This month, after four years of preparations, South China Morning Post is launching a digital subscription service. It thinks of itself as a specialist publication on China and aspires for a global reader.
The 117-years-old Hong Kong-based newspaper was acquired by Alibaba, an e-commerce giant from mainland China, in 2015. The new owner said it wished the newspaper focused on global audience and offered an alternative to what it called “the biased lens of Western news outlets” on the rise of China.
Alibaba reset a digital strategy, ditched a nascent paywall, and funded a revamp of the brand, its products, and the tech stack. SCMP grew its flagship Web site’s reach 18 times: from 2.8 million monthly active users in March 2016 to 51 million in March 2020, per internal data. A total of 95% of these users visited from abroad, and the United States was its primary market.
Global demand for the SCMP’s journalism about China spiked during the Hong Kong anti-government protests in 2019 and again sky-rocketed in 2020 during the COVID-19 outbreak. The business though has been poor for SCMP. In the region’s depressed economy, advertising spend almost halved, and SCMP made most of its revenue from ads.
“Frankly, COVID accelerated the launch of digital subscriptions, but this was always our plan,” said Gary Liu, CEO of SCMP in an interview with INMA. “We believe reader revenue is the best business model for news and for us. We want to align our business interests with users.”
- SCMP is going to roll out a dynamically metered paywall on SCMP.com, allowing visitors to read a few articles for free before offering them a subscription. Over time, the paywall will get smarter and start targeting prospect customers based on what it learned about the early adopters.
- There will be just one tier. A monthly contract is priced at around US$1 for the first month trial, and US$10 monthly afterwards. A one-year-long contract costs US$100, and a two-year contract is US$170.
To focus on the core market or to enter new ones?
SCMP plans to stay a newspaper of record for Hong Kong, a home of 7.5 million people, but it sees more than two billion English-speakers worldwide as the addressable market for its online subscriptions.
“For the world, we are a specialist publication, a China and Asia expert,” said Liu. (While the SCMP’s web site is not accessible from within the mainland China, its journalists can report from there. LinkedIn shows 79 of 1,200 employees of SCMP being based in the mainland.)
How big is the digital news subscription market for English-language sites? Based on the latest data, the top 10 publishers in English — from Australia to the UK and to the U.S. — had 13 million paying customers all together. News markets roughly follow power law distributions, so the total market size can be estimated at 15 million.
This market for digital subscriptions is growing every year, and SCMP’s management bets the interest in news on China will grow too, as its economy is catching up with the United States in size.
Entering markets beyond the core sounds like a plausible strategy for news companies, as the Internet destroyed geographical moats of newspaper logistics and lowered market entry barriers. This strategy is not without risks: a number of metropolitan news brands expanded their subscription products nationally, in Europe and in North America, but only a handful succeeded internationally.
A notable exception is the Financial Times, of which 70%, or about 700,000, subscribers live and work outside of the United Kingdom. For comparison: A similar number of digital news subscribers to The New York Times are based outside of the United States, but they represent just 17% of the subscription base.
Is it better to be first or better?
In our interview, Gary Liu laid out the key initiatives from the past four years:
- SCMP re-articulated its brand’s identity and mission. Liu: “We are a product company. We think user-first and our mission is global.”
- SCMP modernised its product and tech stack: “We relaunched our site and app, but the change was deeper than what the user could see. Our new internal systems made our journalists faster and better, and they allowed distribution of content across the world.”
- SCMP rebuilt its data infrastructure, enabling reinvention of the operations: “We know users better and we can act based on real time data. That gave us speed and agility. We also trained every single department to be data literate, from the newsroom to marketing to commerce.”
Liu got excited when he dived into SCMP’s progress from descriptive to predictive analytics, in which algorithms predicted future outcomes based on the historical data, helping drive user acquisition or advertising performance.
The next step was prescriptive analytics, in which algorithms suggested the best next actions. For example, one of the editorial systems deployed at SCMP recommended the SEO focus for newly written articles to optimise distribution.
“That is why we think we are ready to launch digital subscriptions. Our audience and our product are ready too,” Liu said.
Amid the pandemic and shrinking advertising income, many publishers across the world is considering the shift to reader revenue. The case of SCMP suggests sometimes it might be worthwhile to put one’s house in order before launching a paywall.
Extra time also allowed SCMP to prime its global audience, develop its products, learn the best practices and mistakes from the first movers into subscriptions, and build a proprietary technology that might be the source of competitive advantage.
How to do journalism and business in the age of polarisation?
During my video call with the Gary Liu, I focused on understanding the newspaper’s transformation under the Alibaba’s ownership.
I asked about the prospects of SCMP’s editorial independence days after police searched offices of The Apple Daily, another Hong Kong newspaper, and arrested its owner Jimmy Lai. The raid was based on new national security laws, condemned by international governments and human rights groups.
“We will continue to stand up for press freedoms in Hong Kong,” Liu said, explaining freedoms depended on the region’s judiciary staying independent, which, in his opinion, it did despite the new laws. “We believe we can report on China objectively,” he added.
Liu painted a vision of international expansion. In Washington, D.C., U.S. President Donald Trump threatened to ban another Chinese media outlet, Tik Tok, from doing any business in the U.S. and ordered the sale of the platform.
“The world’s polarisation poses both a challenge and an opportunity,” noted Liu. “With growing tensions, understanding all sides is going to be more important. And we are the most comprehensive source for news about China.”