Last week’s INMA Media Subscriptions Summit in London confirmed for me two things: There is genuine passion rising for understanding the new economics of content, yet there are dozens of ways paid models can be structured and implemented.
In other words, there is no silver bullet.
That’s tough medicine in an industry that loves copy-and-paste, follow-the-leader silver bullets.
I have been accused of having a fondness for the freemium model over the metered model. Sorry, I have no affection for pay models! I can report that in the past three years, there has been a shift in Europe and the South Pacific from metered models to freemium or metered/freemium hybrid models.
What I learned at INMA in London was why that is happening.
In a presentation to the INMA study tour in London, Piano CEO Trevor Kaufmann outlined conversion data between Piano clients operating a metered model vs. a hard/freemium model:
- Metered clients report an average conversion rate of 0.08% vs. 2.56% for hard/freemium clients.
- The metered average conversion rate is 0.36% vs. 4.33% for hard/freemium.
- Time to convert among metered clients of Piano is 11.65 days vs. 3.64 days for hard/freemium clients.
Piano is quick to note that there is a huge range of performance from publisher to publisher across every stage of the funnel – with some promoting more aggressively and some operating with various levels of meter height, which impact conversion results.
Yet Kaufmann said that “the act of launching a hard paywall makes our client think about product development in a different way than launching a meter,” which is best used in a mass-audience scenario.
My read on this last point is that a freemium model forces a cultural discussion about the values behind content: propensity to trigger a subscription, propensity to be shared on social media, propensity to add brand equity. Not every piece of content is designed to generate a subscription, yet there needs to be a smart discussion about your content universe to put that into context.
Either a human makes the decision to lock or a human writes the algorithms to lock. One way or the other, data mostly informs today’s freemium model in a way it didn’t seven years ago as the “gut instinct” method was so poor in triggering subscriptions.
By contrast, a meter is an educated blind guess. Publishers were less confident about the meter height in 2012 when the average meter was 13 versus today, when the average meter height for Piano clients is 5.
A meter can work up to a point. In fact, I asked panelists Siri Holstad Johannessen of Schibsted and Steven Neubauer of Neue Zürcher Zeitung (NZZ) a hypothetical that they answered very slowly: If you could go back in time and launch a paid content solution from scratch, with which model would you start? The short answer was they had no problem starting with the metered model – yet it could only take them so far. Schibsted’s Aftenposten has evolved to a meter/freemium hybrid, while NZZ has a dynamic “paygate.”
Cutting across many presentations in London, we conclude that the metered model works best for brands with strong identities and a high volume of content — which, by itself, might explain why local newspapers under-performed so dramatically with the metered model in recent years.
Freemium works best for brands with unique to highly unique content, offering the best model for converting readers to purchase. The hard pay model works for brands with an extreme connection to their community. Yet make no mistake: The hybrid models of Scandinavia and the dynamic pay gate models are coming on fast.
INMA research conducted for the London Media Subscriptions Summit confirms many of these nuances between the meter and freemium models. INMA surveyed 35 news media companies that were represented at the London summit and who are intimately involved with digital subscriptions:
- 54% operate freemium models.
- 34% operate meters.
- 41% of respondents are unhappy with their model.
- 67% are looking to switch models.
- 76% are looking to add new features to their pay model.
Freemium operators were the “happiest” of the publishers surveyed by INMA:
- Freemium minor lock down: 80% met or exceeded expectations.
- Freemium major lock down: 72% met or exceeded expectations.
- Porous meter: 43% met or exceeded expectations.
- Strict meter: 25% met expectations (none exceeded).
- Hard paywall: While a small percentage, 100% exceeded expectations.
The unhappiest of publishers operate a strict meter, with 75% saying performance was below expectations, according to INMA survey data. This was followed by 57% for the porous meter, 29% for freemium major lock down, and 20% for freemium minor lock down.
Now, for silver-bullet lovers out there, it sounds like the freemium minor lock down model might be the model for you. Most content is free, yet a minority of content is locked.
Yet Kaufmann warned — and summit case studies reinforced over and over — that success is about optimising whatever model you choose.
Whether meter, freemium, or hybrid, you will under-perform if you don’t adopt a clear growth mission. You will under-perform if your effort is not a unified, total company approach. You will under-perform if this effort does not give thought to value proposition, brand, communications, content, products, payment methods, and customer excellence. You will under-perform if you are not committed to total marketing and making reader revenue central to marketing efforts.
To be blunt, even the best paid content model that is poorly promoted will under-perform. It might take an army of consultants retroactively to discover that the model was correct, the pricing was correct, engagement was correct — yet the publisher got the marketing wrong.
This lack of total commitment was the whisper in London. While Sweden’s Dagens Nyheter and Norway’s Aftenposten have pushed the economics of content deep into their newsrooms, others resist — each in their own way. In the process, they hold back the optimisation of subscription success. It’s doable without the newsroom up to a point. But it’s damned difficult.
Then there are nuances within nuances. A senior editor with the Financial Times told INMA he didn’t want his reporters “writing to the KPI.” They should be informed about broad trends in content economics, but they shouldn’t be living and breathing the details like (presumably) editors. Other publishers at the London summit confirmed a similar thought process.
Now, I will veer into dangerous territory: A meter might work best for companies whose newsrooms want little to nothing to do with being involved in content economics. There are newsrooms that are resisting the trends of KPIs, content scoring, and algorithms. I know of high-end newspapers in Latin America and Europe who fit this bill.
How can you smartly lock content (freemium model) without the total commitment of the newsroom?
This is such a pity. As many executives tiptoe around their newsrooms who want to remain an island, other newsrooms are embracing digital subscriptions with gusto as they realise this is the power play of a generation. This is an opportunity to own the brand value funnel and not just a piece of the funnel.
Piano’s Kaufmann gently chastised me for going too far with editors owning all of the paid content reins — notably marketing. Yet I don’t sense newsrooms are looking for operational control so much as moral leadership.
If a conference and study tour can be fun, surely London was fun.
In fact, the INMA Media Subscriptions Summit in London was transformational. It was the beginning of a grand industry conversation about our heart and soul: how to measure it, how to manage it, and how to get paid for it.