July 10, 2020
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Twitter Wants Subscriptions and My Thinking On Platforms and Publishers

The constant love/hate relationship between publishers and platforms can, at times, feel nauseating. In one breath, we’re in love with a new feature the platforms are introducing. In the next, we’re vehemently against everything they stand for.

Unlike the larger players—Facebook and Google specifically, but also Apple—Twitter has gone unnoticed in these debates. By and large, it has continued to exist as a small contributor to publishers’ traffic and we sort of accept it for what it is. Neither enemy nor friend. Switzerland, you could say.

But when news broke on Wednesday that Twitter was hiring for a subscription-specific role, suddenly the speculation became rampant. According to Bloomberg:

Twitter is considering alternative revenue streams, including some kind of subscription offering, according to a person familiar with the company’s plans. A new group called Gryphon is still being assembled, and it’s possible that a subscription product never launches, the person added, asking not to be named discussing information that is not yet public.

The company recently posted a job listing announcing Gryphon, described as “building a subscription platform, one that can be reused by other teams in the future.” The new group of web engineers will work closely with the payments team and the Twitter.com group, according to the posting. News of the announcement prompted speculation on Twitter.

It sure did prompt speculation on Twitter. Some of the ideas that I saw included:

  1. Paying for added features so that power users can become even greater power users. An example? The ever elusive edit button. I might pay a few bucks a month for that alone.
  2. Gating specific tweets from someone. For example, someone could pay $5/m to get access to what doesn’t wind up in my newsletter.
  3. The ever talked about “Netflix for news.” Pay once and get access to all the paywall articles when coming in from Twitter. A consumer’s best friend and publisher’s worst enemy.

To be clear, we don’t actually know what Twitter is considering. Perhaps it’s simply looking to build a tool where marketers can pay a subscription to access 1st party data on Twitter.

But this conversation—and in particular, option #3—got me thinking about our relationships with platforms. Throughout A Media Operator, there are sprinklings of my thoughts, but I wanted to cement how I believe publishers should think about their relationships with platforms. Hopefully, we can then enjoy the upside without being impacted by the downside.

Let’s break it down into three main promises.

Promise 1: More audience

It goes without saying that the platforms have won the audience scale game. When we talk about publishers, we talk in the millions or tens of millions of monthly readers. However, when we talk about platforms, we talk in the hundreds of millions and, in some cases, billions of people.

This has left many publishers envious, remembering a time when they controlled the majority of audiences. In an attempt to scale additional audience, publishers flocked to these platforms and starting building on top of them.

The problem with this was that publishers were valuing the wrong type of metrics. Instead of focusing their energy on building relationships with an understood audience, publishers were looking strictly at how many people they could reach. This ephemeral audience, while massive, actually meant very little to the underlying business.

We can react in one of two ways. We can spend to create content specifically to game the viral algorithms, similar to how BuzzFeed, Huffington Post and others did over the past decade. Or, we can to chase that traffic in a more holistic, but still damaging way. We spend time building audience and engaging with an audience on the platform. Maybe they’re coming back to the site and our unique visitors are rising, but they’re bouncing at the end of every article. Then, just as we start enjoying this flyby traffic, the platform changes their algorithm and we’re left having spent a ton of time working for nothing.

Our businesses don’t scale, so we are left needing to hire more people to continue growing. Therefore, any growth that we do chase, needs to be incredibly targeted. When we are chasing growth on platforms, we might be “reaching” more people, but in reality, we’re not actually generating lasting business relationships.

The way around this is to be very specific about the KPI when looking at audience and platforms. It’s not unique visitors, sessions, pageviews or any of that. Instead, the only metric that matters is the % of people that convert to an owned audience. That either means someone who signs up for a newsletter, registers for a free account or pays for a subscription.

I’ll be honest… When it comes to the dream of bigger audiences, no other metric matters. I don’t believe in this idea that we should be trying to grow platform audience for the sake of it. If it’s not contributing to owned audience KPIs, cut it. It’s a waste of money.

Why else do you think The New York Times finally decided to remove itself from Apple News? As management said:

“Core to a healthy model between The Times and the platforms is a direct path for sending those readers back into our environments, where we control the presentation of our report, the relationships with our readers, and the nature of our business rules,” Meredith Kopit Levien, chief operating officer, wrote in a memo to employees. “Our relationship with Apple News does not fit within these parameters.

This is also why I find the whole argument about Google paying to send us traffic so irrational. Google’s driving readers to our environment, which gives us all the control about how we convert our users.

Promise 2: More Advertising Scale

The objection I’ll hear to this argument is that there is an opportunity to monetize on these platforms, so obviously it makes sense. If we can’t get to hundreds of millions of people on our owned & operator sites, we should try to monetize on platforms with billions of people.

The problem is that we don’t actually control the relationship with the advertiser; the platform does. The worst thing we can do is put a middleman between us and the buyer. The platforms don’t sell specific types of content. Instead, they are selling audiences, so the publisher doesn’t matter.

A good example of this is Apple News. It promised millions of viewers on content and said that there would be monetization against that content. NBCU would be responsible for selling ads, which is a huge win for them. According to Axios:

Krishan Bhatia, NBCU’s EVP of Business Operations & Strategy, declined to say how much money the company makes off of its Apple News partnership, but “it’s a very meaningfully-sized business compared to what we do on Youtube, Twitter or Snapchat.”

