Experiments and future models for digital news subscriptions

Digital subscriptions reached a high point in 2015. In August, the New York Times reported that it had passed the 1 million paid digital subscribers mark. Digital magazine Slate announced that it is creating a metered subscription for international readers, and the technology news site Pando announced that it will now require digital subscriptions to access articles. Even YouTube may soon require a subscription to access exclusive content from its most popular video channels.

One key question facing publishers is: how much money is left to gain? In the first year or two after launching a digital subscription plan, a publisher captures a large share of people who were already willing to pay for digital access. But going forward each new subscriber must actively be won, converted, persuaded. The prospects for long-term growth rates in digital subscription revenue are unclear.

As a result, newspapers are increasingly trying to provide more value to digital subscribers. In some cases publishers even define their program as “membership,” which entails a range of benefits and privileges, not just access to content. Newspapers may offer unlimited access to mobile apps, loyalty discounts to events and retail products, and opportunities to interact with columnists at live events — a potential source of revenue for publishers.

Indeed, the Newspaper Association of America recently estimated that 29% of newspapers offer customer loyalty perks such as these. However, there is a wide disparity between newspapers with smaller circulations compared to newspapers with larger circulations. For newspapers with circulations under 25,000, only 16% reported that they offer such benefits. In contrast, 67% of newspapers with circulations over 200,000 do so.

Data Source: Newspaper Association of America’s 2015 Circulation Facts, Figures & Logic

American Press Institute

In addition to this type of added value, several newspapers or publications are experimenting with new types of digital subscription revenue or models. Below, we briefly highlight some of the most unique experiments:

Google Consumer Surveys (the “survey wall”)

Rather than paying money to access news content, what if consumers could instead support a publisher by answering a short marketing question? Paul McDonald, a Google employee, came up with the idea of a “survey wall” in “a quest to save the newspaper industry.”

After a certain number of clicks on the publisher’s website, a pop-up blocking content asks consumers to answer a survey question in order to read the article. The publisher decides what actions trigger the pop-up and how many questions to ask. The questions, meanwhile, are created by brands that pay 10 cents for each question answered — Google keeps 5 cents and the publisher gets 5 cents. This program was launched in 2012.

Despite the lofty ambitions of its creator, Google makes clear to publishers that Consumer Surveys is not a magic bullet. Still, it can generate incremental revenue from online readers who would be unwilling to subscribe and only takes a couple of hours to install. The program is described as “an additional way to monetize your site.”

Newspapers prominently using this feature include the Oklahoman and the Albuquerque Journal. Exact revenue figures are rarely disclosed — for example, the Columbia Missourian said that the revenue from Google surveys was “significant … like replacing the revenue that an additional ad rep would bring in each month.” However, the Erie Times-News estimates that after joining the program in 2012, its annualized revenue is around $200,000. And Lorain County Printing and Publishing estimates monthly revenue from the program is $10,000 to $14,000.

Salt Lake Tribune (the voluntary membership model)

Managers at the Salt Lake Tribune were hesitant to launch a digital subscription plan, believing that it would reduce web traffic. At the same time, they recognized that digital advertising was not generating enough revenue from their digital audience.

In July 2015, the Salt Lake Tribune balanced these concerns by launching a digital subscription model that was unique in two ways. First, while readers who have clicked five stories are shown a pop-up with membership details, they can click “no thanks” and continue reading stories at no charge. Terry Erme, in an editorial, noted that “unlike those other papers that require payment to read online, we still offer every reader a free website with the latest news. But only premium members to sltrib.com will have access to the website without commercial interruption.”

Secondly, prospective members can opt to receive invitations to a series of events hosted by the newspaper for $4.99 or choose to receive the invites and be shown an advertising-free website for $9.99.

Explaining how the latter option would impact digital advertising revenue, Erme wrote: “We anticipate that a small percentage of our online readers will become members, and that the effect on advertising will be minimal. However, even a small percentage of readers signing up will have a significant impact on our newsroom budget.”

After about three months, nearly 600 people had signed up for the membership program. Comparing the two plans, 90% of members opted for the ad-free option. NPR Utah described this approach as the public radio funding model — it’s voluntary and it comes with perks.

Washington Post (the partner program)

Seeking to expand its national profile, in May 2014 the Washington Post launched its Digital Partner Program. In this program, newspapers can partner with the Post to give their subscribers an access code for a free digital subscription to the Washington Post.

For a newspaper to participate in the program, no money is required. Instead, both partners benefit: The Washington Post expands its reach into new markets and the partnering newspaper offers subscribers additional value at no cost (the Post’s digital subscription normally costs $100).

By October 2014, 165 newspapers had signed on to partner with the Washington Post. In a random survey of 1,300 consumers using this program, which was conducted by the Washington Post, 92% of respondents said it added value to their local-paper print subscription. Moreover, 64% said the access made them more likely to continue their print subscription for the next six months.

In November 2015, I spoke with Steve Hills, then the Washington Post’s president and general manager, about this program. He explained that the program had grown to 308 newspapers and represented a continued effort to build the Washington Post’s audience. Through the Partners program, Facebook Instant Articles, Apple News, and Kindle Fire, the newspaper is committed to “giving readers a chance to sample content and then building news habits.”

