The concept of a subscription needs a more nuanced look these days. Many people think just of the financial aspect — a customer pays for access to content or certain benefits. But Amy Konary, chair at Subscribed Institute (a think-tank subsidiary of Zuora) thinks today’s customers have new expectations and a subscription involves other factors.
On Wednesday, INMA members attended a Webinar that delved into how news media companies should evolve and accelerate their subscription business models post-COVID. Several thought leaders joined Konary to present on the topic:
- Frank Ernst, vice-president of Subscribed Strategy Group.
- Jenny Connelly, SVP of product and technology at Penske Media Corporation.
- Curtis Huber, senior director of circulation and audience revenue at The Seattle Times.
“There are key dependents of subscription models that make them lasting and valuable,” Konary said. “Simply offering the financial arrangements of subscription does not guarantee success in the subscription economy.”
Konary outlined the key factors in today’s subscriber relationship.
- It must be personal. Success depends upon having an offering that is personalised to the customer.
- It must have ongoing value. “The customer, the subscriber, is constantly making a decision as to whether they’re getting value.”
- It must give immediate fulfilment. The transaction must give the customer what they are purchasing right away.
- It must be real-time. “We want what we’re accessing to be the best at that point in time.” Constant updating of news and content.
- It must provide a memorable service. “Because the model is a relationship that you are paying for over time, it’s important that the subscribers knows they are in that relationship with you, and it’s an important part of their experience.”
Convergent media industry trends
Konary next took a look at several trends happening over the past years that have contributed to media companies’ ability to deliver on those promises.
- Business transformation: A pivot from traditional ad sales to an elevated subscriber experience, fueled by technology transformation.
- Customer expectations: Digital and mobile content consumed in-app and cross-device that combine services in new and innovative ways. The way we access information has changed.
- Cloud technology: Evolution in shared IP networks and cloud infrastructure empowers businesses to rapidly launch and iterate direct to digital experiences.
“Subscription models are particularly relevant today because of their resiliency,” Konary said.
As a SAAS company, Zuora has data on around 1,000 subscription-model companies. Looking at this over the last few months, Konary shared how these companies had been faring with subscriptions:
- Nearly half (47.4%) have experienced limited impact.
- 16.9% have seen subscriptions slowing.
- 15.4% have seen them contracting.
- But just over 20% have experienced acceleration in subscription growth.
“The industries that are accelerating include digital news and media,” Konary said. OTT video streaming and e-learning are also accelerating.
Agility is extremely important to the subscription model today, she added. “This flow chart shows how we’ve seen companies, including news media companies, respond to the challenges of COVID-19 within their community of subscribers.”
“But the question, of course, is what happens next? What we’re starting to see are accelerations that are starting to return a baseline. We are living in a time when uncertainty seems to be the only certainty.”
Perspective 1: Jenny Connelly, Penske Media Corporation
Penske Media, which includes a number of consumer and B2B publications, started to move to a digital subscription model several years ago. To keep up with changes caused by the pandemic, Connelly said companies should focus on revenue diversification and consumer retention through relevant subscription products and quality content.
Penske has moved into more live events and e-commerce, which Connelly calls the “flaming hot” business model today.
“Subscriptions were seen as one of the diversification tactics that we entered into,” Connelly said. Many of Penske’s publications enjoyed a strong and loyal reader base.
“I think it’s very easy if you’re a brand new start-up offering digital only to launch a subscription technology very quickly,” Connelly said. “But we, and many people on this call, are not a new digital start-up. We are long-established, legacy media companies. Some of our brands are digital-only and some are print and digital.”
Having both print and digital models adds much more complexity. Penske launched its digital subscription model in 2019 and is currently in the process of migrating brand after brand to that platform.
“The quality of the content is the thing that people will keep coming back for — especially when people have a monthly payment model, they can say goodbye at any time,” Connelly noted. It’s important to make sure your content is driving subscription loyalty and retention.
In some ways, she added, COVID-19 just heightened the need to do the strategic work that publishers want to do anyway. When the pandemic struck, Penske saw two opposite dynamics:
“Our pageviews were through the roof as people needed the news, but CPMs for advertising revenue were through the floor because brands did not want to have their ads around COVID-19 content.”
Figuring out the “new normal” in the post-pandemic world is now the task, Connelly concluded.
Perspective 2: Curtis Huber, The Seattle Times
Huber shared the things that he believes media companies should be doing to pivot to a new business model. The first is to develop a stable audience-centric business model instead of relying on advertising.
“Newspapers that want to become news publishing companies have to accelerate their transition of revenue structure, and they must boldly state that they’re an audience-first business,” Huber said, adding that the company leadership and strategy must match that commitment.
A second piece of the puzzle is e-commerce for additional revenue streams. A company’s Web site must also be intuitive and easy to navigate, and the subscription process must be frictionless for both starting and stopping service.
“It’s really about doubling down on technology, design, user experience, and strategically thinking about what the customer needs are,” Huber said.
In response to a crisis such as the coronavirus, being an audience-focused publisher means The Seattle Times retains its content editors when it comes to cost-cutting measures. “When we’re making decisions about user experience, we’re going to lean towards what’s going to grow and satisfy an audience, not the advertising end of the business.” The same is true of technology investments and other business strategies.
“People will look at companies and brands and say, were they right? Did they act right? Did they take care of folks? And did they behave in ways that I want to continue to have a relationship with them in the future?”
Perspective 3: Frank Ernst, Subscribed Strategy Group
“A major shift in the media industry in the last decade has been moving the print experience online and making the content widely and readily available,” Ernst said. “Now, the next wave is figuring out how to provide core content in new and engaging ways to draw in readers and create long-lasting relationships.”
There are two drivers in subscriptions, he said, and agility is the word that sits behind both of them.
- Market conditions: Disruptions such as COVID-19, financial recessions, and other crises. How will publishers react? What products and content should be transformed to meet those new market needs?
- User experience. Publishers must personalise to the subscriber and allow them to manage and control their account and experience. They must create a relationship.
“The next wave of this is around that agility,” Ernst said. This means strategising over potential scenarios and testing possible responses. Another piece of that is reaction to the subscribers and adding value in ways that they want.
“The providers that can be agile and can understand their subscribers in a good way, and introduce offers to find out what is working and what is not, and be able to lean into this is going to be critical.”
Konary wrapped up the Webinar with the key takeaways from the session.
- Establish strong connections with consumers through a culture focused on the audience first, instead of subscribers.
- Focus on providing relevant, quality content that builds an affinity relationship with the publication.
- Diversify away from advertising towards subscription products and other revenue streams, for new forms of growth.
See the list of INMA members-only Webinars here.