Ya’know who suffered?

While NBCU is making money, most smaller publishers Axios has spoken with say they aren’t. It’s common to hear publishers say they get millions of monthly views on Apple News, but rarely make any real money off of them.

Apple did try to get around that by allowing publishers to sell their inventory directly, offering publishers the ability to keep 100% of the revenue from that. In principle, this made sense. However, the product’s actually pretty inferior. For many agencies that want to have their own tracking, the only option is to use 1×1 tracking pixels. If you want to use JavaScript, iFrames or cookies, Apple doesn’t support it.

Additionally, there’s no way to extend the audience in a way that gives you more inventory to sell into. For example, imagine your clients being able to buy advertising when your readers consume other content from other publishers. Only NBCU has that ability.

Twitter actually has an interesting product that I never unstood. However, in reading a piece by Recount Media’s CEO, John Battelle, the opportunity became very appealing:

Twitter’s Amplify points to a powerful new narrative. It works like this:

1. Media company partners with Twitter to become an editorial partner, stands up editorial on platform (Twitter).
2. Media company partners with marketer to support editorial on platform.
3. Marketer and editorial use platform tools to identify both editorial and audience the marketer wishes to reach.
4. Marketer uses its dollars to distribute both editorial and marketing messaging to audience.
5. The platform and the editorial company split the revenue. All parties are aware of and read into the terms of the deal, no arbitrage is possible.

Now this is interesting…

I have a piece of content that a marketer wants to use to promote. Rather than only promoting it against my audience, the marketer can use Twitter’s extended scale to target far more people. Although I split the revenue with Twitter, the total payments to me should be greater because the scale is built on Twitter.

The key part here is that I, the media company, am selling the marketer on an audience extension campaign, not the platform. I am not being middle-manned. Everyone wins. The marketer gets the audience it wants; the platform and the publisher each earn revenue.

To summarize this promise… The “you’ll have more advertising scale” is a bait and switch to get you to build on the platform. Unless you control the relationship with the advertiser, you’re not really helping your business grow.

Promise 3: More Paying Subscribers

This one is my favorite and it brings me right back to what started today’s newsletter. Let’s assume that Twitter does decide to push for a Netflix for news. This would have to be a nonstarter for publishers.

Unfortunately, this type of product opportunity aggressively cannibalizes our subscription businesses and is an even more aggressive form of chasing audience scale. Additionally, it looks at the problem in the wrong way.

Here’s what people think the problem is… First time users are coming to your site and they’re immediately seeing a paywall, so they never have a chance to learn about the type of content you have to offer. By letting Twitter sell a single subscription, they can see as much of your content as they want, giving you a chance to monetize them in other ways.

I’ll be honest… I’m not a fan of the hard paywall. It’s already hard to grow with half my content gated; imagine if none was free. I admire people that are doing it, but it’s not my cup of tea. Instead, I like either a freemium model (AMO) or a metered paywall (many news sites). This gives us the benefit of free content for growth and an incentive to pay.

If it’s a metered paywall, the first time user isn’t even going to see a paywall. Depending on how strict the wall is, the second or third story from Twitter also won’t result in a paywall. Therefore, the problem doesn’t actually exist. If a reader is consuming enough content from Twitter to hit the paywall, they should have to pay for a subscription.

It may not be the experience consumers love, but let’s be honest here… No other business out there feels bad about charging except publishers. Disney doesn’t feel bad for charging a boatload of money for customers to stand in long lines at amusement parks to contract coronavirus.

If a user wants to read multiple articles in a month, they are the exact target for a subscription. By giving up that control to Twitter, we are 100% cannibalizing our subscription business. We may be earning money from more people, but we’d likely wind up earning less in aggregate.

The Netflix for news model does not help publishers. Any sort of centralized “reader gets all” subscription will, ultimately, only benefit the platform. They’re the common denominator in every subscription.

The Rule to Follow

With all of this said, how do you decide if it is worth participating in a new offering from a platform? It boils down to one of three questions:

  1. Are you seeing direct results in your most important KPIs: newsletter sign ups, free registrations or paid subscriptions? If no, you’re not interested.
  2. Are they letting you directly monetize with your own sales efforts with a product that advertising partners actually want? If no, you’re not interested.
  3. Does this product result in a cannibalization of your main subscription business either with lost subscriptions or lost fees? If yes, you’re not interested.

And this is when we talk about platforms paying for our content. What if Apple or Facebook really want our content on their platform, but they’re not going to satisfy any of the above questions?

They can license it. That is the only answer. They can pay for the content like anyone else that would want to take our content and use it. It’s that simple. If the platforms don’t agree to paying for it, then they don’t actually value it and you shouldn’t be playing ball.

However, there is one major rule to remember. I take this from something Cheddar’s Jon Steinberg said about Facebook News Tab at an event The Information hosted last fall:

Always take the check. But you are never getting another check, so you either take the check and staff it in a way that you can do it and shut it down without hurting your people, or you figure out a way to make it self-sustainable.

By the time Facebook News Tab contracts come up for renewal in a couple years, Facebook will be bored of it. It’s unlikely they’ll pay for content a second time, so it’s imperative that publishers don’t staff up because of this new revenue stream.

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