In this special Conversations episode of Media Voices, Chris Sutcliffe (CS) is joined by Michael Silberman (MS), SVP of Strategy at Piano, and Katie Vanneck Smith (KVS), co-founder of slow journalism outlet Tortoise.

CS: Direct reader revenue is back on top of publishers’ agendas as reigniting the relationship with audiences is seen as the best guarantee of a sustainable media business model. At the same time, publishers’ thinking around subscriber acquisition and retention is maturing, and the sophistication of subscription tools is increasing enormously.

So, to discuss the most pertinent trends around user acquisition and retention, best practice around user data, and the broader philosophy around subscriptions and memberships, I’m joined by Katie Vanneck-Smith of Tortoise and Michael Silverman of Piano.

KVS: Ladies first; how lovely. Thank you for having me. I’m Katie Vanneck-Smith; I’m one of the three co-founders of Tortoise. We are a new newsroom, trying to build a different kind of newsroom that is both slower, more open, but built for and with our members.

MS: I’m the SVP of Strategy for Piano, which means that I run our strategic services business, which is helping publishers figure out what their paid product should be, how to launch it and then how to grow it successfully.

CS: Already it’s interesting to me that you’ve both alluded to your history within the industry, and your roles and how you’ve worked has changed in parallel with how the industry is aligning its priorities. So you’ve both moved away from advertising products and advertising services into talking about memberships and subscriptions.

MS: So I started in digital media way back at the beginning, helped launch and then helped grow that over ten years, and then for about the past ten years, before I came to Piano, was running the digital business at New York Magazine, so helping us grow it, figure out what the product is, figure out how to measure it, and really driven by a very robust advertising business. In the last couple of years when I was at New York Magazine we started to see some of the challenges in the advertising business. Google and Facebook were taking more and more share, and I became convinced that a strategy of reader engagement, of developing real relationships with your readers as opposed to sort of fly-by relationships, which are the kind that are encouraged by the advertising business – that reader engagement was the place to go.

Google and Facebook figured out reasons for people to develop a direct relationship with those platforms and to actually know who those people were. It gives them a tremendous amount of data, which is an amazing asset in an advertising business, but that’s a little bit different from the challenge of publishers, where they’re actually trying to build a real relationship, and the things that Katie is doing at Tortoise are particularly interesting there. A real relationship with their readers, to know their readers, to serve them really really well with a product that they care about enough to pay for.

KVS: It’s for me probably a natural evolution, which is even though in my final job at NewsCorp I was the president of the Wall Street Journal and Dow Jones and was responsible for advertising, I had spent most of my career in the marketing department of NewsCorp and running the marketing functions of The Times and The Sun, and I think it’s sort of a full circle, which is if you look at the publishing industry in news – so newspapers specifically – we sort of lost touch with the diversity of revenue streams that publishers had, and we made many mistakes, which you always do when a new opportunity comes along as you’re learning, but as we got digital platforms and we went into digital, we made the fundamental mistake of telling people that the ad model would pay the way and that content could be published for free to the end consumer.

Most of us had had dual if not triple revenue streams, traditionally. We had had, in print at least, cover price, ie people paying for the journalism that they were consuming, and we had advertising. And the combination of us making the mistake of giving our content away for free for many years and, to Michael’s point, the fact that as we transitioned from our traditional media platforms, be it broadcast or print, into digital publishing, that we have not been able to keep pace with the platforms in terms of the innovation around data products, self-serve products. We lost what we had in our traditional world, which was the marketplace, and the marketplace moved on.

And so advertising has become a much harder business, because of the scale of the – it was a duopoly; it’s now a triopoly with Amazon as well – and we’re now trying to desperately catch up, and play catch up as an industry, with the mistakes that we made at the beginning of the 2000s/end of the 90s, and I would say thank goodness that we have seen in all research and all surveys out there that people are now saying that subscriptions and paid-for media is their number one focus as they go into this year and beyond.

CS: Hindsight is 20/20; you mentioned that the industry perhaps as a whole is waking up to the idea that they did make some mistakes in the past. So I suppose the question is, why is now the time that user engagement is making a big comeback? What are people building this assumption that people will choose to engage with quality news products on?

