why they’re not in. It’s disintermediating them even further from their audiences. It’s a loss of control of user experience. It’s monetizing potentially the rate they can get from direct subscriptions.”

In a note to employees, Matt Murray, WSJ editor-in-chief, offered insight to the newspaper’s choice in joining Apple News+. “The Apple venture is about more people seeing and paying for our journalism,” he explained. This is a tempting argument for publishers as Apple currently dominates the smartphone market at 63 percent, according to the “Mobile Web Intelligence Report” by Device Atlas.

Television, movies and music have all recently morphed from their prior forms into these bundle subscriptions that have performed exceptionally well. Netflix closed 2018 with a whopping 139 million worldwide subscribers, according to CNN. Is it time for the news industry to fit into such an in-demand structure?

Structuring the Right Model

Lucky for news publishers there is so much data available to aid in choosing the right membership model; at the same time, it can be easy to become overwhelmed with case studies and vendor phone calls. Damian Radcliffe, the Carolyn S. Chambers Professor in Journalism as well as a professor of practice at the University of Oregon, reminds us that in the midst of scouring data to not forget about our relationship with existing loyal consumers.

“So often it feels that the emphasis is on growing subscribers and new ways of bringing people in,” Radcliffe said. “We need to have more of a conversation about super serving existing subscribers and be prepared to provide other mechanisms to engage with them.”

In 2012, the Buffalo News in New York jumped on the paywall bandwagon, so they choose a vendor, put up a paywall and did what every news organization does—hope for growth.

“We hit roughly 2,500 digital subscribers, but then we plateaued and we never were able to grow beyond that,” David Adkins, vice president of technology, said. “It didn’t matter what we did about content choices or anything.”

David Adkins

While the vendor they chose had its perks, the paper was not blind to the holes in the paywall. Clearing cookies, incognito or private browsing, changing devices, viewing cached copies of pages on Google and utilizing ad technology are all ways consumers can sneak around a paywall—so Buffalo News set out to fix these issues by creating their own product.

In a nutshell, Buffalo News decided to make use of IP addresses (significantly harder for the user to change) to send the information back to their server and count the consumers articles there, closing nearly every hole and compelling users to subscribe.

“Building a paywall like this was really hard,” Adkins admitted. “We had three developers that worked on the software and they all had to go to school to learn some of the more advance technologies that exist today because we had to make sure this thing was fast.”

Adkins also said they found a few other resources to help guide them during the process of building the software, such as paywall vendors and reading materials. All-in-all, the Buffalo News spent a year building and developing their product before launching in it January 2017.

With 2,700 digital subscribers, the paper implemented a paymeter of 10 free articles a month and placed their premium content behind a hard paywall. Two years later, they’re at 9,000 digital subscribers and continue to see growth.

Having seen great results, the Buffalo News began actively marketing their product to other publishers last May, giving them the opportunity to control and build their own paywall rules. The first client goes live with their paywall this month.

For other publishers, such as the Houston (Mo.) Herald, a vendor’s product could work. Utilizing Pelco, a two-year old company, to create and implement a paywall, the Herald saw a 30 percent increase in subscriptions in just a month.

Andrew Morris

Andrew Morris, an account executive for Pelcro, explained that the company’s goal is to “provide publishers with all the tools they needed to create extreme flexibility, to create memberships that are on a recurring basis and auto renewal—to be able to do things like understand their data and create A/B tests to target based on the user, and of course make it as easy as possible for users to sign up.”

Morris said Pelcro is straightforward while also working closely with their clients to ensure a graceful transition and to gain feedback on their product. Publishers with no model in place can have a paywall up and running within a few hours and those with a model in place take about a week or two to integrate all files with Pelcro.

The Herald is one of those publishers that saw an opportunity to grow with Pelcro, particularly their Launchpad Process. This process takes about three months to execute, beginning with measuring and understanding the client’s current user experience. The next step is planning and configuring a paywall for the client and finally launching and testing though the A/B approach.

As a result, the Herald saw that increase in subscriptions, as well as a 237 percent increase in conversation rates and 62 percent of their subscriptions set to auto-renew.

Merging the subscription bundle and micropayment idea to create a new concept is a company called Agate, a platform that uses an online wallet system.

