INMA research shows subscription best practices of fast-growing publishers
Readers First Initiative Blog | 13 April 2022
Common wisdom in the news industry is that publishers are focused more and more on subscription numbers as consumers — and not advertisers — are becoming the primary revenue source for news media globally.
While there are pros and cons to a subscription-based business model, a new INMA service should help make it easier for publishers to increase subscriber numbers, INMA Readers First Initiative Lead Greg Piechota said in Wednesday’s members-only Webinar.
The new INMA Subscription Benchmarking Service started with subscriptions as a pilot project in late 2021, and it was opened to all INMA members in March. The add-on service gathers 20 data points from corporate members who are news publishers, translates and analyses the data into 34 indices and ratios, and then slices it into six segments. All the information is available on a personalised dashboard with more than 150 charts and tables.
“We are lucky that our industry is rich with many vendors that can provide benchmarks for success,” Piechota said. He explained the peer-to-peer exchange is appealing for many reasons, not least because it’s low-tech and low-cost. The data collection and analysis is really only a small part of the service.
“What really matters is the community,” he said. Thanks to the robust network, “we have more than 6,000 case studies in our archives that we can share with members, and we can also organise private meet-ups and peer-to-peer matching between publishers” so INMA can both share data and learn from one another what works.
Piechota shared more than a dozen data-packed slides that are “just a small part of what we released to the participants” in the hopes that these top-line numbers would “help to advance our understanding of the industry.”
What success looks like
Looking at 102 international news brands, the data was segmented by the growth rate of the subscription base since 2019. While the industry expected to see a spike in the demand for news subscriptions because of the major news event of COVID-19 (even medium-sized publishers grew their subscription base by 100% over the past three years), the most successful 25% in this group were growing at a much higher rate, Piechota said.
When comparing this top 25% to the bottom 50% in the group, the top group’s subscription rate grew 7.5 times faster than the bottom group. Piechota said initially they thought this substantial growth rate for subscriptions was just because of price promotions, but it turns out that the top 25% also saw their revenues grow 3.2 times faster than the bottom group.
Some of the characteristics of the brands in that top 25% were surprising, including that 60% are regional or metropolitan brands (not national) and that 73% are in Europe.
The study then took a closer look at specifically what these brands in the top 25% actually did to achieve such fantastic results:
- The number of online users spiked dramatically when big news broke, so these were well-known brands with good distribution systems in place already (including effective SEO and social media).
- The rate of paywall stops was much higher. The average paywall stop for this group was 30%, while the average for the rest of the market was less than 10%.
- They convinced more people to try a subscription by decreasing prices and making the subscription sign-up and payment process easy and efficient.
There are, however, trade-offs. The brands in this group saw a monthly churn rate that was two times as high as that of the rest of the market, and their monthly average revenue per subscriber was half that of the rest of the market. Piechota said that for these brands, the focus was optimising for high volume and total revenue growth to improve over the long term rather than looking at short-term numbers like monthly churn or average revenue per subscriber.
“You’d think that when the demand for news is high,” he said, like when a big news story breaks, “you wouldn’t have to lower the subscription price. But these brands did. And as a result they were able to acquire so many more new people that even with a higher churn rate, they ended up with a higher total number of subscribers and higher total revenue.”
From a funnel to a cyclone
The old analogy of the funnel doesn’t adequately describe what these brands are doing, Piechota said. Instead of attracting people to the site and engaging them slowly, these brands “suck people in and stop them very quickly, converting them with a very attractive price, and then engaging them with a long trial until they happily renew or upgrade their subscription.”
He calls this a “cyclone” rather than “funnel.”
“In 2019, brands like The Boston Globe and New York Times started offering much longer subscription trial periods — as long as 12 months,” Piechota said, after which publishers around the world started doing the same. At the last INMA Subscription Summit, he said Germany’s Bild described how the combination of a 12-month trial and a 50% discount increased conversions and improved retention and total value.
“So, we looked at offers by the top 50 news subscription brands in the world,” Piechota said, “and almost half offered deeply discounted and extra-long trials as of mid-February 2022.” The median length of a trial offered by these brands was nine months, with the average discount for trials longer than three months being 52%.
While this practice is becoming more common, Piechota said it’s important to remember this strategy won’t necessarily work for brands that have just launched or are just about to launch: “It’s a strategy that works well for established brands, brands that have a good subscriber base and are looking for new ways to interact with more casual readers.”
The path toward reader revenue
The benchmarks confirm there are different stages of maturity for publishers on the journey for reader revenue:
- News media companies that are trying a new model may launch a subscription by putting a paywall on an existing product that used to be free. This usually starts as a marketing or tech project, with a focus on pageviews, so it moves slowly and doesn’t convert much in the beginning.
- Media companies then realise to grow they need to adjust content to the needs of paying readers, so they move toward a product-market fit. This requires a resource adjustment and changes to the operating model. It’s only in this phase that Piechota sees publishers who really change their business model.
- Publishers who have found the product-market fit can then, finally, focus on scaling. This means investing in new tech and new talent, adopting new work methods, and a reinvention of the culture of the company.
“News brands that see more known users see more subscribers, and brands that see longer session duration see lower rates of churn,” Piechota said, so engagement becomes something that is measured not by pageviews but by, for example, how long a user spends on a news site. “We see reader and ad revenue strategies converging as publishers refocus on registering and logging users.”
Executives from The Telegraph talked about its North Star goals at a recent INMA summit, saying their goal was to have 10 million registered users and one million subscribers by 2023, based on the theory that registrations drive subscriptions. Piechota said the numbers from the benchmarks study validate the theory. The idea that “you get one subscriber for every 10 registrations is kind of true.”
Successful brands start with goals, like the Telegraph did, including not just a target number but also why that number is important. Then, they organise around a business objective (acquisition of readers or subscribers, for instance) rather than a function. As the market matures, they can allocate more of their budget toward creating brand awareness instead of conversions.
“Based on conversations with the INMA board and the publishers in the Readers First Initiative,” Piechota said, “we think many publishers will follow the lead of the New York Times” in its quest to become an “essential subscription” where “growth is increasingly driven by non-news products.”
In the last quarter of 2021, 54% of The New York Times’ new subscribers were for non-news products like cooking or games.
Piechota said there are three ways publishers can build up value propositions:
- Build: The New York Times spent nine years building its successful crossword and games app and seven years on its cooking app to reach one million subscribers on each.
- Borrow: This is essentially partnering with an external service, such as The New York Times’ partnership with Spotify, offering a premium bundle of the two.
- Buy: Simply by acquiring The Athletic, The New York Times gained more than one million subscribers.
“There’s a need to balance the trade-offs between creative control, speed of development, and risk of development,” Piechota said. “Building something takes time, yes, and you have a lot of creative control as well as a high risk it won’t work.”
Just as newspapers added supplements like sports, living, and science to their core news products, digital news publishers are now adding different products to appeal to specific new segments of readers. After apps like games and cooking, if historic data from what readers like most in newspapers is any indication, Piechota thinks the industry may see publishers adding digital supplements like local news, comics, and even coupons or shopping discount offers.
He offered the examples of a national Polish newspaper that added a few local news digital-only editions in certain regions, and an Argentinian publisher that also has a discount club people can become members of for shopping deals.
These are, he said, “human needs: to entertain ourselves, find shopping offers, and learn what’s going on around us. These needs haven’t changed — we’ve just changed the way we’re getting the information.”
Greg’s Readers First newsletter is a public face of a revenue and media subscriptions initiative by INMA, outlined here. Subscribe here.