KVS: First and foremost, stop using language like user engagement! It makes it sound like the people who are actually paying for those products and using those products are some sort of robot, which in many cases they are, it transpires, in those free-to-air media platforms. Look, user engagement is a terrible, terrible thing to say, Chris.

CS: I can only apologise.

KVS: That’s ok. The reality is, I don’t think this is anything new. I think people will pay for what they value, and really really brilliant businesses and brands have always built their businesses based on consumer insight, understanding what customers want, and then super-serving it.

But I think, particularly in my industry, if you’re a newspaper – we’ve always had an arms-length relationship with the consumer, and that physical manifestation of the relationship we had actually became in many ways a cultural manifestation, and I think we lost that relationship. We forgot that ultimately we’re there at the service of our reader.

MS: We do think about user engagement because we do think about a customer journey, and how you move people through a relationship with a brand and how that relationship builds over time, and that’s a lot of what we focus on at Piano, especially within my group but also in the sort of product itself. But your point about it’s real people with a real relationship with a brand, and ideally, especially in your case, with the journalists themselves, is a very very different sort of thing than “user engagement.”

KVS: But without Piano and actually understanding all of those different elements for Tortoise, we wouldn’t be as good at actually when you meet the person in real life, which is our sort of difference – I hate that phrase “in real life;” I can’t believe I just used it. I sound like a millennial.

MS: I want to go back to a point that Katie made earlier, which is – you were talking about the fact that some of it was a shift in mindset or a loss of the sort of nature of that relationship and then the sort of natural distance that journalists sometimes have from their audience. I think that’s a big part of it, and sort of getting back to understanding that, we talk a lot about that. It’s a fundamental shift of the relationship between the journalism, the product that you create, and the customer, and understanding that user in a way that you didn’t necessarily have to fully understand them before.

There’s an expectation on the part of that customer, of those people, that they’re going to participate or have a say or have a choice about what they’re reading and what they’re choosing to spend their time with, and so it’s then incumbent on us to understand those folks and to sort of serve them well, and that’s a new sort of habit and a new way of thinking that media companies have to adapt to.

CS: So from your perspective then, what are some of the core questions, the key questions that people come to you with when they’re thinking about launching a new membership or subscription product?

MS: The question they always ask us first is what will my conversion rate be, or what should I assume about my conversion rate, or even if they’re in a business, is my conversion rate good? And that’s a very simple way of thinking about the problem. Conversion rate doesn’t actually tell you very much, and if you, say, were to compare a business like Katie’s to a business like the New York Times, they’re going to have very different conversion rates because they have entirely different business models. Membership vs freemium vs metred, and we can sort of explain what those are.

Membership as we said is more about building a deep relationship. Freemium would be a subscription model where some of the content is available for free, maybe the vast majority of the content is available for free, but then some is only available to paying customers. And then metred model is like the NYT; you get to read a certain number of articles for free and then you’re asked to pay.

KVS: Obviously publishers do actually increasingly talk to each other, which is the lovely thing. Historically we were all like “kill the competition; never share,” all that stuff, but now I think publishers are open to talking to each other and learning from each other, which is brilliant. But I would say because obviously I launched the paywall on The Times in 2010 in the UK, and then went to the Journal, we’ve often had people come to us in the way they would go to Michael and Piano, to understand the journey to moving to paid-for digital, and the question they always ask is “how much should I give away for free?”

You’re trying to actually get people to pay for something, and the reality of this “how much should I give away for free?” means that the mindset people come into the room with is “I’ve got this content and I’m going to have to give away some of the content for free, be it a metred model, a freemium model, a blah-blah model” – whatever hybrid they want to come up with – but it always starts with the content.

Take a step back. Customers pay for what they value. So what is it about you that is different, differentiated and valuable to that customer. It may be that content is part of that, but they always start with “how much should I give away for free” rather than “what is it that I can build and produce that my customers will pay for?” and for me, a content-led paywall model is set up to fail, because you have to look at every customer having different propensities, which takes you back to your data point. The fact that you assume that every customer is going to follow the same funnel into subscribing to you is bonkers, is utter bonkers.

MS: The place that we always start when we’re doing product strategy consulting for our clients is we start with the audience. If they have an existing product, we will do a sort of deep dive to understand the relationship of the people who are most engaged with that media brand. What are they reading? How often are they coming? What are their behaviours, is where we start, the things that we can measure.

