In this week’s episode we hear from Robbie Kellman Baxter, an author and consultant with over twenty years of experience in subscription pricing, digital community, and freemium. Robbie started working with membership and subscription models like Netflix while they were still sending out DVDs, and has written The Membership Economy and The Forever Transaction exploring the membership models of the industry giants, and how organisations of any size can take a slice of the subscription pie for themselves. Robbie is currently working with FIPP on an online event exploring the world of direct-to-consumer revenue models for media businesses.
In the news roundup we debate a report that local publishers are set to lose tens of millions from the demise of the third-party cookie, ask if The Athletic’s mooted sale to the NYT was always a cynical scale play, and examine what the likely features of Twitter Blue are. Esther sings Eiffel 65.
The transcript is available here, or there are highlights below:
The growing importance of direct-to-consumer models
If you think about who the customer is – and this is really the important question – if your customer is an advertiser, then your product is, as people have said many times, it’s the eyeballs, it’s getting somebody connected, to want to learn more about that company’s products. And there is a path to that with content.
But if you want to create content that is optimised for reader learning, enjoyment, growth, entertainment, then you have to optimise around the reader.
We’re seeing over and over again, that consumers are very willing to pay for quality content. And what we’re also seeing is that once they have a trusted relationship with a company, in this case with a media organisation, they’re more willing to buy other products and services that continue to support whatever their goal was.
Bringing together different types of business
That’s always been my approach, when I think about subscriptions is, what can the world of heavy equipment learn from the world of professional services? What can the software world learn from the entertainment world, or the hospitality world?
And in this particular case, what we’re trying to do is bring together, as you said, some new voices who have something to share, and who honestly probably have something to learn as well from the media companies.
Strava is the world’s biggest community for athletes… Last May, they went hard for subscription, they really doubled down on their core members who they know incredibly well. They put up a paywall almost overnight – a lot of controversy when it happened – but it’s been tremendously successful, because they’re so laser focused on providing the greatest value to their most engaged members. And it’s ended up being incredibly well received.
It’s just a really interesting example of, you might not think of it as having much in common with media, but they have a paywall. They have subscribers. They have content – it’s a different kind of content…but they’ve been really, really thoughtful and creative in balancing subscription and ad revenue, or sponsor revenue, and in how they think about what goes behind the paywall, and in how they communicate that message, confidently, transparently, honestly, to their community.
How media companies are faring with subscriptions
There are a lot of really good examples that are doing it well. I think there are also organisations that are struggling to catch up a lot of times because they’ve been straddling the fence. They’re sort of unwilling to really commit to subscriptions, because I think committing to subscriptions, committing to readers, and weaning yourself from advertisers is very scary, because you’re giving up revenue and not knowing if the revenue is going to be made up on the other side.
It requires more than just slapping a subscription price onto your product. The next thing that happens is, you start looking at the content and seeing what content drives conversion? Which articles drive conversion? What topics are people willing to pay for?
The one thing every D2C offering needs
I think you have to have a really clear promise that you’re making to a really clear target customer that you know very well, and you have to know that customer and the journey that they’re on that you’re a part of.
Like, I’m buying this business newspaper, because I’m trying to be successful in my career as an XYZ. Or, I’m buying this magazine, or I’m subscribing to this magazine because I love fashion and I want to be current and I want to look stylish.
If you understand who your audience is, and you understand the promise you’re making to them, it allows you to optimise your offering around them. It allows you to keep them for a long time, build loyalty and trust, and expand the relationship over time.
Key story
- The Press Gazette’s Freddy Mayhew is reporting UK publishers face losing hundreds of millions in display ad revenue when Google switches off third-party cookies.
News in brief
- Amazon has agreed to purchase MGM studios in a deal worth $8.45 billion. The move will help Prime Video compete with Netflix, Disney+ and Apple TV.
- Reuters has postponed the launch of its paywall following a dispute with financial data provider Refinitiv over whether the move would breach a news supply agreement between the companies. Reuters gets around half its revenue from Refinitiv, who have agreed to pay Reuters News $325 million a year until 2048.
- Twitter has listed a new paid-for ‘Twitter Blue’ service on app stores. The listing suggests that the rumoured subscription service will be launching soon.
- Axios Local is set to generate up to $5 million this year, according to AdWeek. The program has attracted 350,000 subscribers in the past four months and is also expanding into 8 new cities.
- The Economist has launched the first online course of its executive education program, Economist Education. The six-week course will explore how politics, business and technology are changing the new global order, and will cost £1,475.
- The New York Times is looking into a potential acquisition of The Athletic. Sources say the Times approached the publisher following a report about a potential deal between The Athletic and Axios in March.
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