Welcome to Readers First, a monthly newsletter for INMA members on reader revenue innovation. Based on your feedback, this time I am offering just one big read and a few shorter notes. 

Follow up during online meet-ups (the next one is Monday, November 19; claim a seat) and on a dedicated Slack channel (sign up here). E-mail me at grzegorz.piechota@inma.org.

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1. THE BIG READ. The New York Times shows news outlets a way to grow: Go after readers of lifestyle magazine. 

• The “Trump bump” is over, and it is not a driver of the Times’ growth in subscriptions. As sales data show, the Times enjoyed a temporary higher demand for its news product in late 2016 and early 2017. Executives and researchers associated the phenomenon with a spike of the U.S. public’s interest in Donald Trump and his disruptions to the United States and the world’s order. Interestingly, the Times has kept growing after the Trump’s impact had faded, and sales have been growing faster for non-news product.

• The Times’ brand may have a global reach, but its international expansion is not a key subscription growth driver. The audience of the Times is concentrated in the United States. The major initative announced in 2016 to scale abroad has not yet brought a breakthrough. According to internal data, international readers represent 16% of digital subscribers and 27% of the total NYTimes.com digital audience of 150 million. 

• The growth is driven by new magazine-style product development, as well as increased investment in brand marketing and aggressive price discounting on the core U.S. market, as explained by CEO Mark Thomson and COO Meredith Kopit Levien at the conference call with the analysts.

• The Times has found a way to cross the chasm — or the gap between brand enthusiasts and heavy users of news — and the mainstream audience, with non-news products such as Crossword, Cooking, and the soon-to-be-launched Parenting that appeal to new segments of users.

• At the same time, the marketing effort shifted focus from a 100% spend on direct response ads to a 50:50 mix of brand awareness building with TV spots, digital video spots, or outdoor, as well as targeted calls to action in digital, e.g. to download an app or get engaged with lifestyle content.

• New low-priced long-term offers, such as US$1 per week for a year, were introduced in the United States after being first tested internationally. The new offers attract the more price sensitive late adopters or medium users hitting a new, lower limit of five free articles a month. 

How does the Times try to disrupt lifestyle magazines? What niches may be next, after Cooking and Parenting?

• The Times has adopted a systematic approach to discover and test new content niches appealing to new segments of users beyond news. After having failed with the apps targeting sub-segments of news users, such as NYT Opinion and NYT Now, it found success with lifestyle apps such as Crossword (it surpassed 400,000 standalone subscribers earlier this year) and Cooking (120,000 stand-alone subscribers as of 3Q 2018).

• An interdisciplinary team at the Times, consisting of design, tech, editorial, data and advertising department representatives, searches for new opportunities. As reported, they assess ideas following the four criteria:

• The size of the market opportunity.

• The potential to build a subscription business.

• Unmet needs in the market.

• Whether the Times has an advantage in meeting these needs.

• Parenting is the next vertical soon to be launched, as confirmed by NYT’s David Gurian-Peck, vice president/subscription, growth, and planning, at the INMA Media Innovation Week in Amsterdam in September. Reportedly, other opportunities the Times has identified include wellness, beauty, and fashion. The company plans to develop two or three new products per year.

• The Times is testing an interest in many other lifestyle topics, my analysis of the Times’ digital advertising reveals. According to the ads archived at Moat.com and Facebook.com, this year the Times promoted guides on fitness, relationships, or travel with headlines resembling lifestyle magazine cover stories such as: “How to Start Exercising,” “Yoga for Everyone,” “How to Be Happy,” “The 36 Questions That Lead to Love,” or “52 Places to Go in 2018.” 
  
  

  

• The Times’ strategic investment in lifestyle content reminds us of the strategy it successfully pursued in 1970s in print.

• In 1976 it added its first regular non-news section, Weekend, covering entertainment, building up its bundle over the next years with Sports Monday, Science Times, Living, and Home.

• The new sections helped to grow the print circulation beyond news readers and attract new categories of advertising.