And then we have conversations with them. We actually go and talk to the readers, the customers, and understand what do you value about this brand? What does it do for you? Why do you come there? Why do you come there instead of someplace else? What are the other things you read? In product development-speak, what are the jobs to be done and their unmet needs? And that’s the beginning of understanding what that product should be, before you’re even starting to think about what access model there might be.

KVS: But it is because we’ve been so used to publishing and because we have known business models that have worked either for decades or, in some cases, centuries, we take so much of that thinking and so much of the behaviours that worked for us traditionally into this new opportunity. It’s the wrong place to start; you’re absolutely right.

MS: We’ve had this luxury of being able to just think from the editorial point of view. When we’re doing product strategy, we’re not just trying to understand their audience and then helping them develop ideas about how to serve that audience, you know, what are the editorial site features and so on; what are the elements that work best? It’s also a process during all of it of educating the team and getting them to think differently about that relationship.

A question that we frequently are asked is “what’s my conversion rate?” And while, yes, we absolutely have data about the conversion rates of all of these different businesses, simply looking at the number of total users you have and the number of subscribers you have and doing that division doesn’t really tell you anything about the business. You have to understand number one: what’s the model? So is it a membership model, a freemium model, a hard paywall, a metred paywall – each of those is going to have a very different conversion rate. The size of the business. If you have a small, niche publication with a deeply passionate, dedicated audience, it’s going to have a very very different conversion rate than some massive brand with 100m unique users a month, and a fraction of those users are actually becoming subscribers.

So the way that we think about it is sort of the next level down from that, which is what’s the business you’re in? What’s your access model? How big is your audience? How many people are you even asking to pay? One of the big mistakes that publishers often make is that they don’t ask enough people to pay; they don’t stop enough people and say “Please pay us; this is valuable” and so that’s a number that we call exposure rate. So how many people are you even putting that offer in front of?

So if you’re exposing a really small number of people relative to the size of your audience then obviously your conversion rate is going to be really really low, and all you have to do is ask more people and all of a sudden that conversion rate goes up.

CS: One think I know that myself and my co-hosts would love some education on is what exactly is – or even if there is a practical difference between a membership and a subscription? Often it seems it’s used as a point of differentiation when somebody wants to say “we have deeper engagement” but it practically amounts to the same thing?

MS: Katie, you’ve had experience with both.

KVS: I have. I would say that not all membership businesses are built on a subscription model, first and foremost. You can be a member of something and have no payment necessary. Membership is the act of joining, and subscription is the act of buying. A subscription business – very few subscription businesses are in fact membership businesses.

A subscription business is a wonderful, wonderful business model, because it has recurring revenues and it’s a brilliant – you know, the digital ecosystem and the digital age and the technology has meant that we have seen a rapid growth of many disruptive businesses embracing subscriptions as a way to provide unicorn-style growth and show the revenues doing the lovely hockey stick we all love.

So subscription businesses are very en vogue, because the technology has made it easy for the disruptors to come in, build a subscription model and show a hockey stick to investors, and happy days, Tenex Europe [?] evaluation.

Membership businesses are fundamentally different because they are about an emotional connection. You join it, you don’t buy it, and that connection – you’re belonging to something rather than buying into it. It sounds like semantics, but it’s not, because very few people who are readers of a traditional newspaper would describe themselves as either a subscriber or a member in this country, and that’s predominantly because in this country subscription is a very new thing for the news industry, because it wasn’t the model of many generations, because we were a retail model.

So subscriptions are particularly new for newspapers; they were part of the magazine world always. But they are fundamentally different things, and if you sit in a room of Times readers or Guardian readers, most of them would refer to themselves as readers, and then maybe say “oh actually, I subscribe to that” – you know, it’s a secondary part, it’s how they pay for it. If you sit in a room of Tortoise – of our customers, they refer to themselves as members, and that is because we’ve asked them to join something, they believe in the mission.

MS: I’ve been wondering about one question. Are you asking more of your readers as well?

