The Huffington Post in the United States has just launched a membership model without a paywall, following the success of The Guardian in the United Kingdom that attracted one million people around the world to help fund its journalism with donations rather than subscriptions. In a live Webinar on Monday, INMA members discussed the membership model.

INMA Researcher-in-Residence Grzegorz (Greg) Piechota presented case studies of news memberships from Europe, Latin America, North America, and Asia, based on his original research. Piechota was joined by two panelists: Robbie Baxter, consultant and author of The Membership Economy, and Emily Goligoski, director of research at the Membership Puzzle at New York University.

The Webinar discussed why some news organisations launch memberships but not paywalls, what memberships are all about, how they are different from subscriptions, and how an organisation can transform itself to be membership-based.

“Last week, the Huffington Post announced that they are launching a membership model but not a paywall. In December, BuzzFeed launched a membership model, but not a paywall,” Piechota said.

Today, 111 news organisations worldwide are offering memberships, and 60 of these are for-profit organisations, including large, digital-only players. “It’s interesting that some of them ask readers for support, financial support in the form of a membership,” Piechota said. “Many of these publishers who follow the membership strategy, they look at The Guardian and their success with a hybrid model of this.”

For the last three-plus years, The Guardian has implemented a unique membership/subscriber hybrid strategy in which all its content is offered for free. The company asks readers to support its mission financially (totally optional) and offers subscriptions to access a preferred user experience. Results as of the end of 2018 included:

• 600,000 single contributors.
• 340,000 member patrons.
• 230,000 mobile and tablet app and print subscribers.

“When we think about different paywalls, I think it’s useful to analyse paywalls as segmentation tools,” Piechota noted. “Whether the content is locked or not locked, it just helps you to filter out different people. The people who want to pay are people who have a very strong attitude towards a brand.”

From a marketing point of view, however, this approach is not much different from a hard paywall, he said: “It’s a very similar benefit.”

Benefits of media

Piechota talked about these benefits as jobs that people are willing to pay the media to do, which fulfill various needs of the consumer.

• Cognitive needs (acquiring information, knowledge, and understanding).
• Affective needs (emotions, pleasure, and feeling).
• Personal integrative needs (credibility, status, and stability).
• Social integrative needs (family, friends, and community).
• Tension release needs (escape and diversion).

“It’s interesting that when we lock content, we just focus on just one of these needs — the cognitive need. We charge people to access the information, for the access to knowledge. But in fact, people actually engage with the media for many other reasons,” Piechota said.

“This is actually one of the differences from the marketing perspective, as I see it. Of course, there is the question whether these models are actually performing better than paywalls.”

Piechota took the audience into a look comparing The Guardian to its peers: The New York Times and The Washington Post. It took all three organisations four years to reach one million customers online. The ratio of paying customers versus total unique visitors is different, however. In 2018 this was .6% at The Guardian, while it was 1.1% at the Post in 2017, and 1.3% at the Times in 2015.

“This means that the [Guardian] model was converting at a lower rate than its peers,” Piechota concluded. “And when we try to estimate annual revenue per paying user, we see that the model of The Guardian was actually suppressed by single contributions and is making significantly less money than the paywall of The New York Times.”

The Guardian reported annual revenue of US$75 per paying user in 2018, while The Times’ figure in 2015 was US$192.

“Traditional subscription-focused news organisations are actually turning to this cause-driven or identity-driven marketing and trying to offer some value propositions beyond content,” Piechota said. With The Times, for example, these offerings include crossword puzzles and cooking. The Times also has begun asking subscribers to support its journalistic mission by funding student subscriptions.

Other organisations are implementing similar marketing strategies, such as Gazeta Wyborcza in Poland and Dennik N in Slovakia.

Subscription vs. membership: What’s the difference?

Piechota then introduced guest panelists Baxter and Goligoski. As an author, Baxter has experience with membership models both inside and outside of the news media industry, such as streaming media like Netflix and subscription boxes. Piechota asked her to share her own definition of membership.

“For me, a subscription is a pricing decision. It’s a tactic — it’s how you choose to get paid for the value you provide,” Baxter said. “Membership is about the mindset of the organisation and how they think about serving the long-term needs of the customers that they serve. So in a membership mindset, you might serve any number of membership benefits in addition to the straight subscription.”

There are a number of different benefits that can be added to a membership, said Baxter. The model really frees up an organisation to get more creative about the packages it offers.

Goligoski agreed with that assessment, saying that subscription is a quite straightforward, transactional exchange of value. “When we talk about membership, we’re thinking about all the ways individuals might contribute.” While money is the most common mode of support, members can also contribute with their time, their energy, and their expertise.

