Tag Archive - Subscription business model

Could Decreased Visits be a Good Result for NYTimes.com?

April 13, 2011 in Digital, Media with 0 Comments

The New York Times building in New York, NY ac...

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I’ve seen several tweets today promoting the Hitwise blog highlighting the post-paywall traffic drop for the New York Times.  Clearly so many media watchers, particularly publishers evaluating similar strategies, are eagerly awaiting any news from the latest high-profile paywall.  I read the news of a 15% decline with a little feeling of “wow, great news for New York Times”.  There are immediately a few questions to interpret this (good!) result:

1. How well monetised is the remaining traffic?

2. Have consumers had time to figure out what is the best option for them?

3.  What were the expectations?  Surely some decline was expected.

First, a quick analysis suggests that NYTimes.com would need to convert less than 1% of its 48m monthly unique visitors to a subscription to offset advertising revenues attributable to a 15% decline in visits.  This assumes subscribers continue paying for less than 4 weeks after the 99c promo expires.  It is safe to say that a small proportion of subscribers will never cancel and many will pay for longer than the first month.  This suggests to me that there is likely to be a net positive result from raising the paywall.

There are a number of ways for people to continue reading NYTimes.com without paying, with search and shared links being the biggest two extensions of the 20 pages per month.  No doubt there are plenty of staff monitoring this and considering where there are loopholes which need closing versus ones that are effective sampling opportunities.  It is impossible to tell how well monetised these users will become, just as it is as yet unknown whether NYTimes itself will change its Twitter or Facebook strategies to more finely target and convert incoming casual traffic.

Second, there are so many complexities the the subscription model itself that many people will be trying to figure out what is the best option for them.  Most of us have no idea how much we use any particular utility within our daily lives.  Pages viewed on a particular website will be no exception.  A reasonable number will elect to subscribe to the print paper and take their digital content as part of that.  Regular readers may not yet have all the gadgets that those of us in media and technology consider essential.  I’ve used the ‘what would my mom do’ test on this one – not a New Yorker, she’s become a Sunday home delivery subscriber for $3.75 per week which includes full digital access on all platforms.  She is a devoted Times reader online and will continue to be a large source of recommendation for me, with or without a subscription.  More insight to people’s choices will become clear as their 99c/week promotional offer expires, as people determine whether they get enough from their 20 pages plus links sent to them from other sources, and once there is a few months of data to really understand.

Third, and finally, I really suspect a 15% decline in visits must be within expectations.  Despite commenting that they did not expect to usage to decline much given the import of their heavy users who were expected to take up a digital subscription, there would certainly be a provision within the business model for this initiative that allows for a decline.  The critical question is what’s happening below the surface and how is it impacting advertisers?  If NYTimes.com can still fulfil their advertising demand and maintain strong yields, the first 12 days of traffic performance could exceed the business plan.  The subscribers taking up home delivery subscriptions still accomplishes the same goal – readers are paying for content – and probably looks like upside in the overall plan to substitute growing digital subscription revenues for shrinking yields on ad revenues (separate post on that later).  In the long run, I see NYT with a sustainable digital journalism business whose revenue streams begin to reflect historical print papers – subscription/newsstand plus advertising/classifieds.

No matter what your hopes are for the success of the New York Times’ paywall, this result should have produced a little flutter of excitement.  I, for one, strongly support paid content and rewarding those who invest in quality journalism and protect our access to information and freedom of speech. I’ve lived abroad for a long time, but those first amendment rights stay with me forever.

Digital Publishers Will Overcome Apple Subscription Hurdles

March 7, 2011 in Digital with 4 Comments

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We all know that a digital business practice is totally mainstream when it is covered by the New York Times, simply because of the broad nature of the NYT audience.  This weekend, they covered FT’s success in mining customer data from its over 200,000 subscribers as a key to its success – so far uncontroversial, but at the conclusion of the article, finally was raised the role of mobile devices in driving subscription revenue for publishers and the role of Apple in recently attempting to not only tap into the revenue stream, but also deprive publishers of the valuable customer data which enables product improvements, increased advertising yields, and sustains quality journalism.

But the industry will work around practices that stand in the way of long term success. Apple has done a tremendous amount to advance the digital media sector, but the sector will untimely ensure it’s own success with or without Apple.  I am increasingly feeling a sense of deja vu.  We must assume that they have a plan to ensure they avoid a repeat of the 1990s Mac vs PC era decline of the closed proprietary platform, a lesson most certainly learned over in Cupertino.  The question that arises is did they also learn from the mistakes of another once visionary giant – AOL?  Clearly the lesson that trying to control consumer behavior within any type of walled garden or proprietary device is be known to anyone who has been in the digital world for the past two decades.

This industry is resilient and the bold ones with a great consumer vision may choose to sacrifice customer data in the short term to achieve scale using Apple’s platform, but they will reach a point where a greater amount of control of their own business outweighs the distribution provided by iTunes.  We have seen this model before, in fact, it was adopted by Google in their early days.  The device landscape may experience plenty of ‘copycat’ products as Jobs taunted during the iPad 2.0 launch, and no one is disputing that the iPad is a phenomenally transformational device, but for publishers and others pursuing a subscription business model, there will be choice.

The philosophy of working together to increase the size of the pie and then dividing the pie according to value contributed was not invented by the digital industry, though it has been a good predictor of success.  What Google has ultimately provided both on and off of google.com is an advertising platform adhering to this very principle.  The very long tail of publishers provide audience, context and reach; Google supplies advertisers, the technology to serve relevant advertising across a range of formats, and data about performance – a model they are looking to replicate through their One Pass Subscription Platform.  Facebook provides a platform too, but so far offers reach with limited monetization for third parties.  Facebook is already moving to make more of the data they collect more available to third parties so they appear to understand the ecosystem build around them.  The industry will work around the monetisation challenge while Facebook adapts.  In the end, the sharp customer focus that has driven success for the Financial Times in digital will be replicated by other publishers and will allow them to choose how they work with Apple.

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