KVS: Yeah. We’re built on the premise that – at Tortoise, we say “we’re built with and for our members.” We shouldn’t be hard work, so we’ve taken out things that we think might be barriers for creating hard work, so we only have one story a day, we have no ads, we’ve designed an experience that’s purposefully a little more calm, and all those things you do to make it feel less friction-y, but in essence, we really do want people to participate. We want them to come to our newsroom, we want them to participate in our stories, we want them to give us feedback. We want them to make us more informed so our journalism is better.

MS: So it’s an investment beyond just paying.

KVS: 100%. The reason that membership is important I think for digital businesses is that you need to give people a sense of belonging, something tangible beyond the digital-only experience. We’re very lucky; we’re in-person, we have print and we’re membership, but I think the reason membership has become a buzzword in digital publishing is because actually the satisfaction levels in digital-only businesses are quite low.

CS: So how do you create that satisfaction if it’s a digital-first or maybe even a digital pureplay outlet?

KVS: There are lots of things you can do.

MS: It’s about building a relationship and creating a smart experience that takes people through a journey, and one of the challenges of digital businesses and one of the specific challenges of the metred model is how do you build the relationship? For example, if you’re going to only let people read two articles and then ask them to register, or even five articles and ask them to pay, have they had enough time to build up the relationship with that brand and to understand whether they value that brand enough?

KVS: That’s the transaction, though, isn’t it? If every single customer gets the same experience and it says “do this, and you’ll get that”, that is a subscription business.

MS: Right.

CS: It sounds like then that you’re saying that there’s not necessarily a binary distinction between subscriber and non-subscriber, that there’s almost an intermediary or a series of intermediaries between the two.

MS: The way that we think about it is, first you’re anonymous. You come and we have no idea, we have maybe no relationship at all with you. Then hopefully you see enough on say that first visit that you’re willing to come back, you’re sort of interested in that brand and you want to learn more about it. There’s some article that you read that resonated with you, or you read a second article.

And then it’s that moment of nurturing that relationship and building up the connections, so it might be at the right moment sliding in something to say “sign up to a newsletter,” “hey, we noticed you’re reading a lot of politics; we have this great politics newsletter that’s written by our politics editor, and it’ll be different to what you get just by reading our articles, so sign up for that” – and then maybe a little bit further down the road it’s like “if you tell us this little bit of information about yourself, then we can make the site a bit better for you and have a better experience” and so there are things that you can do along the way that build that relationship and start to – also, ideally, speak to your readers in a human and connected way, as opposed to a dry, marketing “you’ve reached your limit.”

KVS: I think what’s really fascinating is that if you have – if you’re Netflix, you have an amazing business, and that is a subscription business. You get a 30-day trial, you come in, the product is great, right, and you know – if you talk to Reed Hastings [?] about it, they used to measure likelihood of people to recommend the service when they left, not the churn number itself, because the likelihood to recommend meant that when the content was great, these people would come back. So if you think about them, they are a subscription business; they are a brilliant subscription business, and they don’t really think about the relationship per se. They think about the product being a brilliant product; they use all the great technology to try and make sure you’re seeing all the things you need to see, but they are a subscription business.

What Michael’s talking about is that news brands and publishers have such a broad church of content within them, and the type of relationship you have with your news brands and your publishers of choice has always been a very emotional relationship. But news brands and publishing brands can be membership brands if they want to be, but they don’t have to be. They can be subscription businesses.

MS: There are many very successful subscription businesses, both on our platform and beyond our platform, so that’s a totally viable model. And a metred model is also a very viable model, although I think most of even the top metred examples, like The Times or the WSJ, are moving towards a more sophisticated way of deciding how much to show to whom at what point in that journey. That’s a piece of technology that we have available as well – we’re starting to roll out subscriber propensity scoring, so that we can, instead of just throwing up a metre, put the right thing in front of them. Which might be a block to say “ok, it’s time to pay,” but might be something entirely different about nurturing that relationship.

CS: That seems completely fascinating to me; that you can recognise people’s propensity to pay as you say.

MS: Even for – obviously The Times and The Journal, they’ve been at it for much longer – that is the New York Times, not the London Times – they’ve been at it for quite a while, but the Journal is 20-some years, I think?

KVS: 20 years of paid, but really only doing propensity modelling and consumer-based dynamic pricing in the last three.

