Subscription model (finally) gains ground online
By Marie Griffin
Little by little, digital media brands are challenging the assumption that content must be free for all readers on the Internet. Newspaper companies, which had the largest stake in reader revenues as a result of their traditional paid circulation model in print, have led the way in recapturing subscription dollars online; however, lately even digital-media natives are adopting or considering reader-payment models.
Earlier this month, for instance, Newsweek/Daily Beast contributor Andrew Sullivan announced that he would publish his blog, The Dish, independently and ask readers for donations of $19.99 or more to support his efforts. Other digital-savvy brands making headlines simply for considering charging readers are Newsweek/The Daily Beast and The Atlantic.
For newspapers, meanwhile, 2012 was the year in which it became “the rule rather than the exception” to have some type of user-paid model for digital content, said L. Gordon Crovitz, co-CEO of R.R. Donnelly & Sons Co.'s Press+. Founded by former Wall Street Journal executive Crovitz and media entrepreneur Steven Brill in 2009, Press+ is a technology and e-commerce platform that provides online subscription services for Web and mobile media sites. After introducing the service to the newspaper industry, Press+ has increased its focus on b-to-b media since its purchase by Donnelly in 2011.
Press+ does not advocate traditional pay walls that require a reader to buy a subscription before content can be accessed. Rather, Press+ encourages its customers to adopt some form of the metered-access model pioneered by The Financial Times and proven so successful that The New York Times launched its own version in March 2011. The strategy has been a success for the Times, which is expected to report more revenue from subscriptions than advertising for full-year 2012.
The metered-access model allows readers to see a number of articles before they are asked to subscribe. Although sites may lose a small portion of their traffic when users not interested in subscribing hit their free-content limit, none of Press+ customers have lost digital advertising revenue, Crovitz said, because they invariably have more available ad inventory than they can sell. The metered model also ensures that a title's voice within the industry is not muffled by a subscription wall and allows ongoing sampling by prospective subscribers. As b-to-b publishers expand their mobile offerings, Press+ also allows them to extend access to subscribers on any device.
While a small number of b-to-b media titles have signed on with Press+, including NewBay's Twice (This Week in Consumer Electronics) and Duncan McIntosh's Editor & Publisher, other b-to-b publishers told Media Business they are exploring their options with an eye to implementing some type of user-paid digital subscriptions this year.
This anecdotal insight is borne out in the most recent “Digital Publishing Survey” conducted in October by the Alliance for Audited Media (formerly the Audit Bureau of Circulations) in conjunction with Roslow Research. Forty-eight percent of respondents from the newspaper industry (newspapers represented 58% of the 210 respondents) said they were charging at least some readers for access to some content. Although the sample of business publication respondents was small, just 11% of the total, they were even more likely to have implemented a user-paid system online, at 54%. Among respondents not currently using a subscription system for online content, 44% said they plan to implement one within the next 24 months.
EXPANDING DIGITAL SUBSCRIPTIONS
ALM is one of the few companies that always charged readers for online access to content from its legal newspapers and subscription-based magazines. However, after Bill Carter became president-CEO last March, he identified an unrealized opportunity to increase user-paid revenue; one of his major initiatives in the second half of 2012 was the launch of a program to sell subscriptions to law firms and other businesses.
“One of our big efforts has been building a corporate subscription sales organization,” Carter said. This team now calls on corporate accounts directly and helps customize companywide digital subscriptions that package magazines such as flagship The American Lawyer with regional legal newspapers that fit the firms' geographic profiles.
“This is solution selling,” Carter said. “In the past, the conversation was something like, "Here's why you should buy The American Lawyer.' Now we ask, "What are your needs?'” In general, corporate subscriptions result in higher revenue for ALM than individual subscriptions from that same firm would have yielded in the past. “Customers understand that we are providing more value to more users,” he said.
The sales team initially concentrated on selling corporate subscriptions to ALM's media assets, but Carter is testing the possibility of having them also sell research and business intelligence products. “This is very new, but we're training our sales organization to have a broader conversation with our client base,” he said.
Increasing paid content revenue is also an important 2013 initiative at Access Intelligence, said Donald Pazour, president-CEO. “I foresee that we can achieve revenue growth because we're introducing e-commerce sales of content and the execution of site licenses,” he said. Equivalent to the corporate subscription model at ALM, Access Intelligence's site licenses provide unlimited access to a brand's content and archives, as well as push emails, for a number of people within a company for a set price.
“Two things happen with site licenses,” Pazour said. “One, you get a little more money and, since you're delivering everything electronically, it doesn't cost more. Second—and the big win—is that renewals are about 95% as opposed to 85% for individual subscriptions. This is because you have deeper penetration within a company, more people advocating for your content, and the cost to change for them is higher.”
At McGraw-Hill Construction, Engineering News-Record has had a paid content model online since 2005, said Keith Fox, president. “As people's behavior has changed and the value of content is acknowledged, we have found that people are willing to pay for ENR's content,” he said. ENR's bundled subscription includes the print edition as well as full access to all digital content, including archives, newsletters, and the ENR News App.
ENR's content revenue has increased four-fold over the past seven years. Based on that success, “we are currently exploring creating a similar pay model for Architectural Record,” Fox said.