Hello! This is Readers First, a newsletter for INMA members on reader revenue innovation. I am INMA’s researcher-in-residence. E-mail me at: greg.piechota@inma.org. 

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MARKET SIZING: How big is the market for online subscriptions

The more newspaper copies people bought in a country 20 years ago, the more people in that country are paying for online news today, INMA analysis finds. This insight might help size the opportunity for online subscriptions.

What is the evidence: I found a positive correlation when compared the proportion of adults who paid for online news across 25 mature markets in Europe and North America, per Reuters Institute’s Digital News Report, to the number of print newspaper copies sold in a given country 20 years ago, per WAN-IFRA’s World Press Trends.

For example, countries with educated and affluent populations, such as Norway or Sweden, had strong reading cultures in the past, buying up to 700 newspaper copies per capita. 

Today they are leading the transition to paid news, with up to 45% of adults having paid for online news in the past year. 

The Internet changed the way audiences access the news, but it did not perhaps alter the fundamental dynamics — news is most valuable to politically, socially, and economically active members of the community. 

These groups have led the adoption of online news subscriptions, and their size limits the potential for this product category’s adoption.

Why does it matter: Many publishers survey the market and analyse available data to size the potential for online news subscriptions, which are often the fastest growing business line.

Strategists usually ask the following:

• How big is the total addressable market? E.g., how many news consumers or adults online are there?

• How many can I reach with distribution and sales channels? E.g., how many users do we reach on a monthly basis with our direct and non-direct channels, such as social networks?

• How many news consumers or users of a particular Web site would pay for online news if the quality and price were right?

• How many users already demonstrate brand preference and regular usage? E.g., how many users visit the Web site directly? How many visits on four or more days in a month? 

Sizing this market is difficult though, as online subscriptions in many countries are in their nascent stage. Across 20 developed countries, Reuters Institute found 17% of adults paid for online news at least once in the past year. My 2020 study found that most of the top national news brands in 33 markets have not started to charge for online news yet. 

Using the historical data on the print newspaper sales as a proxy for the size of the educated and affluent audience could help address the limitations of the online audience-only analyses.

What are the benchmarks: Earlier this year, at a New York Times Company’s earning call, President and CEO Meredith Kopit Levien said: “There are a billion people reading digital news, and an expected 100 million willing to pay for it in English, so it’s not hard to imagine The Times having a subscriber base that is substantially larger than where we are today.”

100 million is about 8% of 1.3 billion people for whom English is a native language.

The Times’ estimate is roughly in line with the one by The Wall Street Journal. At an Investor Day in 2020, Dow Jones’ Chief Marketing Officer Suzi Watford said she saw 56 million paying or willing to pay for online news in the U.S. alone. 

This would be 17% of 328 million Americans.

Is the estimate for paid news adoption at a range of 8% to 17% an overly optimistic or rather conservative?

Historic analogies: In 2001 in the United States, on average, 269 newspaper copies were sold per capita, suggesting a higher proportion of the population might be willing to pay for online news.

We can travel in time even further to discover more benchmarks. In many ways, the set-up of today’s market for paid online news resembles the beginning of the newspaper industry in the 18th and early 19th centuries. 

At that time, U.S. newspapers served about 15% to 25% of the population. The business model was dependent upon circulation sales to educated and affluent individuals, observed Professor Robert Picard in his 2010 book The Economics and Financing of Media Companies.

Advertising as a key revenue model for news developed in the last half of the 19th century. Urbanisation, the Industrial Revolution, replacement of slavery with wage earning, and rising literacy changed the society, creating new mass audiences for news and consumers for the ads. 

The adoption of printed newspapers peaked in mid-20th century before mass audiences embraced TV broadcasting. The advertising-driven business model peaked in the turn of  the 21st century before the Internet media unbundled news from classified ads and put the print business in a disarray.

A decade ago, Professor Picard predicted that news readership in the future would look much more like its initial position rather than the position in its mid-20th-century height. 

Given the facts of greater income, literacy, penetration of and broad adoption of the Internet as distribution channels for news, he expected a higher proportion able and willing to pay.

“Somewhere in the range of one-quarter to one-third of the population seems realistic,” he wrote.

Bottom line: Historical data on sales in a traditional channel might help to estimate the size of the market in a new channel. And in case of news subscriptions, such an analysis suggested the opportunity might be even larger than the market leaders predicted.

ENGAGEMENT: After the success with e-mail, the new promising channel for daily briefings is audio

With the audio-enabled morning briefing, The Washington Post enters a new battleground for consumers’ attention and senses. Podcasts fit into people’s routines in a similar way to e-mail newsletters. Will more publishers follow?

What is new: The Washington Post launched a short daily briefing, The 7, with the most important and interesting stories to start the day with. 

