Offering Perks to Increase Subscriptions
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The quest to get users to sign up for a subscription has pushed some publishers to start offering additional perks in addition to the content. Digiday wrote a piece about how TechCrunch is trying to entice additional sign ups.
On Thursday, TechCrunch announced that annual Extra Crunch members, who pay $150 per year, could get two free months of Aircall, a cloud-based phone system that TechCrunch uses for customer service. The Aircall partnership is the fourth member perk TechCrunch has announced in the past three months, joining $1,000 worth of Amazon Web Services credits, 100,000 Brex credit card reward points and six free months of customer support software Zendesk.
By offering these additional perks, it makes the actual cost of the subscription significantly lower.
If we recall, TechCrunch’s Extra Crunch is not targeted to just any subscriber. Instead, the specific focus is on those that are looking to build startups. Danny Crichton, former executive editor of Extra Crunch, said this:
With all those constraints and rules in mind, what we ended up centering Extra Crunch on was solving the problems facing founders in building their startups. That included how to raise venture capital, recruit talent, grow, pay themselves, work with PR agencies, and much, much more. I was previously a VC, and so I essentially channeled all the questions my founders would ask me into articles that solved those problems. Since launch in February, we’ve published about 600 articles on these topics.
If we look at what TechCrunch is offering, it’s clear that the product offerings perfectly align to who the prospective audience is. AWS credits to power their project; Brex credit card points to get free travel; and Zendesk to start offering customer support. All three of these are important for young startups.
Between the three product offerings, you’re looking at over $1,500 in savings. Couple that with the core information offering and it becomes a bit of a no-brainer.
According to Digiday, TechCrunch is looking at this as a retention product. If there is a slow rollout of new offers that current subscribers are eligible for, it could keep people subscribed.
However, TechCrunch should pay attention to how these particular subscribers are engaging with the content. If they’re never reading content, it’s likely this person signed up specifically for the free perks and it’s unlikely they’re going to renew the next year.
I do find this to be an interesting approach, though. Since TechCrunch is selling the subscription for $150 over a year, getting startup founders to sign up for the free perks gives the publisher a year to keep the user engaged.
The economics of this sort of a deal is also a no-brainer.
Though TechCrunch has existing advertising relationships with many of the companies offering these perks to its members, neither TechCrunch nor the companies are paying to secure the offers.
While TechCrunch opted not to charge their partners, I think these opportunities can be monetized. If Amazon Web Services is giving $1,000 away, how much do they view the new client to be worth in their lifetime? Clearly it’s more than that, so could you convince them to give you an affiliate deal?
This doesn’t work with every industry, of course, but if you have partners that sell products with long-term contracts, you may be able to offer these perks to your new subscribers and earn additional affiliate revenue from those that are already subscribing.
For those publishers that don’t have the ideal partner-type, this article got me thinking about some experimentation that Wired did with its paywall back in June that you may want to experiment with. According to a Digiday article:
On June 1, Wired site visitors will see a message informing them that the site’s paywall has been raised from four articles to five, with that extra article’s worth of access sponsored by WeTransfer. Wired is hoping that the campaign, which runs for 30 days, will kill two birds with one stone, bolstering ad revenue on one side and driving subscriber growth on the other; WeTransfer is hoping the access helps distinguish the file transfer service’s first-ever digital branding campaign.
WeTransfer effectively paid to unlock additional content for users. The advertiser gets a high-impact ad unit targeting the highest quality and the publisher gets a lump sum of cash alongside users subscribing. It’s the closest case of having your cake and eating it too.
There are two primary risks that are worth exploring. First, the ad’s impact becomes less effective because users see the ad more often. Second, going from four articles to five before triggering the paywall, how many fewer people will subscribe?
Ultimately, this all boils down to testing things out. If you have a partner that wants to “sponsor” the paywall, keep track on how many potential subscribers you lost. If you know the LTV of one of those subscribers, you’ll know if the deal worked out for you.
Niche streaming services
Yahoo Finance reported that First Look Media launched a streaming service, believing that by going super-niche, it could build a business. The article says:
On Thursday, First Look Media, parent company of The Intercept and Press Freedom Defense Fund, quietly launched a $5.99-per-month streaming service called Topic, throwing its hat into the now comically overcrowded ring of OTT offerings.
Topic is home to original shows and movies, mini-documentaries, and news shorts, plus a small number of licensed content, like both seasons of the British version of “The Office.” Topic’s home screen currently touts original programming like “Monogamish,” “Philharmonia,” “Honour,” “Invisible Heroes,” “Pagan Peak,” “Blind Donna,” and “Miriam’s Big American Adventure.”
The immediate response to this story is a collective sigh. Why do we need another streaming service? Isn’t Baby Yoda enough for the rest of time?
And if First Look were introducing a general consumer streaming service like a Netflix or a Disney+, I would agree. However, this is a niche play. Just like I’ve been writing about the barbell of digital media, there’s also a barbell in streaming services.
On one end, you’ve got the Netflix and Disney+. These are massive offerings and they’re aiming for tens of millions of subscribers. Compare this to The New York Times and The Wall Street Journal. Then, on the other side, you’ve got the niche offerings, such as what First Look is trying to do. It doesn’t need millions of subscribers to be profitable.
And Wilson tells Yahoo Finance that Topic only needs “less than a half a million subs” to be profitable. “We don’t need to be in 80 million households,” he says. “It’s a tiny amount of subs required to make this engine run profitably.”
In the middle, there are going to be a lot of consumer streaming companies that realize it is a lot harder to engage with audience. The content budgets aren’t great enough and the audience is equally not niche enough.
None of this is to say that First Look will succeed. While I believe niche works, convincing 500,000+ people to sign up still takes a lot of work. However, if they have been paying attention to what their readers are consuming as much as they say they have, they might know enough to deliver the right kind of programming.
Whether it’s streaming or more traditional digital media companies, ask yourself where your business rests. You can count on two hands the number of large-scale media brands. If you’re not serving a niche audience, you might be in the middle. Things are going to get harder for those companies, not easier. Start thinking about niche product offerings. Even if it only serves a small percentage of the audience, you’ll be building a product for a niche, which is the way to monetize with user revenue.
One note about product & editorial
Over the weekend, I saw this tweet that talks about the perils of local news.
As a paying subscriber, you get a couple of stories and then the rest of the content is advertisements. Why would anyone pay for this?
This is a reminder that as a news publication of any sort, your primary product is your newsroom. If you’re cutting back on journalists and then expecting people to continue paying for news, you’re in for a rude awakening.
According to the Shorenstein Center and Lenfest Institute’s whitepaper “Digital Pay-Meter Playbook,” people will pay for local news:
According to publishers surveyed, users who view local news appear to be 2-5 times more likely to subscribe than those who view national and wire-sourced stories. Of news organizations studied, publishers that produce more local (and non-wire-sourced) stories tended to generate greater subscription sales.
This means that newsrooms need to invest in more local news, not less. Unfortunately, more of our local papers are being gobbled up by investors that don’t understand this necessary investment.
Even for those that are not investing in local news, this is an important message to remember: your newsroom is your product. Invest in it.