In addition to reaching more consumers, Hills explained that the relationships with other newspapers have value as well. For example, in the future the Post could license out Arc, its content management system, or Clavis, its recommendation system. Already having a network of newspaper partners would help facilitate that process. Additionally, it is always in conversation to explore other opportunities for partnerships with newspapers in this network.

Winnipeg Free Press (micropayments)

In May 2015, the Winnipeg Free Press, a Canadian newspaper, began allowing users to access articles through micropayments on their website, making it the first North American news outlet to do so. The newspaper offers two plans — unlimited digital access plus an optional Sunday paper for $16.99 per month or a pick-and-pay model that charges readers 27 cents per article. Readers who do not participate in one of these programs are allowed to read only two articles in 30 days.

In December 2015, I spoke with Christian Panson, vice president of digital content, about why they chose this innovative approach and their results thus far. He explained that their digital subscription strategy was unsustainable for two reasons: 1) they weren’t generating enough digital revenue and 2) they had very little data about their digital audience.

To address these issues, they transitioned into requiring consumers who read more than two articles to register an account or log in. Ultimately, they registered 180,000 user accounts and lost only 2% of web traffic.

This new user data allowed them to redesign their website to create custom recommended content. It also helped them determine that a large segment of their digital audience is returning users who would likely avoid purchasing a monthly subscription. Instead, they would read the maximum number of free articles allowed each month. A typical metered model would not generate revenue from these users who would view the first 10 articles as free, but the 11th as costing $15. To generate revenue from this audience and reduce their financial commitment, they decided to introduce micropayments.

Because the micropayment plan was launched at the same time as a site redesign, it is difficult to isolate the impact of only one of these initiatives. With that caveat, Panson explained that since the micropayment strategy was launched:

• Pageviews declined by 24%, which is in-line with metered models. Additionally, no exceptions were made for users arriving from search or social media. In terms of engagement, they lost portions of their least valuable audience.
• Overall, pages per session increased by 87%. Average desktop users increased from 6 to 9 pages, average mobile users increased from 3 to 8 pages, and average tablet users increased from 5 went to 14 pages.
• Time on site increased by 124% and average engagement per page increased by 20%. Both are at all-time highs.

According to Subscription Insider, as of last month, Free Press had sold about 150,000 articles, for revenue of $40,500.

Blendle (the “iTunes for news”)

Blendle, a Dutch start-up that aims to simplify how people pay for news online, was created by Alexander Klöpping to address a common problem: convincing young internet users to pay for journalism online.

In December 2015, Blendle announced it is launching a beta version in the United States in 2016.

In The Netherlands and Germany, Blendle has signed up about 650,000 users — roughly half of the users are under the age of 35 — and about 20% of users have paid for articles. Blendle has “proven that we can get young people to pay for high-quality journalism — as long as they don’t bump into paywalls or ads all the time, don’t have to register for every website, only have to pay for the articles they actually read and can get their money back if they don’t like a story” Klöpping said in a press release.

Millennials, he believes, want a platform that allows them to easily find, access, and pay for the best stories from a variety of news publications — which would normally require subscriptions to several different outlets. Blendle is designed to serve as the platform that aggregates news stories and allows users to pay for select stories through micropayments, like iTunes does for music.

Each publisher sets their own prices and receives 70% of revenue, with Blendle keeping the other 30%, which is similar to the Apple store. Users are able to receive a refund on any article that they did not like and articles appear without advertising.

According to Klöpping “The articles that sell better are analysis pieces and interviews, rather than a random hot take on something that Donald Trump has said.” A senior editor at Blendle recently compared the five best selling stories in Germany on Blendle to the five most refunded stories and noted that well-researched stories were rewarded and clickbait was penalized.

Indeed, the American Press Institute recently found that 40% of Millennials are already paying for news content out of their own pocket and that the best predictor of their willingness to pay was their broader beliefs about the value of news. Young adults who want to stay connected with the world, who are interested in news, and who are more engaged with news on social networks are the most likely to be willing to personally pay for news. These survey results and Blendle’s popularity in Europe suggest that Millennials are willing to pay for quality journalism.

However, as Rick Edmonds of the Poynter Institute pointed out, in The Netherlands and Germany, hard subscription models are prevalent. In the United States, Blendle faces a significant obstacle, because “there is an abundance of material behind metered paywalls, which makes it relatively easy for users to access individual articles for free.”

Asked about these challenges, Klöpping argued that “you don’t know what you may be missing that’s behind (hard) paywalls, and I expect we will be seeing them more and more” in the United States. This report challenges that assertion. Hard digital subscriptions are increasingly rare, and we found no evidence that they will be making a resurgence.

The road ahead

Fifteen years ago, the only national or regional newspapers charging for online access were The Wall Street Journal, Albuquerque Journal, and Arkansas Democrat-Gazette.

Today, 78% of the newspapers analyzed by the American Press Institute do so.

From membership plans that include live events, to “survey walls”, to micropayments, or advertising-free options, newspapers are innovating new ways to monetize their digital audience.

Whether one of these experiments will eventually become an industry norm is unclear. But as newspapers continue adapting to the economics of the digital environment, creating and studying fresh approaches like these is critical.

Digital subscription plans are not the solution to the steep advertising losses impacting the newspaper industry — but digital subscription plans combined with other approaches may offer a sustainable revenue plan for the future.