“It means that membership programmes have the potential to involve people who maybe even can’t afford to pay,” Goligoski said. “We think about ways in which you might pay by participation. This is not to say that we don’t think the money is important.”

The value is that individuals may contribute what they can, whether that is their knowledge, experiences, or professional expertise.  The important takeaway, Goligoski said, is that whatever revenue model an organisation decides on, it should be transparent about what it’s offering.

Baxter echoed that membership really opens up the range of benefits: “One of those is the feeling of contributing to something that is important and meaningful. Another one is status and being an insider, being recognised as important in the organisation.”

Risks and challenges

Baxter cautioned, however, that one of the greatest risks is conflating these benefits. “Being a for-profit company and then asking for money can seem very disingenuous.”

Baxter brought up another challenge to be aware of in the membership model. “When you have a membership model and your members are very close to the organisation, you tend to hear their voices a lot more loudly than you hear the voices of tomorrow’s members. And the result is that often those memberships result in an aging cohort, where they find themselves with an average member age that is not representative of the desired audience as a whole — which has a kind of vicious cycle where new members peek in, see people who don’t look like them, and then go away.”

A third challenge is the feeling that an organisation can do whatever it wants because its members support it intrinsically. “When you have to rely on a subscription, where it’s a very straight value exchange, you know if people cancel it’s because they don’t value your content,” Baxter said. With membership, this can often be harder to recognise if the product is becoming dated or less relevant.

The membership club

One way to look at membership models is as a “paid club,” Goligoski said. Members pay for access to belong, but that is different than a true community.

“A key point here is that membership organisations are sort of different by design. If they’re robust, members have the opportunity to contribute in myriad ways.”

One important aspect the Membership Puzzle has found in its research is that members are highly motivated by the idea that they can get something from their membership that can’t be found anywhere else, a sort of exclusive access. If the organisation plays to its members’ strengths and find out what they want to know, it can have a better model. The organisation also must be transparent about sources of revenue and what it’s doing with the money.

“Those that design with those principles in mind are really well-poised to then ask for audience revenue,” Goligoski said. “They sort of set themselves up really well in that they’ve demonstrated the unique value that they offer.”

Case study scenarios

Piechota and the audience discussed three different potential scenarios as case studies for approaching the membership model. Participants were polled for each case study.

Mission vs. profit

If a company is considering a membership model without a paywall, similar to The Guardian, what should come first — the company mission or profit?

From Baxter’s viewpoint, the concept of short-term versus long-term needs to be part of that question. “If I’m going for my quarterly profits, I might be killing the golden goose that’s going to allow for that next 10 or 20 phases of growth and profitability.”

Piechota revealed that the majority of respondents in the Webinar, two-thirds, chose the profit over the company mission.

Users vs. profit

When considering whether to make it easy or more difficult for customers to cancel their membership, what should come first — user convenience or company profit?

Piechota pointed out it’s important to remember the easier it is for a customer to cancel, the higher the churn rates and lower the lifetime value is.

The results of the poll were that 80% of respondents chose user convenience over profit.

This question is really one of a company’s alignment with its mission and building a trusting relationship with its members, Baster said. Though a company might retain more members by making cancellation more difficult, that doesn’t take into how word of mouth or returning customers affect the bottom line.

She pointed to the subscription box model, which has largely adopted a lower-friction cancellation process by giving customers the opportunity to pause their membership instead of cancelling it. “A lot of companies are moving towards that, which is a leading indicator of where the market is going,” Baxter said. “If you let people cancel, then you’re living and dying by the quality of your product and your mission.”

Members vs. editors’ autonomy

Brand fans are the best customers, but what if they demand editorial changes? Should the company put fan preference or editor autonomy first?

Goligoski weighed in, saying that working with members and understanding their concerns is crucially important in creating meaningful ways for them to have input. But ultimately, this decision lies with editorial.

INMA members agreed, with 65% siding with editorial autonomy in the poll.

News media organisations should look at member input as highly valuable input, though that’s not to say that members should drive editorial decisions, Goligoski said: “Organisations that are really clear about what they cover and what they don’t, and where they’re coming from, are going to have the best shots at success.”

Engagement vs. costs

When organisations consider the rising costs of serving their fans, which should come first: the most engaged users or the most profitable ones?

The Webinar participant poll was just about evenly divided between these two answers.

“Understanding the needs of your most engaged, most regular people can have virtuous effects on everybody else that you serve,” Goligoski said. “That can really be a jumping-off point for understanding how you want to involve more casual people and those who haven’t come into your funnel.”

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