What if readers who pay more actually read less?

By Grzegorz Piechota

INMA

Oxford, United Kingdom

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

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1. PRICING: E-replicas, gifts, and multi-user access are the key benefits of premium-priced bundles 

What makes some news consumers willing to pay more for their digital subscription? The INMA analysis of offers in 33 countries suggests: it’s less about extra content and more about user experience and non-editorial benefits.

Academic research finds charging a single price is rarely the most profitable strategy. Utility-driven consumers might be willing to pay more for more benefits, and price-sensitive consumers could happily pay less for less.

To maximise profits, news publishers often create versions of their digital subscription product, for example, following a popular good-better-best logic. The “good product” is a stripped-down version of the higher-valued “better product” and hence it can cost less. The “best product,” as the name suggests, has the most features and is priced the highest.

My study of 224 value propositions of national news outlets in 33 countries shows that 70% or 157 featured more than one digital product or a price point. 

While basic digital news subscription offers most frequently include product features — such as apps, and subscriber-exclusive editorial content — the top benefits of premium-priced offers are different in nature.

My analysis of 157 news outlets with at least two digital products showed that features such as e-replicas, non-editorial offers such as discounts, and multi-user access were the most frequent benefits for which publishers charged extra.

The occurrence of benefits in the studied offers does not indicate popularity of them among readers. It shows though that many publishers believe these benefits are more valuable for some readers and justify the higher price.

Let’s then look at the premium benefits more closely. 

Interestingly, e-replica, or a digital version of a print edition, and access to online archives were the most frequent premium product features.

  • For example, access to e-replica is excluded from the cheapest Digital Light product of Tages-Anzeiger in Switzerland, and is offered only to subscribers of a full digital product or buyers of bundles with print. The same feature differentiates standard and premium tiers of the subscription to the Irish Times.
  • Other frequent features include extra mobile/tablet apps (for example, Le Figaro in France includes a crossword app) and premium subscriber-exclusive newsletters (for example, El Mundo in Spain offers them). 

Non-editorial benefits help expand the value proposition of news subscriptions beyond news and content from the publisher.

  • Publishers offer tablets bundled with an e-replica. For example, Der Standard of Austria has such an offer, demanding a two-year contract.
  • One of the premium-priced bundles of The Australian includes subscriptions to Vogue magazine and full digital access to The Wall Street Journal, locking in readers not with one product but three.
  • Some publishers run exclusive loyalty clubs available for an extra charge like Clarin in Argentina. Its club 365 offers discounts at 6,500 shops and services.

Another type of premium benefit helps readers with families to open separate accounts for each family member rather than share passwords and get misdirected recommendations.

  • For example, Le Figaro in France includes family access packs of three or five accounts, depending on a price paid.
  • Other access-based benefits allow subscribers to gift access to anybody. For example, the premium bundle of The Washington Post includes both a bonus subscription to share and 30-day digital passes one can give away every month.
  • The New York Times and Dennik N in Slovakia allow subscribers to pay extra to gift subscriptions to students.
  • The former news site also features an option to unlock individual premium articles to anybody and share the link by e-mail or on social media. 

2. CASE STUDY: How a Slovakian news site discovered its most valuable subscribers read little and didn’t care much about benefits 

Tomas Bella of Dennik N could not believe the numbers: “The more someone is paying, the less she is reading!”

Bella is a co-founder and head of digital at the 5-year-old Slovakian news start-up with 50,000 subscribers. Dennik N is participating in the INMA-supported GNI Subscriptions Lab, receiving guidance from FT Strategies, a consulting arm of the Financial Times.

Last week, Slovaks finished an in-depth analysis of the Dennik N subscriber base, comparing behaviours and preferences of readers paying €4.99 per month for the Mini product (the good), €6.99 for the Standard product (the better), and €8,99 for Klub N membership (the best). 

While common wisdom suggests usage indicates willingness to pay for online news, the best customers of Dennik N actually read less than others.

  • Subscribers to Mini and Standard products visited the Web site 10 times a month, on average.
  • Members of Klub N visited just seven times a month.

Why? “Probably those paying more are simply richer and have less time for reading. They just want to support us and not to spend their days on our site,” hypothesises Tomas Bella.