• Digital audiences interested in lifestyle may be up for grabs as many consumer magazine publishers are still busy trying to stop the decline of their print business and pursue advertising models in digital.

• Restructuring, centralising, catching up technologically are the themes discussed in the boardrooms of Condé Nast and Hearst.

• Their reader revenue efforts face challenges such as a product-centric culture, balancing requirements of advertising and consumer revenue (reach vs. engagement), low volumes of quality content, etc.

• Does it make them vulnerable to an assault from the digitally savvy, consumer-centric, subscription-first Times?

• The big picture: Digital subscription business has brought the Times US$295 million in the first nine months of 2018 — or double what it made from digital ads (US$155 million). Are you looking for a killer argument for business model innovation? What about this: The Times has tried to make ads work online for 22 years, since it launched its Web site in 1996. It has built a business twice as big with reader revenue in just seven years. And it is adding the third leg with e-commerce, events, and other businesses that have all together brought US$100 million so far this year.

• One caveat: In this analysis, I’m focusing on marketing strategy behind the digital subscriptions growth, but one needs to acknowledge there are many reasons the Times is doing exceptionally well:

• It’s a strong, trusted brand with a home base in one of the richest cities in the world.

• It’s a superb product appealing as much to news junkies as it may to fashionistas.

• It has the world’s dream team with a newsroom and tech capabilities expanding when so many others downsized.

• It has developed and practiced a process of innovating with customers, products, and business models in an iterative way for years.

How to grow subscriptions after one exhausts the segment of heavy users? Share your strategy tips with me: grzegorz.piechota@inma.org or join our daily exchange on Slack. 

Inspired by the Times? Check who’s an inspiration for them: 

• Gabriel Snyder, “Keeping Up With the Times,” Wired, February 12, 2017.

• Michael Smith, Rahul Telang, “Data Can Enhance Creative Projects—Just Look at Netflix,” Harvard Business Review, January 23, 2018.

2. IN YOUR INBOX. Survey of 700 newsletters from 128 nationwide news outlets in 33 countries.

How do you develop habits of regular reading? What tools other than newsletters do you use? E-mail me: grzegorz.piechota@inma.org or chat with me on Slack.

A must-read:

• Dawn McMullan, “Report: How Newsletters Are Redefining Media Subscriptions”, INMA, June 27, 2018.

3. PEER-TO-PEER EXPERT. The story behind Schibsted’s success with having up to 50% of user sessions logged-in.

At our last Readers First online meet-up, Bard Skaar Viken of Schibsted Media shocked INMA members with the fact that Schibsted’s Norwegian brands such as Aftenposten enjoyed up to 50% of user sessions logged-in. Tracking user behaviours across devices helps in segmentation, targeting, and engagement. I asked Bard for more details.

• Long-term systematic approach: “We have worked systematically on getting users to register and log in for more than five years across many disciplines (technology, product, marketing) and products (Web, app, e-paper). One key metric we monitor is visits from logged-in subscribers each day: daily active subscribers.”

• Paywall: “We sell a lot of subscriptions and our sites such as Aftenposten or Bergens Tidende have a high percentage of content behind a paywall. After a few years, our installment base compounded to a very high percentage of Norwegian population.”

• Print readers: “We have had several successful campaigns and activities targeting our print subscribers to register online to claim access to premium content — 60-70% of our full week print subscribers have registered.”
  
  
• Ecosystem: “We benefit from being part of a Schibsted universe of digital products and services that include popular classified and e-commerce sites such as Finn. May of our users have already registered to other Schibsted services, which makes it easier to get our users to log in to our news sites. A Schibsted login called ‘Schibsted Account’ is an alternative to Google or Facebook universal logins.”

• The next big thing: “We think a lot about the value proposition for registered users who are not subscribers yet. They pay with their data, so they expect something for their registration.”

Do you have a question to your peers? E-mail me and I will find the expert: grzegorz.piechota@inma.org or ask your questions directly on our Slack channel.

