February 13, 2024

Subscriptions Require Content Worth Paying For

I am excited about this week’s newsletter because we’ve published the first piece from Greg Dool, a new freelance writer for AMO. Greg was an editor at The Real Deal and, before that, Senior Editor at Folio: Magazine, so he understands niche media. Keep scrolling to see the full newsletter.

The state of audience development is changing quite a bit. What worked in the past is unlikely going forward, especially as platforms get tighter with traffic. 

To better ground ourselves and understand where things are headed, Omeda is doing a State of Audience Survey. The goal is to dig in and understand where different publications are prioritizing their audience development energy. 

If you work in the audience department at your media company, take a little time to fill out this completely anonymous survey. It’ll only take 10 minutes, and Omeda will donate $50 to the Chicago Food Bank for every completed survey. Plus, you’ll receive the full research report and findings later this spring. 

Fill out the survey here.

Aggressive Pricing: The Key to Maximizing Reader Revenue (PRO)

In today’s piece for AMO Pro subscribers, Greg talks with two people about pricing strategy for subscriptions. The first is David Clinch, VP of Partnerships at Mather Economics, who talks about the inherent price elasticity that exists with subscribers. Second, we spoke with Preston Holland, who was part of Flying Magzine when the team updated the subscription strategy.

Holland explained that after years of losses on the subscription side, Flying broke even in the first year with margins improving. And, in what might sound counterintuitive, the pricing changes that Flying made had a direct impact on advertising revenue.

Click here to become an AMO Pro member and to read the whole piece.

Most content is not worth paying for

The one guaranteed fact in media is that when a business model shows any promise, the entire industry will shift as hard as possible to try and catch up. Search, social, pivot to video, podcasts, commerce, subscriptions… the industry moves so hard to try and catch a buck. Maybe this time, we’ll find a strategy that works.

And so, when the latest and greatest tactic doesn’t work, these publications have to shift and find something different to do. This discussion started due to comments that the Washington Post’s new CEO said to Semafor:

My hunch is that the existing model is creaking. We went from an advertising model to a subscription-based model, and that subscription-based model is now waning and then will enter a more significant period of decline.

Axios’ Sara Fischer followed up, reporting on several publications that had changed their subscription businesses over the last year: TechCrunch, which I wrote about here, Time, Quartz, Gannett, etc. And Fischer’s point about why this shift has taken place perfectly sums up the problem:

A strategy focused mainly on subscriptions requires upfront spending on premium content. That takes time to pay off — and many publishers don’t have the cushion for that in the current ad slowdown.

At the same time, many outlets have learned that simply throwing a paywall up over your previously free content doesn’t work either. It throttles ad revenue without capturing enough new subscribers.

Bingo. These publications don’t have the resources to invest in the type of content that people might want to pay for, so they figured they’d throw a paywall up and pray. This is not how you build a business. But it also points to a deeper problem that many of these media companies have.

By constantly shifting strategy and focusing so much on indirectly monetizing readers with ads, publishers never had to stop and judge whether their content was good. So long as it was generating strong pageviews and time on page—to load more ads up into the experience—quality didn’t matter nearly as much. This was especially true when most of their traffic was from search and social, where most users were stopping in for a quick visit before bouncing.

However, when you want to get a user to pay, you must deliver legitimate value. And that has not been the DNA of many of these large media companies for quite some time now. Rameez Tase, Co-Founder and President of Antenna, a market intelligence firm, had an in-depth tweet about it, but this part is worth calling out:

Rule #1 of the internet is that (commodity) content wants to be free BUT scarcity content has almost infinite value and a global TAM. This means that the #1 question each of these CEOs needs to ask is “is my content commodity or scarcity?” Unfortunately, all of these folks either didn’t ask that question or answered naively / dishonestly.

I suspect many operators who were just “throwing a paywall up” did not ask that question, or they answered it naively / dishonestly. The sad reality is that much of the content across media today is just not that good. It might be fine enough to get a quick read in, but it’s certainly not enough to pull out our credit cards.

Tase offers a smart framework for determining whether your content is a commodity or is scarce. He writes:

Here’s a quick way to proxy for that answer:

– Google search the headline behind your most popular content last month.

– Do dozens of other similar articles come up from different outlets?

– You know who would answer “no” to that question? Disney. It turns out the only other place to watch Avatar or Frozen is illegally and inconveniently.

– But, if your answer to that question is “yes” then you should probably have a long look in the mirror and ask yourself why the business model you’ve chosen is deeply misaligned with your value proposition.

It’s why so much of media is struggling right now. We have dozens of publications that all write the same story, and many wonder why monetizing properly is so hard.

In 2014, Rafat Ali, CEO of Skift, wrote about the ultimate metric for media startups.

It goes something like this: imagine, because of some catastrophe, the media company you know suddenly shuts down, tomorrow. Will anyone miss it, and will the disappearance of the said company harm the ecosystem at large in various ways? The first part of this question is a level one test, the second part is a level two test, both of which take time to build up to.

What would happen day two and beyond, if you suddenly go away tomorrow?

It’s an important question to ask because I would suspect for many publications, no one would care if they disappeared. And if that’s the case, why would anyone willingly hand their money over?

Compare that to publications that are doing well with their subscription businesses. News Corp reported its Q2 2024 earnings last week (its fiscal is not a calendar year), and things looked very good for its subsidiary, Dow Jones:

  • WSJ saw 11% growth in digital-only subscriptions to 3.5 million, and total subscriptions eclipsed 4 million
  • Barron’s saw 23% growth in digital subscriptions to 1.1 million

The New York Times equally reported strong growth in its subscription business.

  • It added 300,000 digital-only net new subscribers in Q4, hitting 9.7 million digital-only
  • It is seeing an acceleration of its bundle offerings, with 4.22 million subscribers having multiple products, up from 3.79 million last quarter

While The Information does not report how many paid subscribers it has, I thought this ad that they were running on Twitter the other night perfectly summed up the point of this piece:

The Information’s journalists get the news that other newsrooms envy. That’s why our coverage was followed by the New York Times, Bloomberg, the Wall Street Journal and dozens of other outlets more than 400 times in the last year.

In other words, you will have to pay if you want information you cannot get anywhere else. There’s no way around it.

The reason brands like Time, Quartz, TechCrunch, and others are forced to get rid of their paywalls is, ultimately, because they don’t create something that can’t be found anywhere else. The content may be the best written, but it won’t be good enough to justify a subscription if it is fundamentally not unique.

Content to Commerce but With Real Estate (PRO)

I’ve been thinking a lot about the state of local news, especially since a few papers in my county have stopped publishing due to a failing business. And one thing I keep coming back to is how they monetize. Most media companies are very myopic about subscriptions and ads.

However, I think there’s another way that could make a lot of sense: real estate. Specifically, I mean the publisher becoming a part of real estate transactions—either on the buyer or seller’s side. There are certainly complications to this, which means it might make more sense to partner with a broker. Nevertheless, the potential revenue can be significant, and publishers have a unique advantage over your average agent.

If you want to read how I’d execute this strategy, click here.

Thanks for reading today’s AMO. If you have thoughts or there are other topics you’d like to see covered, hit reply. Become an AMO Pro member so you don’t miss any future editions of AMO + for an invite to the AMO Slack. Have a great week!