MS: So that’s pretty recent even for the top players. We’re introducing it now; we’re actually beta-testing with a few clients and we’re going to be rolling it out actually in the next month.

The other thing we’re working on in addition to subscriber propensity is content propensity, so finding that Venn diagram of the right user and the right content at the right moment in time to say “ok, now it’s time to pay,” so that will help answer that question that Katie was talking about: “what shall we lock?” Right then it’s not “what shall we lock?” – we lock the right thing for the right person at the right time.

CS: And I suppose it’s equally true then that that’s very useful for acquisition, but at a time when retention is becoming equally important, a lot of those same tools and techniques that underpin them can be deployed to make sure that people continue to pay or continue to subscribe?

KVS: The reason that you pay often is not the reason that you stay. So the reason you need those tools is because you need to constantly learn about each individual customer, their relationship with the brand. The irony is that the journalism and the content and the consumption of content is a much better predictor of retention than it is of acquisition, and you need a lot more variables from a data perspective into the propensity model than you do just content variables for acquisition.

MS: The biggest predictor, and we’re actually working on a churn model as well, or a sort of retention model as well, but the biggest predictor we’ve seen so far is active days. The more active you are actually both before you become a paying member or subscriber and after – the more active you are, the more likely you are to stay.

KVS: And that’s a subscription model, not a membership model, because the difference with membership is that actually a lot of the predictive things that we’ve learned in our subs businesses and our content businesses, which is all around those signals and that data, which genuinely are – Michael’s 100% right – they are the ways that you understand what your churn model looks like.

If you’re a member of something – we’re all members of gyms, golf clubs – we’re members of many things that we don’t use very often, but the value equation on membership can be very very different to the value equation of a subscription. So if you’re paying for something every month and it’s a subscription, if you’re not using it, you will churn.

If you’re a member of something, the reason that you have joined could be multifarious. I could be a member of something and never ever actually engage with it, but want to be part of what it stands for and what it is.

MS: It’s more about your mindset and what you think it reflects about your personality and the place you have in the world.

KVS: And in an era of identity, and identity-driving things, I think it’s an important part of the mix.

CS: What crossover is there? Are there any universals when it comes to getting people into an ecosystem and along that funnel?

MS: I think there are some universals. It is ultimately about, number one, being exposed to the brand in the first place. You have to start with that, that they have even an awareness; have they sampled the thing? That is a universal; it doesn’t matter whether it’s membership or whether it’s subscription or whether it’s an ad-supported model. Even in ad-supported models, the people who come a lot are much more valuable than the people that just come once and disappear, so you’re still trying to build that relationship even in a completely free ad-supported model as well. I used to think about that obsessively at New York Magazine: how do we get people to go from coming once to coming a lot?

KVS: I think we’ve only just started to catch up with the consumer behaviours in the industry actually, which is make it work, make it easy. So it doesn’t matter what kind of business you’re in – publishing as an industry, we’ve valued for many years the distinctive nature or the valuable nature of what we do.

We’ve never made it particularly easy or we’ve never made it work particularly for the customer – in the UK particularly, where you used to go and have to buy your newspaper in a local newsagent, which, when everyone smoked and had to go there to get their milk and bread, sort of made sense, and then you had newspaper delivery boys, but then you weren’t allowed to work and carry stuff that was too heavy, so actually no one could deliver newspapers physically like that any more, and then the Metro came and it was much more convenient and it was in the tube stations, and then digital came and then mobile phones – and the reality is we all need to think a lot harder about does it work? And is it easy?

CS: Based on everything that we’ve said so far then, from subscriber journey and the difference between membership and subscribers, how is Tortoise attempting to build that new relationship?

MS: Tell us about your marketing funnel!

KVS: Wow.

MS: That’s actually an interesting question, right? So you’ve got a membership product.

KVS: I have.

MS: The sampling is a little bit complicated, right? So how are you sort of warming people up?

KVS: So – I don’t think we’ve cracked it fully yet, because we’re just six weeks old so we’re still learning a lot, and the key thing is that we start with the hypothesis – still to be proven – the hypothesis that great membership businesses grow exponentially through recommendation.

