In the long history of print newspapers and magazines, we became trained to hit circulation targets by any means necessary: discounts, giveaways, promotions. It was all about delivering the biggest number to advertisers since that was our business model.
We occasionally would talk about the averages, the medians, the general characteristics of our print readership base. Yet the truth is, we knew precious little. We flirted with household overlays that might provide clues even as a circulation director confessed he had no clue whether it was a man or woman living at an address.
We aimed print subscription offers at high household incomes. We gave away the store to marginal readers. And then we always had the safety valve of single-copy sales for the flirts who couldn’t quite commit — and convinced ourselves there was a path to subscription.
It is a different story in today’s digital subscription game as we are overloaded with real-time data analytics and benefiting, increasingly, by newsrooms that know what to do with that data.
Yet we still haven’t had a smart 360-degree discussion of the reader revenue possibilities. That is starting to come together.
On today’s INMA Webinar titled “Segmentation for Bundling and Unbundling,” Greg Piechota aimed to paint a broad picture of a publisher’s potential digital subscription audience. No doubt you’ve seen variations on this graphic of:
- Heavy Users.
- Occasional Buyers + Deal Seekers.
In Piechota’s story, Fans and Heavy Users have the highest lifetime value, while the Pragmatists (benefit seekers) have medium lifetime value. Meanwhile, the Occasional Buyers and Deal Seekers have the lowest lifetime value.
As INMA has talked extensively of digital subscription opportunities, much of what we’ve focused on is the low-hanging fruit that can be done through content optimisation aimed at Fans and Heavy Users. I heard on the recent INMA study tour of Oslo and Stockholm media houses that with a sharp, market-focused newsroom, content optimisation itself can represent 60% of subscription sales vs. 40% with more traditional marketing methods.
There is a healthy support for building membership benefits for the Pragmatists. To date, that has mostly been the “cherry on top” conversation on how to grow reader revenue beyond news subscriptions.
Yet by teasing the monetisation of the “other 97%” of the market, Piechota graphically put the broader challenge for publishers in very graphic form. It’s a lot to swallow, yet it provides a strategic framework for digesting the challenge for the next few years.
Here are my thoughts:
- Fans: Let’s hope you have a subscriber relationship with your Fans by 2019.
- Heavy Users: There is upside for most publishers with Heavy Users. Yet this is the ceiling many are hitting. In some cases, maybe we’re not clever enough. If you’re a regional publisher, it may simply be a matter of not enough addressable households.
- Pragmatists: There is enough upside with Pragmatists with membership offers, non-news niche content, and the like.
- Occasional Buyers + Deal Seekers: Then there is the whole world of Occasional Buyers and Deal Seekers that is getting parked in advertising-driven free portals and, as Piechota hinted today, third-party extenders like Apple News+. This segment can be “bought” with day passes (Tages Anzeiger likes them, Die Welt does not), upselling services like video or broadband (Stuff New Zealand) and the direct sales of cars (Dennis Publishing).
I asked Piechota how to read the LTV graphic. He said left to right, first to last. As someone with roots in smaller newspapers, I could think of no other way to digest the reader continuum. So at least most INMA members are starting in the right place.
The mission of INMA’s Readers First Initiative is to “surface global best practices in the art and science behind digital subscriptions … and create a road map toward the next generation of consumer monetisation through 2020.”
Piechota is trying to nudge us toward the second part of that mission. The challenge is many INMA members, including those attending the recent Stockholm Media Subscriptions Summit, are just now getting their heads around the newsroom vs. marketing effects of Fans and Heavy Users. They are just now becoming obsessed with content economics primarily aimed at those Fans and Heavy Users. They are still occasionally fighting their recalcitrant newsrooms who want to do what they’ve done for 100 years and not be bothered with data or subscriptions.
If INMA is to paint a broader portrait of the reader monetisation landscape, we have to start getting comfortable with all four parts of this beautiful continuum: Fans, Heavy Users, Pragmatists, and Occasional Buyers + Deal Seekers. The media company of, say, 2022-2023 has to be fluent in this from the front desk to the newsroom to the advertising sales department and beyond.
Gone are the print days of delivering a dumb number at any cost. We have to segment using data, and we must be honest about telling the story of our readership base — from Fans to Occasional Buyers.
It is beyond Ph.D. to suggest ways to upgrade Occasional Buyers to Pragmatists to Heavy Users to Fans. We have plenty of time for that conversation. Yet let’s start with acknowledging the totality of the market and where they fit in our strategy today.
If reader revenue is the business model that will sustain scalable journalism, then we need to find the digital news subscription ceiling for the 3% of our potential market — and have a smart discussion about pushing beyond. That was the lesson I got from the Stockholm Media Subscriptions Summit and Piechota’s Webinar today on Readers First Initiative’s second phase.