With print magazines under severe threat from digital media, it is not surprising that most are desperate to jump on the digital bandwagon. The just-issued FIPP Insight report on ‘Paywalls – how to start your subscription strategy,’ by Martha Williams, chief executive officer, data and AI for media of World Newsmedia Network, in collaboration with Blaize, subscription economy platform, discusses in detail the strategies a print magazine can adopt to grow its digital presence and revenue. According to the report, most magazine companies receive 70% revenue from print advertising but with shrinking print ad revenue, many are realizing the potential of diversifying their product portfolios. The innovative magazines have already developed customer-oriented revenue models that may include digital subscriptions, memeberships, events, eCommerce, and licensed goods.
Reader relationship is the key strategy to succeed. It involves collecting user data with permission and leveraging it to drive user satisfaction and creating engagement.
Understanding the relationship economy
For a magazine to shift from ad or transactional-focused relationships to customer-focused relations, the reports quotes the authors of How to Succeed in the Relationship Economy, in defining three strategies. First, identify loyal customers who drive revenue and target content, products, services and ads on them. Second, understand the issues and needs of customers through feedback and improve the customer experience. Third, the relationship with a customer will strengthen over time by attending to their needs and these results need to be shared with every employee to create a ‘customer first’ culture.
The biggest relationship opportunity
The first step in cultivating a bond with a reader involves collecting personal data with persmission through registrations, eCommerce, customer service data, third-party ads and cookies. It helps a magazine media to understand customer preferences. Comparing the challenges and opportunities for news and magazine media, the report says that news media have a head start in creating a loyal user base through which they can generate robust digital subscriptions. News media revenue streams were disrupted more than 20 years ago, which led them to seek digital subscriptions and ads earlier than magazines that observed disruption in revenue more recently. Print advertising in magazine media is expected to diminish by 2022. (In India the major news magazines are already reeling in terms of circulation and subscription.)
The report suggests strategies such as hiring opinion leaders to write compelling content, developing daily model of content generation worthy of subscription, AI-driven personalized eMail newsletters, audio and videos, and expanding targeted audience through paid marketing, social media and SEO to create user engagement and increase digital subscriptions.
The relationship strategy
In order to build a relationship with customers, magazines need a deep understanding of each user through audience data. Real time data collection, analysis and targeting is the key to keep users engaged with relevant content. The FIPP report gives examples of Meredith Corporation that has a diversified portfolio and 45 million subscriptions with an annual revenue of US$ 500 million; Conde Nast has decided to put all of its titles behind a paywall; Hearst Magazines launched an aggressive strategy for targeted digital advertising; The Economist’s rich customer database is responsible for 80% cost reduction in the cost of customer acquisition and a three times increase in digital subscriptions.
Audience relationship funnel
The audience relationship funnel is a visual representation of progressive conversion of a targeted customer to a lifetime customer. The 7-step funnel starts by identifying the targeted audience through social media, SEO and marketing. Once the target audience reaches the website, they need to be engaged and tempted to register. Once registered, the user can then be offered a discounted paid subscription and once they subscribe, they need to be sent regular notifications and personalized content. In order to convert them to a loyal user, AI-driven tools can be used to keep them engaged with content as per their preferences. Lastly, they can be converted to a lifetime customer by prioritizing them and providing them with a variety of relevant content and services to strengthen the bond.
The advertising and subscription balancing act
The FIPP paywall study cites a report by PricewaterhouseCoopers suggesting that consumer magazines will see a 6.2% decline in print ads worldwide by 2022. A 5.8% increase in digital ads and a 5.5% increase in digital subscriptions is foreseen for the same period. For B2B magazines, the report informs that there will be 5.3% decline in print ads, but a potentially higher 9% surge in digital ads and 13% increase in digital subscriptions.
Magazine publishers need to balance revenue through digital subscription and maintain ad revenues despite the decline. It is not easy for a magazine on a digital platform with a paywall to attract traffic, satisfy advertisers and tempt users into paying for content. According to Arvid Tchizhel, before launching a paywall, it is important to publish unique and relevant content along with other benefits such as access to events and exclusive promotions. One must apply data-driven user engagement, acquisition and retention. Using the right technology for content managment, subscription, paywalls, payment and analytics is critical. Do not forget the print subscribers and engage them to also activate their digital access to complete the shift from print to digital.
Types of paywalls
Magazines have choices in types of paywalls that range from hard to premium. A hard paywall is best for strongly engaged audiences and is used by newspapers such as The Times, UK and Financial Times. Metered is best for high quality content and is used by New York Times and The Economist. Freemium is suitable for free articles with some premium articles behind a paywall. A hybrid of metered and freemium is good for high value content as well as commoditized content. Dynamic paywall is best for personalized content and is used by the Wall Street Journal. Membership or donation paywall can be used for non-profit organizations. Lastly, a premium paywall is designed for high value content with potentially high paying customers and is used by The Telegraph.
Digital subscription success stories
The Financial Times has 930,000 paid subscribers, 730,000 of which are digital subscribers. The New York Times introduced paywall in 2011, reduced the number of free articles and at the end of the first quarter of 2019, it had 3.58 million paid digital subscribers. Out of its total subscription sales of US$ 1.1 billion, US$ 400 million was earned by digital subscriptions. The Guardian lost US$ 28 million in 2018 but gained it back in 2019 through its three-step membership strategy. The Economist has the highest number of digital subscribers despite implementing a ‘hard’ paywall and providing limited number of free articles.
Although the report has not commented on Indian media, the only newspaper behind a paywall seems to be The Business Standard. Magazines from the Manorama, Mathrubhumi and a few other groups such as Ananda Vikatan are using various types of paywalls. The outspoken news magazine, The Caravan, has reportedly initiated its paywall recently and has surpassed 3,000 digital subscriptions. It recently won a Silver Abby award for its digital subscription campaign under the category of ‘Best launch of a new title of newspaper/magazine/digital publication by the Abby Jury,’ India’s respected advertising award. The Caravan launched its digital subscription campaign at the end of 2018 and its digital campaign ‘True media needs true allies’ in the July 2019 issue features testimonials from 25 intellectuals including Gurcharan Das, author, former chief executive officer of Procter and Gamble, Shubha Mudgal, Hindustani Classical Vocalist, and Arundhati Roy, author.
Please visit this link to download the FIPP insight report – http://www2.fipp.com/paywalls-subscription-strategy