So the funnel, if you want to call it that, really has to think about how we build the best tools for recommendation and the most obvious member experiences for recommending, and we are only just starting at that, but if you look at something like – so if you look at our business, we don’t have a paywall, per se.

If you are a member of Tortoise you can share our journalism freely, because we believe a share and a recommendation is a powerful marketing tool in its own right. What we haven’t yet done is then as you think about – when you land on the sharing page, anyone can read our journalism for free, right, because they’ve been invited by someone to do it.

MS: A member’s brought you along. They’ve invited you.

KVS:  And it’s an invitation. So when you’re in there it says “you’ve been invited by a member. Tortoise is a members-only proposition, but another member has shared this with you.” By working with Michael and the team at Piano, what we’re able to do as we bed more of the tools into our world is that we’ll be able to connect that share back to the fact that Michael’s shared it – so we will be able to say “you’re here because Michael’s shared this with you.” They have a rules-based engine called Composer, so you can compose your own experiences I suppose for your members.

And so we build our app, so it’s build for sharing, we build our think-ins, so we always tell you to bring a guest. Everything is there to sort of say – the start point is “member get member.” We’re really at the beginning, with 7300 members; we’re only six weeks old.

CS: Really at the foothills of everything you want to be doing.

MS: A sort of growth-hacking model?

KVS: Yeah, I’m going to be a growth hacker; this is so exciting.

MS: That’s so mid-2000s of you.

KVS: I do call myself the has-been, because I am pretty much the oldest person in the office, so yeah that would be fine; I could be mid-2000s.

CS: Even with all that, even with the focus on referrals, it’s such a different proposition to these previous subscription models, so what other challenges are Tortoise going to face, and how are you helping them overcome those challenges?

MS: Katie’s on to something, and this idea that – number one, tapping into these more emotional connections with a media brand is a very powerful idea. The big challenge I think will be scaling that; obviously if you’re asking more of your members, if they have to make a deeper commitment, as light and friction-free as that might be, then that will take longer to build, and there’s – presumably, because it’s a more personal brand, more personal connection, there’s gonna be an audience that will be really receptive to that, and there will be a whole bunch of other people who won’t.

So, to me that seems like that’s the biggest challenge, is finding those people that have a great fit with the Tortoise brand. The bigger idea that Katie is working with here is the idea that you need to find multiple ways to connect with your audience, and then you need to find multiple opportunities to create sampling. The chance to try something out, see if you like it, have a little taste with a lower commitment then creates the opportunity to start building that relationship, and then ask for more later.

KVS: That’s the plan. Let’s see.

CS: So as that – this variety in membership options and subscription offerings grows, is Piano talking to publishers, is it listening to them in developing new tools, or do you eyeball something and say “this will be required in the future; let’s build this now”?

MS: So we do both. We spend a lot of time listening to publishers. Katie’s given us tremendous, really fantastic ideas about things that we should build to support the kinds of things that she wants to do. But we have a big big chunk of our backlog, our roadmap, that’s driven by our customers. Then there are some bigger things that we’re trying to work on as we think about the future of the business and how best to serve publishing, but frankly also how to go beyond media as well.

The platform that we’ve created will serve media companies really really well, and we have deep expertise in that. We’re probably – I don’t think it’s boasting to say that we are the most knowledgeable business – technology and services business that is powering media subscriptions. We actually run 15 media subscription businesses on behalf of our clients, and we have hundreds – nearly 1000 – media websites on the platform, so we see a tremendous amount of data.

We have actual hands-on experience running these businesses, and yet at the same time, the fundamental model we’ve built, which is the ability to measure user behaviour, to create audience segments, to target those audience segments with the right message or experience at the right time, on their owned and operated digital platforms, and then drive them towards some sort of deeper relationship, toward a conversion, whether that’s paying for something or maybe just signing up for something or choosing to make an appointment or come to a think-in – it could be any sort of conversion that’s at the end of it.

KVS: That for me is where niche publishers and maybe even local newspapers, who’ve had a really shocking time, can actually think about themselves differently. Because if you’re a niche publisher, you’ve got an extraordinary fanbase, and you are really in people’s lives in a way that you’re not unlocking if you’re not trying to think about what you do beyond the publication.

