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. PAYWALLS: In 2020, every second paywall follows a freemium model 

Research shows 39% of national media outlets in 33 countries charged for online news in early spring 2020, according to my testing of 569 news Web sites with the highest declared usage.

• In February and March, together with my associates, we tested the national news sites of brands listed in the Reuters Institute’s Digital News Report as the most read, watched, and listened in 33 countries in the world.
• We accessed each Web site repeatedly over a week, trying to be stopped by the paywalls and searched for paid value propositions. We used a VPN service to appear local users to the sites.
• We identified 224 sites with a paywall or a paid news product, such as the e-replica of a printed edition or news video streaming.
• In a similar study for the Oxford’s Reuters Institute in 2018, in a smaller sample of 397 brands, I saw 32% charging for online news. 

We found 47% of brands charging for online news seemed to follow the freemium model, in which some content is free to all users and some premium content is accessible only to subscribers.

• 18% of brands had a free Web site but charged for access to e-replica of their print products. This replica-only model has decreased significantly in the last two years; in 2018, 32% of brands featured it.
• 12% of brands appeared to have a meter model, in which readers can read a limited number of stories for free.
• 12% of brands did not have a paywall but asked for donations or offered membership. This model may have increased significantly in popularity, as two years ago only 1% of brands in my sample followed it.
• 6% of brands featured a hard paywall, a slight decrease from 8% in 2018.
• 5% of brands seemed to have a hybrid model, a slight increase from 3% in 2018. We observed combinations of a freemium and a meter, and the paywalls kicking-off based on the reader behaviours and other attributes. 

Our study has a number of limitations. We selected the sites based on Digital News Report, an online survey of news consumers’ preferences that ranks sites based on declared usage, and not actual traffic. We tested only nation-wide brands’ sites, as the local and regional news is featured in the survey as a category and not the individual brands. The results of our tests, although providing quite accurate results for the brands we know more of, were not validated by the tested publishers. The growing use of dynamic or adaptive paywalls made it difficult to trigger paywalls on some sites through our testing, so we may have underreported the share of hybrid models.

2. ETHICS: Should we keep charging users who don’t use our service? 

Netflix started to ask hundreds of thousands of users who hadn’t watched anything in the past year whether they wished to keep the subscription.

If they don’t confirm, the company announced last week, their subscriptions will be automatically cancelled.

At the end of March, Netflix had 183 million subscribers across the world. According to Eddy Wu, director of product innovation, the inactive accounts represent less than half of 1% of the company’s customer base, so less than 900,000 customers. 

“I wonder if other subscription businesses will be brave enough (and confident enough in the value of their products) to follow suit,” commented Robbie Kellman Baxter, a membership expert and an author of The Forever Transaction, in an interview with INMA.

Earlier in May, Baxter spoke at the INMA Vitual World Congress and urged publishers to look beyond short-term results to assure long-term customers.

“Netflix has always prioritised ‘cancel anytime’ and making it easy for members to cancel,” she said. “This approach goes one step further in truly ensuring that people only pay if they get value. Talk about ‘easy to cancel!’”

As Netflix considers risk to be small, what is the benefit here? “The goodwill [and PR] among both subscribers and employees will be high,” she answered. “After all, it’s hard to feel good about money you’re earning from people who aren’t getting value from your products and services.” 

Netflix makes it easy to cancel, but it also makes it easy to come back. Users who cancel their subscription and then re-start within 10 months keep their profiles, viewing preferences, and account details. 

What’s your opinion and practice? Should publishers make it easy to cancel? Do you? E-mail me at: grzegorz.piechota@inma.org 

3. CASE STUDY: Engagement-based pricing at the Financial Times 

Group subscribers to the Financial Times pay only for users who read the newspaper frequently. It sounds fair, but is it smart?

Similarly to many business news brands, a high proportion of FT subscribers — two thirds of 1.1 million — get access thanks to a group plan, as employees of firms, governments, or academic institutions. What’s unique is how the FT charges their employers.

In essence:

• For an average consumer, FT content is, in practice, hard-paywalled.
• On the other hand, group account users enjoy a metered access — limited by the number of articles they can read for free.

“We believe the engagement-based pricing model is a very fair way to price the value that our customers derive from our journalism,” said Tom Betts, chief data officer at the FT, in an interview with INMA. 

The common approach among news publishers is to sell groups access in bulk, while applying a volume discount. One rarely reports the actual engagement with the site, let alone charges accordingly.

How does the FT engagement-based pricing model work?

• The FT grants access to all registered team members or employees, and it doesn’t charge as long as they read eight or fewer articles a month.
• The FT charges only so called “core readers,” or those who read nine or more articles a month.
• The number of “core readers” is set initially based on an estimate of how many people require frequent access to the FT and then adjusted every year based on usage reports. The volume discount is applied based on the number of “core readers.” For example, an average annual price per reader can drop from £392 for a group of eight “core readers” to £319 pounds for 128 “core readers.”
• Administrators of group accounts get access to dashboards tracking the user behaviours. They can also manage users, select topics for them to follow, set up industry or company alerts, etc.

Why did the FT choose this model?

“When we first discuss subscription options for an organisation. it is very difficult to know, on both sides, how many people are likely to use a subscription and whether or not they will use it often,” explained Betts. “Our engagement-based pricing model allows us to make an estimate up front, and then over time we learn more about the demand within that account and can adjust the price they pay accordingly.”

Another reason is sampling in the search for potential upgrade. “Using this engagement-based pricing model we don’t tend to limit access to only those who have paid,” Betts said. “At the end of their annual subscription, we can negotiate the price for the next year using the engagement as evidence of demand.”

Engagement-based pricing mobilises the publisher to monitor and actively stimulate engagement of group account users.

For example, the newsroom of the FT tracks so called Quality Reads rather than page views. This metric shows the percentage of page views where a reader has read at least half of the article, estimated by time on page, scroll depth.

Product teams evaluate the performance of new features based on the impact on the engagement score called RFV, as it measures Recency and Frequency of visits, and the Volume of articles read.

The customer success team monitors the usage levels of readers and tries to ensure they get enough from the subscription to stay happy. As an Oxford academic, once I got a nudge from my FT guardian: “Our automated system has flagged that you may not be making as much use of FT.com as other readers at the university.”

The newspaper representative offered a free consultation about how to set an app, newsletters and alerts to “maximise the value” I get from the FT. 

Share your case study with INMA peers: What are you experimenting with? What have you learnt so far?E-mail me at: grzegorz.piechota@inma.org

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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