The insight from data is supported by the results of a survey, in which Dennik N asked its most valuable subscribers for the reasons they had chosen Klub N.

  • “I want to support Dennik N” was the most frequent answer — 69% subscribers chose it.
  • Klub N members enjoyed also the privilege to unlock premium articles to anybody and an ad-free user experience on the Web site. 

The findings have a strategic significance for Dennik N.

To maximise profits, the news media company has been trying to upgrade low-tier subscribers to the higher priced tier by driving their engagement, as well as develop new features and editorial products such as a print monthly magazine.

Bella: “Readers told us: ‘We don’t really care about your features. We just want to send you money because we value what you do.’”

The biggest lesson here? The Slovak plans to stress the “support journalism” aspect more in the communication rather than previously planned benefits-driven messages.

Bella also urges publishers to study their subscribers and stay open-minded: “Don’t focus on features only in your surveys. Ask about emotions your brand and work create. Some people buy pragmatically access to news for €5, but some other prefer to pay double that to feel happy they supported our mission.”

3. ANALYSIS: Are wealthier people really less concerned about price and more about time?

The relationship between money, effort, and time is a bit more complex than a simple trade-off, academic researchers find.

Dennik N found that its most valuable customers — subscribers to the highest-priced subscription product — read actually less than other customers, and Head of Digital Tomas Bella had a hypothesis that rich people valued their time more than money.

It’s indeed well established in economics literature that consumers' costs include not just the price of products or services (monetary cost) but also non-monetary costs such as the effort and time: 

  • For example, subscribers are required to identify and select products and services (search costs).
  • Required to order and receive products and services (purchase costs).
  • Required to use and dispose of products and services (usage costs). 

On the individual level, people might value money or effort or time more if they have less of it. So, in the case of Dennik N, wealthier readers might be less concerned about the price and more about the time and effort required by the service.

In my book with Professor Thales Teixeira, Unlocking the Customer Value Chain, we describe an experiment in e-commerce showing more sensitive consumers were willing to put more effort and time to find discounted products on a shopping site, while less price sensitive were happy to buy products at full rate. 

Having said that, the research shows also both low-income and wealthy people suffer from shortage of time, and across societies and cultures the most constrained ones are working parents (by the way, they are found to be the least happy people worldwide). 

People value money, time, and effort differently. In general, it is found that time is more valuable than money.

  • Examples: People view spending time as more reflective of who they are than spending money.
  • In the research of the non-profit world, it is found that people view donations of time more moral and self-expressive than donations of money.
  • In the consumer world, people like products more when they think about the time they have spent with that product versus the money they have spent. 

The research, including the studies of news readers, is pretty clear that consumption has an impact on the willingness to buy — be it for the first or repeated time.

What does it all mean to Dennik N and its problem? While the lower usage of the product might be caused by shortage of time, it may also be caused by other things.

For example, readers might feel spending time with Dennik N is less valuable than alternatives meaning the product doesn’t meet their needs:

  • Be it cognitive (they need different information).
  • Affectional (reading doesn’t give them pleasure, or they get bored).
  • Or social (they miss social connections or interacting with other people).

Perhaps Dennik N might consider interviewing these members to understand their motivations better. 

The idea to emphasise the intrinsic value of support to higher ideals in offers might be a good one in itself. The research on happiness might inspire some other benefits of the news value proposition worth promoting or at least testing: 

  • Help others: Giving makes people happy. The New York Times found thousands of readers happy to sponsor access to a million students. The membership strategy of The Guardian is built on an idea that members support journalism, so all get access, including those who cannot afford it. 
  • Experiences: In general, the psychological research suggests people are happier when they buy experiences rather than material possessions. What about events, contributions, etc.?
  • Time: In transportation people often pay extra to get somewhere faster, skip lines, etc. Can we imagine products that help save time the time-pressed readers? A special morning executive briefing newsletter? A weekly briefing? 

About this newsletter 

Today’s newsletter is written by Grzegorz (Greg) Piechota, researcher-in-residence at INMA, based in Oxford, England. Here I am share results of my original research, notes from interviews with news publishers, reflections on my readings. Previous editions are archived online.

This newsletter is a public face of a 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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