And I think about local newspapers in this way too; I mean, they are being decimated by the fact that they’ve lost local marketplaces to better digital solutions, but they still could play a different type of role in their communities and society, which I think people are crying out for, because I think the watch-words that we see at Tortoise are it needs to be in-person, which we passionately believe in, but it also needs to be personal, which is where the technology enables you to be able to scale what you want to do as well as do it differently.

Because the in-person side of Tortoise really matters, and increasingly when you look at mental health issues, when you look at what digital – you look at the Cairnross Review – the data in Britain shows that even though digital news provision has – there are more digital choices and in the main it is still free to access, the impact of the digital transformation and delivery of news has meant that more people – or less people from lower socio-economic backgrounds are now engaging in news than ever before – they have less access, even though it’s for free. They’re not consuming it in the same way they did when they had their local newspaper and they had their print.

This is a really big societal issue, and this is where I think membership, or some of the things we’re talking about today – that insight into your customers and how you can connect and build relationships – could, and hopefully it’s not too late, help particularly local newspapers and niche publications that actually can provide that role for people in their lives.

MS: It’s a really interesting model to take what you’ve done with Tortoise and think about how that might apply in a local market.

KVS: It’s like a TedX to Ted.

MS: Exactly.

CS: Obviously there’s a lot of similarities, but when you’re talking about niche products and these smaller publications, do they have different demands? Do they require different tools?

MS: No, fundamentally the same. What we build for Tortoise has just as much application for Gatehouse Newspapers; they can use that same model and those same tools, so no, I don’t think – there are particular demands of say B2B publishers, who are also trying to sell some kind of corporate subscription in addition to individual subscription. Those are very specific products that wouldn’t apply to a consumer-facing publisher. Some of that is though also that the technology solutions have gotten better and easier and more flexible; there’s things that have changed on the technology side that have made it so that you can have a pretty bespoke experience and unique website even using off-the-shelf technology.

CS: That’s fascinating. I thought that the build vs buy debate was going to be ongoing.

MS: I think a media business would be on some level nuts to do that. I’m an interested party; I will admit that.

KVS: Unless you’re Jeff Bezos and the Washington Post, and they have built a brilliant CMS. That’s a technologist investing in technology.

MS: That is a very very different story. But listen – even the companies that do have a ton of technology resources like the WSJ and the NYT; they’re taking off-the-shelf solutions and then adapting them to their internal needs – it’s not like they’re building their own customer data platform or data management platform. Part of it is the choice about which pieces you build and which you buy and how you integrate, but then they’re integration challenges; stitching all those pieces together takes overhead and time.

KVS: I’m being slightly facetious, which is – I’m a start-up, so I have no legacy. And actually, a lot of the tech decisions that get made are because you’re trying to balance a series of legacy platforms and trying to operate a build alongside fix and knit together, so there are a lot of integration challenges, both of the solutions you buy but also of your legacy tech solutions.

But at the end of the day, I come back to – as a start-up, the other day we had an idea and I shared it with Piano, and I then shared it afterwards with my co-founder James. And he went “You gave them that idea? That’s a really good idea. Maybe that’s a better business than the one we’re building.” And I was like “Oh, awkward. I’ve already asked them to build it for me.” And that was the realisation: know what you’re in. Know what business you’re in. We’re in the journalism membership business; we’re in content.

MS: It’s bad to be distracted and think that you’re a technology company when you’re a media company.

KVS: Yeah. And I did give you a good idea.

MS: Focus on the thing that makes you different, not the thing that is plumbing.

KVS: The challenge we have is that what we have seen happen with all the media tech platforms is the realisation how valuable content is to the ecosystems they’ve built. So what then happens is you see the sort of Facebooks and the Googles and Apple build systems that actually end up disrupting the industry even more.

And the one I’m thinking predominantly of is obviously, from a subscriptions pay perspective, is Apple News, and Apple News from a consumer perspective is brilliant: a one-off, all-you-can-eat, $9.99 subscription to all the news if people play and are on the platform, would be a wonderful – it would be the Netflix, it would be the Spotify, it would be the news and magazine solution.

The challenge is, the nature of our content doesn’t have the shelf-life that the other industries do. My worry is a little bit around the fact that as the tech platforms have caught up to the power of content on their platforms, and you now see Apple making the announcements that they made at Cupertino last time, which very much was “we’re a content player.”