The new briefing takes just a few minutes to read, is available in both text and audio formats, and is available through The Post’s Web site, its application, social media channels, and in the form of an e-mail newsletter delivered by 7 a.m. every weekday. 

“Get it how you want it. Listen to The 7 on your commute or over breakfast: You can listen to an audio version on our app or Web site,” wrote the Post in its ad.

Why it is important: The Washington Post’s newsletter programme is already one of the largest among the top 50 news subscription sites in the world. Based on my review, it offers 49 newsletters (71 including news alerts), while the median number across 128 world’s biggest national news brands is nine.

Daily briefings in the form of short digestible news summaries are nothing new. Based on my review, 75% of the world’s national news brands offer a daily e-mail. For some brands though, the briefings became the key editorial products. For example, the flagship e-mail of The New York Times, called The Morning, has five million users.

If the concept is not new, what makes The 7 special? What stands out, in my opinion, is the audio form, which does not require reading and lets users catch-up with a few minutes of morning news in a car, on a subway, or simply at home while at chores.

How critical e-mail channel is: It is a workhorse of news subscription programmes. 

At the September INMA Digital Reader Engagement Master Class, Patrick Appel of Piano said that across 201 news sites internationally, e-mail is the second most-effective driver for subscriber engagement after direct visits to a home page.

With retention being in many publishers’ spotlight, e-mail newsletters became the critical tools to onboard new customers and trigger repetitive visits to Web sites. 

E-mail helps media companies acquire new subscribers, too: according to Appel, registered users convert, on average, at a 45 times higher rate than anonymous users.

With four billion users across the world, it is one of the most adopted Internet technologies, and as a channel offers publishers both scale and reliability.

Why newsletters work: Publishers’ newsletters inject themselves into an existing habit of many people to check their e-mails: 99% of e-mail users check their inbox every day. Of those people, 58% check their e-mail first thing in the morning.

News engagement is habitual, too. Many users check news on a regular basis and in a similar context: on the same time of a day, on the same device, in a similar environment, such as in bed, at breakfast, or on a bus, etc. 

For example, Norwegian Aftenposten found 41% of its sessions are generated by Daily Briefers, users who visit one three times in a day. 

Both habits — to check e-mail and the news — converge and reinforce each other.

Can audio play a similar role: There are daily routines that prevent people from reading, such as jogging in the morning or driving a car to work.

Today, more than half of Americans spend up to 29 minutes on one-way travel to either work, university, or school. They spend about two hours a day on household activities, e.g., preparing meals, cleaning home. 

Podcasts and audio news may very well fit in these day-by-day routines: 68% of U.S. adults listened to online audio in the last month this year, per Edison Research, and 50% listened in a car through their cell phone.

Daily briefings in the form of podcasts exist. The concept of The 7 resembles The Smart 7, a podcast by a U.K. radio presenter, producer, and entrepreneur Jamie East. Built without the support of a big organisation, his podcast hit five million downloads within its first year.

Takeaway: Expect more publishers to follow with such simple offerings, similar to The 7, that are easier to launch and cheaper to maintain than the radio-quality podcasts, such as The New York Times’ The Daily.

FROM OUR SLACK: Best reads about edition-based journalism

Every day, on the Slack channel for the Readers First initiative, I post links to articles that showcase best practices and inspire innovations in reader revenue.

Here’s a selection of the last week’s reads:

• In a blog for INMA, Steve Dempsey of Mediahuis Ireland explored the value of news bundled into editions for consumers, who search for a daily briefing, and for publishers, for which business unbundling is disruptive.

• Interestingly, engagement with digital replicas of print editions is a leading indicator for online activation of print subscribers and the key to their retention, found Matthew Lulay of Mather Economics.

• The Morning, the New York Times’ flagship daily e-mail newsletter read by five million people, is prepared by a team of six, revealed David Leonhardt, its Pulitzer-winning lead. The small newsroom for this prime example of edition-based journalism will grow soon.

• In the meantime, the pioneer of edition-based publishing on the Web, the Times and the Sunday Times in the U.K., is going to embrace live and visual coverage (video, infographics). The change is driven by its new head of digital, Edward Roussel. 

• Perhaps he saw this trend: While half of Americans continued to get regularly news from social media, Facebook lost some ground in the past year (decline from 54% to 47%) and Tik Tok gained (from 22% to 29%), a new report from Pew Research Center showed.

About this newsletter

Today’s newsletter is written by Greg Piechota, Researcher-In-Residence at INMA, with the research assistance of Marek Miller.Greg leads the Readers First Initiative at INMA aimed at sharing the best practices in growing online engagement and reader revenue. 

E-mail him at greg.piechota@inma.org with thoughts, suggestions, and questions. Sign up to the Readers First Slack channel for daily links.

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