News media companies are not pricing themselves appropriately and do not have high enough goals for their digital subscription numbers, the former chief economist at Spotify told INMA members on Thursday.
Will Page, author of Tarzan Economics: Eight Principles for Pivoting Through Disruption, kicked off the first of seven modules of the INMA World Congress of News Media by explaining how much the industry can learn from streaming services like Spotify.
The third World Congress to take place virtually, with the May 2023 World Congress scheduled for New York, 267 delegates from 42 countries have registered thus far. The World Congress continues through May on Tuesdays and Thursdays. Today’s module was sponsored by Google.
Page gave attendees a virtual kick in the pants to think bigger and price better: “Coming form a music perspective, the numbers are just too small,” he said. “Why is it we’ve got half a billion people … whereas newspapers lag so far behind?”
He reminded attendees how the music industry’s disruption began 10 years ago with the emergence of Napster. That peer-to-peer music file sharing service opened the door for other piracy sites such as Kazar, uTorrent, and Pirate Bay, and changed consumer behaviour and expectations about how they acquire music.
But while copyrights and legalities eventually crippled those sites, the idea behind them inspired the creation of Spotify, which today is one of the world’s largest music streaming services.
Part of what differentiates Spotify is that it is a legitimate way for users to “steal” music. Users don’t have to subscribe to get music, although they’ll get an ad-free version by paying for the premium service. And the company, which went public in 2018, makes it easy for users.
“There’s friction in stealing music, but there’s no friction in pressing ‘play’ on Spotify,” Page said. And, like Spotify, newspapers are “in the business of getting someone to pay a recurring fee for content.”
However, while listeners have welcomed Spotify’s subscription model, readers have often balked at paying for digital news content.
“It always has been, and always will be, voluntary to pay for music,” Page said. The same goes for news, so publishers who want to thrive in the new digital environment could benefit from looking at what has worked for streaming music.
When the numbers don’t add up
The dilemma facing newspapers, he noted, is that they don’t have enough subscribers. He used observations from the U.K. showing subscription numbers; 15 million Brits subscribe to Netflix, even though they have access to the BBC. And Apple TV has 2.4 million UK subscribers, which is more subscribers than all the country’s newspapers combined.
Streaming music has 523 million global subscribers. Compared to that, he said, newspapers lag far behind. He urged publishers to look at their addressable market. From a music perspective, that means looking at how many unique people have a Spotify-enabled phone as well as a credit card to pay for music services. In the United States and United Kingdom, that number is about two-thirds of the population.
Then, chart how many subscribers per household are paying for a streaming service. In the U.K., that makes the total addressable market about 53.4 million strong.
In addition to not having enough subscribers, Page noted a challenge with pricing.
“I don’t think newspapers do a good job of pricing their own products. What they do is shoot themselves in the foot.”
He showed examples of offers he saida are confusing and sometimes contradictory. On the contrary, streaming music services make it easy: a simple price of US$9.99 a month for unlimited music. News media companies are more complicated because they offer different price points and discounts. Factoring in family and student plans that increase the number of users per account brings down the per-user price.
Answers in the app
News media companies could benefit from paying more attention to apps, Page said: “A lot of newspaper apps feel like Web sites squashed inside of a phone. We can do better than that.”
He shared U.S. app downloads by subcategories and explained that app success is measured by three factors: number of downloads, usage, and number of sessions.
“Getting into this rhythm of app store intelligence is really crucial,” he said, noting that the spikes in app usage at the height of the pandemic completely overshadowed what was happening in the newspaper world. Even though newspapers saw a spike, they missed an opportunity: “There was a party happening in the app stores and you didn’t invite yourselves.”
Twitter and Reddit received more downloads and usage than newspapers, broadcast news, and sites like NewsBreak and Google News.
“People use Twitter for breaking news, Reddit for gossip and intrigue, and Medium for long-form essays. These are tens of millions of people. Why do you need a newspaper?”
News publishers need to “get their hands dirty” and study app store intelligence because app stores are redefining the market, he said: “That’s where you need to be if you want to go where the game is.”
Response of news media leaders
INMA CEO/Executive Director Earl J. Wilkinson asked a panel of news media executives from three news media companies their thoughts on age’s industry pushback.
“I walked away from that presentation thinking about the economic value of every piece of content,” said Damian Eales, president of INMA and global head of transformation at News Corp. “It pushed me to embrace the data that we have on that content today, which we never had in a print world — data that shows the relationship between content and acquisition, between content and engagement or retention, and not at a macro level but at a micro level.”
While Eales said there’s no doubt the news media industry is different from Spotify, he thinks there’s so much we can learn from an industry that’s permeated the population the way Spotify has. And, although we have closed the variance between consumption and purchase over the years, “there’s such a long way to go. We can be so much more sophisticated in terms of segmentation.”
Stephen Dunbar-Johnson, second vice-president of INMA and president of international news at The New York Times, agreed: “The sophistication that we have gained and learned over the last decade in terms of data analysis and understanding our customers has gotten a lot better, but we’ve got a long way to go. We should always be in beta in our industry, I think, as we strive to achieve the potential.”
Maribel Perez Wadsworth, first vice-president of INMA and president of news at Gannett, said that while the industries are different, she believes there are tremendous similarities: “The difference is that Spotify isn’t looking at its user base as one homogenous group of people, so they’re not presenting the treasure trove of content they have as one homogenous experience.
“If we’re using data properly, if we’re segmenting properly and looking at the total community, I believe our penetration can grow significantly.”