Before participants traversed London for the INMA Media Subscriptions Study Tour, INMA Executive Director/CEO Earl Wilkinson told the group he believes there are two strategic subscriptions games being played by news media companies worldwide: the volume game and the premium game.
“Be aware that, with your colleagues, you all may say you’re in the same game, but your strategies are different, ” Wilkinson said as the two-day study tour began.
Markets, internal priorities, and even language may vary, but motivation for the shift toward subscriptions is similar across the world. The decline of advertising is pushing companies to diversify revenue streams.
Three years ago, The Guardian was losing significant money, Graham Page, business management and customer operations director, told study tour participants: “We just recognised that advertising wasn’t going to be our future,” Page said.
Though many of the companies visited shared varying emphasis on monetisation strategy shifts, a common thread was the importance of culture shift in the newsroom and the company as a whole.
Culture shift in response to digital transformation is necessary, but extremely difficult to navigate, said Emma Tucker, deputy editor the The Times.
“I think in many ways it’s the greatest challenge of all,” she said.
The tradition of print still sits heavily on the media company, Tucker added. After attempts to encourage staff to embrace digital change, the Times’ team now has digital embedded in every aspect of their work. Special digital-only morning meetings and a physical newsroom reorganisation have helped staff incorporate digital into their process more organically.
“The idea is to keep everyone informed on what’s going on so they don’t feel that there is this other thing going on that doesn't concern them,” Tucker said.
Going one step beyond digitally driven culture shifts, a few of the companies visited during the tour shared an internal focus on incorporating data into the core of their operations. While data can be a crucial guide toward subscriptions building and retention strategies, some companies are careful not to rely on numbers too heavily.
“We take our analytics very seriously,” Robert Shrimsley, editorial director at Financial Times, said. “We are deeply informed by them, but we are not driven by them.”
Some companies on the study tour noted that data is driving one of the biggest internal shifts — a shift away from the historical quest for scale.
Retention efforts are a bigger pay-off in the long run, Simon Raggett, managing director of sales operations at Sky Media, said.
“Attraction has been a big part of our history, but retention is becoming more and more important,” Raggett said. Sky Media, pay TV media company, is concentrating on retention of current customers with a rewards system based on the length of the relationship.
Claire Overstall, head of retention and partnerships at Telegraph Media Group, also said a focus on retaining current users is valuable in the long run, and that data is crucial to retention efforts.
“There’s lots of different things we can do now that we know the behaviour we want to create and how likely someone is to leave us,” Overstall said.
With a shift away from scale, publishers are doubling down on efforts toward their most valuable asset: content.
“A lot of papers have, by chasing scale, stripped out the things that make them unique,” Trevor Kaufmann, chief executive officer of Piano, said.
One common thread across the tour was publishers’ assurance that journalism is the core of their business and the value they offer.
For Immediate Media, a company the specialises in niche content verticals, content is a driver of new business as well as retention.
“The more content we produce, the more investment we put into our Web sites, the more traffic we will get,” said Andy Healy, managing director of history, science apps and digital editions at Immediate Media.
Grzegorz Piechota, senior research fellow at University of Oxford, disagrees. After researching digital disruption and business model innovation, Piechota found that the difference between media services like Netflix and publishers comes down to convenience.
“Content is very important, but it is not king,” Piechota said. “Convenience is king.”
People pay for Netflix and Spotify, he added, because they view it as an investment for future entertainment. When they purchase a Netflix subscription, they are comparing it to a trip to the movies, not to other movie rental services.
Perception and marketing play significant roles in the value of a service, Piechota’s research shows. Brand value is largely determined by audience perception. Though convenient, social media services absorb a news brand’s value.
Chris Duncan, managing director at the Times, agrees. Social media, if not used carefully, devalues news brands, he said: “There is no way that social platforms are designed to help you.”
Social media is a marketing tool, not a content tool, he said.
“When you think about how to interact with them, the answer is carefully and cautiously,” he said.
Publishers risk subscriptions when content is devalued, but sharing can be an important aspect of engagement.
Understanding the impact of social media, engagement, and data on publishers’ digital subscriptions is the first part of journey for media companies. Digital subscriptions themselves may even be a stepping stone for future audience revenue, INMA’s Wilkinson said.
“I do suspect that digital subscriptions are the opening act to something bigger,” he said.
Jess Burney, managing director, direct marketing and business development at Immediate Media, shared what she sees as a next step in her company’s strategy: “Subscriptions are hot today,” she said. “Community is getting hotter and hotter.”
The INMA Media Subscriptions Summit follows the study tour today and tomorrow at Reuters. Follow this blog for daily coverage.