MS: The math for publishers isn’t very good. I actually wrote a blog post about this – the math is terrible. On average, even if Apple gets as many subscriptions as the NYT does, which I think would probably be a stretch for them; I’m not sure they could make it to 3m subscriptions – but say they did. That’s 20 cents per reader, per publisher, on average across the 300 publishers. That’s a tiny amount of money.

CS: There’s been a lot of talk lately around the idea that subscribers only – consumers in general only have a certain amount of disposable income, and that there’s a lot of competition now between publishers, and it’s only going to increase. So is there already such a thing as subscription fatigue? Is it something people are aware of, and how are publishers trying to mitigate it if there is?

MS: I’ll give you a few data points. One is – we’ve done some research about this as we’ve been doing product development research for our customers, and one of things that we find is that the users who already subscribe to a news product are more likely to want to subscribe to a new news product.

CS: Is that additive?

MS: We’re assuming that it’s additive; we haven’t seen any indication that there’s a choice to be made. If you are somebody that subscribes to news products, then you’re gonna be open to more subscriptions.

CS: Your propensity’s already higher.

MS: Exactly. So there’s that. Then the other thing that we’ve seen, and I think the Reuters Institute folks pointed this out, but in the studies they’ve done of country-by-country willingness to subscribe or presence of news subscriptions; they’ve done that every year for the past four or five years, something like that. In the countries where Netflix has grown, the subscriber propensity for news has increased. So once you get the subscription mindset going, then it sort of says “oh, yeah, this is a reasonable model; I’m willing to pay for this” and certainly some part of the audience will probably never be willing to pay, or be willing to pay for a limited number, but then there will be other people who are absolutely deeply into subscriptions.

KVS: I agree, but I have a slightly different perspective, which is I do think there will be subscription fatigue, but I think it will be not necessarily the volume of subscriptions you may have, but I think it may strike in different ways. I think Apple News is actually a quandary. It may not be a risk, but it is a quandary, and it is a quandary because it is what consumers would want. If they could have a pick-and-mix, £9.99 a month product, they would.

So I think there is something that they’ve not got right in their model yet, and I don’t think they will be able to get it right actually, based on the value exchange and all those different bits, but I think the second quandary of Apple News and Netflix and Spotify is the £9.99 price point. Because many publishers have taken their product pricing of the offline world into the online world, and are £26 a month, or £15 a month, and actually I think that when you look at the subscription economy that’s around that, if you ask people to subscribe, many of the Swedish [?] publishers have already taken that hit and said “we’re going to be £9.99.” Because they’ve sort of said there is a new default price point for subscription in content coming out, and that is a £9.99, and it is being set by the Netflix, by the Apples and by the Spotifys, and by these content-led streaming services and content-bundling services.

I just don’t see as much innovation happening that will enable us to be able to say ok, if a £9.99 aggregated product – Piano could do it; you’ve got like 200k brands on your platform; you should just do it, right? – but if that model was to find some form of space in the ecosystem, hopefully that will get us as an industry to think more differently about how to unlock that relationship and the brand.

MS: I think more about innovation in user experience, innovation in how to build the relationship, innovation in value of the product that you’re delivering – those are the reasons that somebody’s going to come direct to the brand instead of going to an Apple where it’s inevitably going to be more generic, more cookie-cutter.

KVS: Ooh, it’s going to be the age of the marketeer. It’s all about the brand. I’m happy.

CS: Thank you both very much for joining me for this episode. I learnt a lot about price-anchoring relative to competitors, even outside the media sphere. I learnt a lot about propensity to pay and what tools can be used to affect that at publishers. Thank you both very much for coming on.

MS: My pleasure.

KVS: Thanks for having us.


This episode of Media Voices is sponsored by Piano, a platform dedicated to helping publishers develop and grow their direct reader revenue strategies. Piano believes there will always be a demand for words and scenes that make a difference, whether that’s through hard-hitting journalism or emotive articles that resonate with audiences, and is passionate about helping media businesses grow the revenue required to produce it.

For more information on modelling your subscription success, download Piano’s new ebook:

Making Every Offer Count: Turning Users into Subscribers in a Modern Media Landscape.

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