Dominic Young

“It’s very difficult to sell a single newspaper subscription at scale because most people actually consume lots of different media brands,” Dominic Young, Agate CEO, said. “But they won’t have multiple subscriptions to similar brands.”

Publishers working with Agate set a price for how much an individual article will cost (all must be the same price) and the maximum price, which is the number a consumer must hit before the publisher stops charging. For example, if a newspaper’s price for a weekly subscription is $1.20, once the consumer buys enough articles to equal $1.20, they will not be charged for the rest of the week.

Young believes this process brings back the option to have one subscription to your favorite newspaper, but also pick up a similar brand here and there as well as create the option to explore.

Even though Agate just launched last year, Young said they have been able to help one publisher covert more than 10 percent of their usual website visitors to wallet holders.

The “Newsstand” Model

Before the days of the internet and smartphone, the newsstand paper was your window into the world, and perhaps more importantly, your community. But when the newsstand paper went away, so did an important piece of the revenue puzzle, said Hal Bailey, chief revenue officer for LaterPay, a subscription management company.

Hal Bailey

“Now, publications primarily skipped to the model of either you get a couple of articles for free each month or you have to pay about $10 a month to subscribe,” Bailey said. “There’s very little of anything in-between, and we see the digital single copy as a very easy way to engage users and to get them to see everything that a publication has to offer.”

Bailey spoke to E&P about their new initiative inspired by the newsstand paper. Called the digital single copy, it is essentially a 24-hour pass to a publication’s entire website or app.

Bailey believes other micropayments, such as selling single articles, are valuable options, but the digital single copy is both valuable for the consumer and the publisher. It can remove complicated issues from the newsroom like pricing on single articles or which will be sold individually verses which will not and the fear that consumers won’t go through the hassle of creating an account for one article.

Kiesow seems to be in agreement with the latter statement—the problem with any type of micropayment process has been the “friction in getting that first dollar.”

However, if you let readers in for 24 hours and allow them to pay later (when their consumed content reaches $5) and they see a list of what they have read when they register and pay, the value is now tangible while also removing the friction that Kiesow refers to.

Despite being a relatively new solution, LaterPay’s partners are already seeing success with the digital single copy. Publishers are seeing conversion rates (reaching the $5 threshold) of 10 to 20 percent on average. This revenue is both incremental and supplemental to subscription income as, LaterPay says, it comes from the approximate 80 percent of readers who were unlikely to subscribe to begin with.

Made to Order

While Apple was busy building Apple News+, McClatchy released a standalone offer for sports. The Sports Pass was released last fall as a niche vertical offering readers the opportunity to pay for just the sports section. The pass was released in 10 markets: Miami, Fla., Kansas City, Mo., Columbia, S.C., Lexington, Ky., Raleigh, N.C., Charlotte, N.C., Boise, Idaho, Tacoma, Wash., Ft. Worth, Texas and Sacramento, Calif.

According to Leanne Gemma, director of product for McClatchy, the company has known for years that their online sports readers are highly engaged and loyal. These readers make up less than 20 percent of their audience, but consume more than 50 percent of their page story views and are three times more likely to return than non-sports readers.

Leanne Gemma

“This is a very different approach than what McClatchy has had before. It has always been one size fits all,” Gemma said. But by creating the Sports Pass, McClatchy is attempting to “create experiences and products that really meet people where they are and give them the right experience, pricing and product at the right time.”

This customized initiative is a first for McClatchy, but not for the news industry.

“The New York Times bet more than a year ago that it could convince an audience of foodies to pay for a standalone section devoted to all things cooking,” CNN’s Jill Disis wrote last November, just months after McClatchy’s Sports Pass was released. According to her report, the Times then had 120,000 subscribers for the cooking standalone, which costs $5 a month and is not included in the regular digital subscription.

In addition, the Times offers its crossword as a standalone at $6.95 a month or $39.95 if paid for annually. The crossword is also not included in a regular digital subscription, however, it is offered to a subscriber at 81 cents a week if the user pays monthly or 38 cents a week if paid annually. Last June, Poynter reported that the crossword had reached 400,000 subscribers.

For McClatchy, this initiative has also paid off; in some markets, the Sports Pass has doubled McClatchy’s subscription conversions for the week and has not showed any signs of cannibalization of their regular subscription sales.