Usage drives purchase. Habit drives usage. Brand and channel preferences drive habit.
It’s not enough, he stressed, to just get more and more people signed up for digital subscriptions, thinking that will solve the news industry’s need for reader revenue to replace declining advertising revenue.
“We know that people who read stay and keep reading, and that people who don’t read leave and don’t keep paying,” Piechota said. “We need to be focused on helping people create the habit of reading .... We need to make them read afterwards. We need to tell them about the product when they subscribe. We need to focus on creating a habit, to demonstrate the value of their membership, perhaps trying to tie them up with a sort of identity community.”
His other shared, and related, findings:
- Paywalls are segmentation tools.
- Growth comes from new segments.
- Skills and resources developed for selling content open the gate to a wider commerce.
Piechota and many others at this reader revenue summit share the view that a large percentage of publishers use paywalls incorrectly, in ways that actually hurt rather than encourage subscriptions growth. That’s because the typical implementation is all about limiting access to content rather being used to identify and selectively interact with people who are indicating their interest in content by being on the Web site in the first place.
“People normally focus on what’s behind the paywall,” Piechota said. “And I am looking at it in a different way. Who is exactly the person who is hitting the paywall? Why did we choose this person and not somebody else? Adjustments should be made.”
His studies at Harvard in the United States and now Oxford University in England have led him to study how other industries deal with the same type of problem of segmenting customers for appropriate handling.
“How did you book your room at this hotel?” Piechota asked the conference crowd as they sat in the Hilton Stockholm Slussen auditorium. “Was is a direct booking or was it an indirect booking? Are you a member of Hilton Honors or not? Did you buy through a search engine like Kayak or did you buy through an online agency like Booking.com?”
The travel industry shares many problems of news publishers, he said. Half of sales go through platforms and they need to compete for the same market, and so and so and so. So, how do they deal with that?
“They actually deal through channel management. They have channel managers on staff who actually think about it. This is the bottle water from my room,” Piechota said, holding it up. “If I am a member, I get this free. But if I’m not a member, I need to pay 35 Swedish crowns.
“So one idea is we actually need to differentiate the experience, the prize, the attributes of a product, the service that is connected, for different channels. We shouldn’t publish all the same stuff on our main channels, where we have people with the highest value, and on our Web site and on our app. It should be different. It needs to be different. This is how hotels and airlines actually deal with the problem.
“Then you need to monitor each person’s engagement and profitability. Otherwise you cannot actually associate them with different targets and different segments. You don't know what should be the service provided.”
At the end, after making it abundantly clear with an F-bomb that publishing’s traditional revenue model based on intermediation between readers and advertisers and information is irrevocably broken, Piechota offered one last thought to the subscriptions summit: Perhaps subscriptions is not the ultimate answer to a sustainable media future.
“Maybe this is not the destination for some of us,” he said. “Maybe this is just the way (for now) and we are still on our way to another destination.”