Dagens Nyheter moves to successful digital subscription model
Conference Blog | 13 December 2017
No media company has closed the cultural gap between its newsroom and the emerging world of digital subscriptions more than Sweden’s Dagens Nyheter.
In a live, in-depth INMA Webinar presentation on Wednesday, Editor-in-Chief Peter Wolodarski shared how the company overcame high churn rates, integrated machine learning with teams, and identified KPIs for its newsroom on its transformative path.
Three years ago, Dagens Nyheter was having a huge celebration for its 150th birthday. “I think we had good reasons to celebrate. But at the same time, we had tough questions about our future,” Wolodarski said.
At that time, in 2014, most of the newspaper’s revenue still came from one source: print. “We were concerned that though we had a proud history, we had no clear vision for our future,” Wolodarski said. He began traveling around the world to get inspiration from other successful media corporations, and see what they had been doing to address the transition from print to digital.
In Silicon Valley, he met Michael Moritz of Sequoia, a leading venture capitalist. As Wolodarski talked about Dagens Nyheter, he noticed that Moritz was looking more and more bored. Finally, Moritz looked up and said the words that would ring loudly and clearly for Wolodarski:
“I can hear you are busy dying.”
“I could see he had a point,” Wolodarski told the INMA webinar audience. Moritz said he knew of a Swedish company that Dagens Nyheter should connect with — Klarna, a payment solution firm. “I never thought about connecting us, a leading newspaper, with a payment service company.”
Klarna looked at the Dagens system, finding the media company’s process of becoming a subscriber was far too difficult. There were too many steps and details to get through, and when it’s that difficult to become a subscriber, you lose people. They suggested the newspaper partner with Klarna to create a one-click subscription solution.
Wolodarski said he knew Klarna was right. “At the beginning of 2015, we launched our first version of this friction-free, one-click subscription/payment solution. At that time we had almost zero digital-only subscribers (without it being bundled with print). From January 2015 to March 2017, after implementing the Klarna system, we saw a net growth of nearly 12% per month. I’m pretty proud of this development.”
When Dagens Nyheter started implementing this new subscription and paywall model, a lot of “so-called experts” told them people would not pay for it. But Wolodarski said: “Once our numbers started showing up, they wanted to know if they were really true; they thought we must be giving the subscriptions away for free. Still, people were not believing me. But now, no one is questioning that this development is really happening.”
In the Swedish media market now, all traditional newspapers are on this track — be they national, regional, or local.
INMA Executive Director/CEO Earl J. Wilkinson jumped in to ask if this growth came from completely new digital subscribers, or previous print subscribers who transitioned to digital.
“Some come from print; we are not seeing a more rapid decline from print since we launched this model,” Wolodarski answered. “But most of the digital subscribers you see in these numbers are brand new subscribers.”
He also shared that, on average, the digital subscribers are nearly 20 years younger than the print base. “For the first time in many years, the average age of our subscribers is going down.”
This success had not come without problems, however — biggest of which is churn. Dagens Nyheter went from 11.5% churn in September, 2016 to 14.8% in March, 2017. The more subscribers they signed up, the higher their churn rate climbed.
“Those numbers were not sustainable for us, and we had to deal with it,” said Wolodarski. “If we had continued like that, the digital stock would have leveled out at 90,000-100,000 subscribers. That’s not enough for us; we need many more subscribers just to survive, much less be successful — and to be able to invest in our core product, which is journalism.”
About that time, on a vacation to Tel Aviv with his family, Wolodarski learned of an Israeli data company, SparkBeyond, that had developed a powerful, automatic research engine. After meeting with them, he decided to do a one week data “hackathon,” combining machine data with a cross-functional team, to see what they would find.
“What was fascinating is that the results came up after just a day or two. Very early on, the research engine identified 200 features that could explain our digital churn.”
The six most important factors were:
- Monthly reminder invoices (digital/paper).
- Longer subscription periods (especially amongst students).
- Auto-payment model.
- Iphone and iPad identification — subscribers coming from the iOS system was more valuable, and they should adjust their offer accordingly.
- Activation — if a subscriber was active more than 90 seconds over the past week, that user would probably not churn. They needed to activate with the newspaper, through e-mails, notifications, etc.
- No telemarketing — while this was the traditional method for getting print subscriptions, it was a bad idea for a digital business.
