The Matchup, Athletic share sports readership strategies, COVID bump continues

By Grzegorz Piechota

INMA

Oxford, United Kingdom

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Hello! 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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PARTNERSHIPS: U.S. local publishers test sharing paywalled content in a new initiative called The Matchup

When the season of the National Football League in the United States started on September 10, visitors to a local news site in Illinois could, for the first time, access stories from the paywalled sites in Massachusetts or Florida for free.

It’s a live test of The Matchup, a new initiative by the Local Media Consortium, an alliance of nearly 90 newspapers, broadcasters, and digital media. The initiative is sponsored by Google. 

Effectively, it’s a content sharing programme — a sports fan who subscribes to any member publication gains access to articles published by other members without additional charge.

Members of the LMC believe this initiative will help them compete with the nationwide outlets, such as ESPN or The Athletic, for subscribers and for advertising. This fight requires scale — more content to convert and engage subscribers, and more reach and inventory for advertisers.

“It’s critical for the survival of local news publishers to face the challenges together,” said Mike Orren, chief product officer at The Dallas Morning News, in the interview with INMA.

The math is simple:

  • Members of the LMC produce more than 90% of local sports journalism in the United States.
  • They also have a combined audience of 78 million unique visitors, the third largest behind ESPN and Yahoo.

How The Matchup works 

A user journey that has been tested last weekend looked like this: 

  • A sports fan of Chicago Bears visited its local site, e.g., Shaw Media’s ShawLocal.com.
  • When reading an article about the weekend game, she could see a Matchup-branded widget with a selection of news about other teams, e.g., New England Patriots from Boston.
  • When she clicked on a link, an article from The Boston Herald would pop up in a light box — technically, a Google AMP page — without further authentication to the Herald site, nor a need to subscribe. 

The publishers involved in this exchange agreed to share the value generated by the sports fan visit, as follows:

  • Shaw Local owns the relationship with the reader, the first-party data, and keeps all advertising revenue from its own page.
  • LMC can run extra ads in The Matchup widget; this money helps to fund the initiative.
  • The Boston Herald earns all ad revenue from the AMP page displayed in the light box pop up. 

According to Orren, it took the LMC members two years to think through and negotiate this deal.

How the Matchup is born 

“In my career, I saw many collaboration ideas fail. The key reason was publishers seeking unique terms,” Orren said. Other common obstacles include over-complicating, the search for a “perfect model,” and the focus on a new initiative’s profit rather on benefits to member participants. 

Hence, the Matchup is simple to join and low-cost to run. The set-up utilises existing and standard technology from Google, members’ combined reach and original content produced any way. The LMC ownership guarantees the focus on delivering benefits to the members. Last but not least, the Matchup starts small with the live tests and plans to learn fast.

In the next phase, sometime in 2021, the LMC plans to launch a national sports news aggregation site at TheMatchup.com as an extra benefit for local subscribers and a funding source for the initiative. 

Interested in how local news publishers can compete with national or global brands?Read the summary of the INMA meet-up with Mike Orren, Pal Nedregotten of Amedia, and Tony Haile of Scroll. Or watch the recording.

MARKETING: The Athletic doubled its subscriber base amid the pandemic through aggressive pricing, referrals 

Despite the shutdown of sports events amid the pandemic, a subscription-focused start-up The Athletic said it managed to grow from 600,000 to 1 million subscribers. How? 

The last week’s announcement by Adam Hansmann, co-founder of The Athletic, came as a surprise. While demand for news spiked during the COVID-19 pandemic and many general news sites saw a bump in online traffic and subscriptions, the sports media actually suffered. For example, ESPN and Fox shrunk programming. No wonder — sporting events around the world were cancelled or postponed and whole seasons were suspended. 

The Athletic adjusted its coverage from news to entertainment in the form of “nostalgia, culture, and people behind the games we love.” According to the Similarweb estimates, the visits to its site decreased 33% in March and 45% in June, all compared to January 2020. 

By June, the Athletic reportedly saw a decline in its subscriber growth, introduced “extreme cutbacks” on marketing spend, laid off nearly 8% of staff, got rid of freelancers, and cut the salaries by 10%.

In such challenging circumstances, retaining the current base of subscribers would be a success. The Athletic, though, said it managed to double it.

Scaling during the pandemic 

My analysis of promotional activity of The Athletic suggests it might have grown its base with a number of aggressive pricing and referrals. 

  • Firstly, it slashed the price for new subscribers of US$7.99 per month. Initially, it extended a free trial from seven to 90 days. Later, it offered access for US$1 per month for 12 months.
  • Secondly, it granted its current subscribers free guest passes to give away to friends — for example, a June benefit included five passes for 30 days.
  • Thirdly, it gave away a free one-year subscription to all customers of telecom operators T-Mobile and Sprint. The Athletic reportedly receives no money from the telecoms.
  • Fourthly, it signed a deal with Bloomberg to sell a bundle of business and sports news access. Buyers of a US$290 annual subscription to Bloomberg.com get a free six-months trial to The Athletic.

Engagement and monetisation challenge 

Aggressive acquisition tactics seem to have helped The Athletic weather the storm and maintain the growth rate, but they are likely to challenge the key metrics — the retention rates and average revenue per user. 

  • Trials definitely help selling subscription, but — according to the benchmarks from Piano — readers on a free trial convert at half the rate of those on a paid trial.
  • The Athletic is likely to observe a deep drop in its retention rates (reportedly, 80% after one year vs. the news industry average of 45% for monthly contracts).
  • The free and deeply discounted offers are likely to impact significantly the ARPU and slow The Athletic’s “virtuous cycle,” in which recurring revenue funds the further growth.
  • Before the pandemic, at the level of 600,000 subscribers, the start-up saw its annual ARPU at US$64. After acquiring 400,000 new subscribers with free trials or annual plans for US$12, it’s likely to be less. 

Ability to retain readers and charge them a premium matters, as these were, according to the investors such as Bedrock Capital, the fundaments of the business model that attracted US$140 million of funding for The Athletic.

COVID: Reports of the bump’s end are greatly exaggerated

Online visits to the top news subscription brands are still up compared to January 2020, even during June, July, and August. The COVID-19 bump in demand for news is longer than any other news event in the past 15 years.

Back in April, some media commentators announced: “The coronavirus traffic bump to news sites is pretty much over.” 

My updated analysis of the traffic data to the top 50 news subscription brands reveals: 

  • The global brands still enjoyed 15% more visits in August than in January 2020.
  • The national news brands were still 7% up.
  • The local news brands were up 27%.

Brace for the next bump 

The 2019 study on the lifespan of news stories found the duration of online traffic bumps depend on the speed at which events developed and whether or not their outcomes were expected, like in the case of elections or the sports game finale. 

By today, it is obvious the coronavirus follows a pattern of a prolonged event with potentially multiple peaks. 

The world is observing the second spike of the number of infections, new regional and national lockdowns, and the impact on the economy becomes clearer and worrisome for most. 

The demand for journalism is likely to rise again.

About this newsletter 

Today’s newsletter is written by Grzegorz (Greg) Piechota, researcher-in-residence at INMA, based in Oxford, England. Here I 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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