4. LETTER FROM THE ROAD: How partisan will a news brand go to please its brand enthusiasts?

Subscription-first news brands worldwide find success in engaging their core audience: brand enthusiasts. In polarised societies such as the United States or Poland, this is like playing with fire.

When I am traveling across the world, I am hearing that brand enthusiasts might be efficiently mobilised with identity or cause-driven marketing. They eagerly engage with a product optimised to their preferences: topics, authors, and views — including those on politics.

Newsrooms and board rooms discuss: How far though should we try to please the core audiences? How to avoid risking the credibility of their brands, the trust of their staff and the general public, and the potential for future growth?

• Helsingin Sanomat, Finland: At a summit in Helsinki in July, presidents Donald Trump of the United States and Vladimir Putin of Russia were greeted with 300 billboards and posters with headlines such: “Mr. President, welcome to the land of free press,” “Trump calls media: Enemy of the people,” “Putin shuts down Russia’s largest news agency.”

• Gazeta Wyborcza, Poland: Right before local elections in October, the newspaper published a two-part special edition titled: “The Black Book of the Rule of the Law and Justice.” It documented ways that the government and parliament controlled by this nationalist party undermined rule of law and separation of powers, took over courts, the public media, and other institutions.

• The New York Times, United States: It’s an opposite case. In the search for balance and in hope to attract new readers, the liberal newspaper hired conservative op-ed columnists such as Bret Stephens, Bari Weiss, and Quinn Norton. In February, after an uproar from staffers and the current readers, it fired Norton.

What’s your take? Have you faced a similar challenge? What have you done and why? E-mail: grzegorz.piechota@inma.org or join the debate on Slack.

A scientific perspective:

• Amit Bhattacharjee, Jonah Berger, Geeta Menon, “When Identity Marketing Backfires,” Journal of Consumer Research, Vol. 41, August 2014, p. 294.

5. WHAT I AM READING. Try Blitzscaling by Reid Hoffman and Chris Yeh.

Do you prioritise growth or efficiency? Reid Hoffman, a founder of LinkedIn and co-founder of PayPal, has been teaching super fast scaling of technology ventures at Stanford since 2015. Now, he has published a book, co-written with Chris Yeh, in which they present a number of case studies of companies scaling aggressively, such as Airbnb or Amazon, and put their learnings together in a ready-to-use framework. 

The big idea is that one can prioritise growth over efficiency in the short term — if the growth actually provides the base for outstanding efficiency in the long term, thanks to network effects and positive feedback loops.

I like particularly Hoffman’s focus on business model innovation, as opposed to technology innovation as the real enabler for the growth behind the technology ventures. When he analyses proven business model patterns, he mentions subscriptions, too.

One benefit to the subscription models is that once the business achieves scale, the predictability of its revenue stream allows it to be more aggressive with long-term investments since it isn’t obliged to maintain large cash balances to weather short-term variations in the business. This financial firepower can represent a major competitive advantage. Is that what we’ve been observing recently with The New York Times?

Predicting the lifetime value — or future profits for each customer — puts the Times in a unique position to make smart investments in subscriber acquisition. Similarly to Netflix, the Times may ramp up spending on content and marketing because it knows exactly how far it can go.

About this newsletter:  Today’s newsletter is written by Grzegorz (Greg) Piechota, Researcher-In-Residence at INMA, based in Oxford, England. Every month in this space, I will share results of my original research, notes from visits to digital subscription leaders, reflections on talks at conferences, and my favourite readings. Previous editions are archived online:

• “No. 1: What Paywall Myths and the tale of the two Posts say about reader revenue”

• “No. 2: Driving Loyalty in the Age of Social Networks”

This newsletter is a public face of a year-long reader revenue and media subscriptions initiative by INMA, outlined here. E-mail me at grzegorz.piechota@inma.org with thoughts, suggestions, and questions. Sign up to our Slack channel.

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