Wolodarski said digital subscribers who came through telemarketing churned far more, and it was not sustainable. “Telemarketing is an analog way of recruiting people to a digital service — it just doesn’t work well.” Another big benefit is that it saves a lot of money; telemarketing is much more expensive than other methods, while at the same time being less effective.
With this data, Dagens Nyheter now has a model that predicts with 86% accuracy who will churn.
“We developed a real-time dashboard, using these markers, that enabled us to take action every single day on the most important churn drivers,” Wolodarski said. “When you connect the behavioural data with your marketing organisation, it can be very powerful. You can send out the right kind of offers to the right kind of customers. You can focus on the customers who are most likely to leave you soon, and take actions on that.”
Dagens Nyheter focused on three broad areas:
- Sales channels: move from telemarketing to digital sales channels.
- Pricing/Offers: focus on subscription optimisation, invoicing, and debt.
- Payment: introduce broader options, paywall recognition, create autopay flow, and migrating stock to autopay.
The main takeaway from this entire experience for Wolodarski was that it became a big organisational shake-up.
“I discovered when we started this project that there was always someone missing when we were ready to do something. I decided to do a daily 15-minute morning check-in with all the relevant stakeholders present. We started to truly work in a cross-functional way, with continuous and regular problem solving.”
Every Friday the team has a 30-minute demo session, to check on their progress and celebrate success. The editorial side of the company was also quite involved with this transformation. At the heart of the newsroom, they can follow the subscription dashboard in real-time. The dashboard also shows the articles that are driving the subscription business, and having the highest conversion. Goals are clearly there and transparent for everyone.
Some of these most important KPIs include time spent on articles (Wolodarski said that tells them more than simple page views), social shares, etc.
“This is all very much part of our culture these days, and has helped us a lot.”
The results? After implementing Klarna’s one-click subscription payment service and SparkBeyond’s research data, churn is down significantly since the high in March 2017.
Dagens Nyheter has seen a drop in churn of more than 25% since that time, from 14.8 to 10.8. Its base of digital subscribers is also increasing steadily, with a net growth of about 5,000 new subscribers per month. For the first time in 12 years, the total number of subscribers (print and digital) has increased exponentially.
Wolodarski said one reason he felt the implementation of this transition was so successful was because it was led by the editor — not by the marketing team: “I think we are really on a path to success. We are not done with this transformation. Now we are busy growing, instead of busy dying.”
The Webinar then opened for a Q&A session, moderated by Wilkinson.
INMA: Is there a free or bonus period in the beginning of a new subscription?
Wolodarski: First month is free, and the cost is approximately US$12 per month after that. The operate with a hybrid model that offers four free articles per week, and the rest behind a paywall.
INMA: Which digital sales channels work best for you?
Wolodarski: Organic sales from our own Website have the best conversion and lowest churn levels. Google is now introducing a friction-free solution for publishers (similar to Klarna from three years ago). It’s good, but it won’t be efficient. Klarna is ahead of both Google and Facebook in the payment area.
INMA: How are you engaging with the customers whom your data shows are more likely to churn?
Wolodarski: We are experimenting a lot. One big method is we reach out via targeted marketing on Facebook with special offers. This also changes quite a bit over time. We are always evaluating to see which techniques work the best. You have to work on it all the time and try different things; there is not just one solution to this.
INMA: Do you have specific channels to promote your brand to younger audience?
Wolodarski: I think we can get a lot better in this area. We are working on this through universities. We are associated with knowledge, and are viewed as credible. This is something very valuable for students and teachers. Social media, of course, is very important here as well. The most important aspect however is in your content — having the right content that is relevant, and that the younger audience cares about. That is how you convert free readers into paid readers.
INMA: What kind of data are you collecting from users who sign up with one click?
Wolodarski: Their time on the Web site, what they read and engage with, in addition to their payment information. We are starting to collect information on things like how much money they are willing to pay for certain things, which will become even more important when we start using this to go into e-commerce.
INMA: How many digital subscribers would you need to survive only with digital?
Wolodarski: This is difficult to answer because it depends on how much we charge. Right now we’ve been raising the print subscription price, while the digital is inexpensive. When we have bigger volume we will start to raise digital prices as well, depending on the data. In general, we would probably need to double the amount of subscribers we have now. But the opportunity for that growth is out there; we only have 1% of the Swedish population right now. I think achieving 5% is not unrealistic.
INMA: What percentage of your digital subscribers are on auto-pay?
Wolodarski: Right now it’s around 30%, while print is 60%. But these numbers are going up steadily for the digital stock, which will take churn numbers down.