With every media company looking at reader revenue and trying to figure out how they can introduce a paywall, there’s never really the conversation around why and when to introduce the paid offering.
Jessica Lessin, founder of subscription-darling The Information, said at one of their Media Bootcamp events in September that “you can’t put a paywall on a pig.” Yet, so many media companies are doing that.
Rather than looking at the content and assessing whether it’s worth paying for, media companies are looking at paywalls as the next great tactic to generate revenue without having a strategy.
In an interview back in May, Lessin said:
As journalists, we think our story is so much better than this other story, but in the eyes of a reader who is maybe not paying a ton of attention, it may seem similar. I always say, you really need to go for the 10x and focus on the things that are 10 times better or different than what other people are doing.
Often times, the news you’re creating is not explicitly 10x better what someone else is creating. So long as that’s the case, the content might be read by an audience, but not paid for.
This is especially true in consumer media. Everyone and their mother is doing political reporting. How many of these entities are actually producing high volume, solid, original reporting? Yet, everyone has a subscription of sorts despite the fact the content doesn’t warrant it. I suppose it makes sense. As ad rates continue to drop, these mid-tier publishers are desperate to get revenue anywhere they can.
But they never stopped to ask why. Why should my reader pay for content?
I was recently chatting with the CEO of a niche publication and we were talking about subscriptions. He wants to put off rolling out a subscription, though I get the feeling his investors are pressuring him. Rather than trying to charge $500 a year now, he’d rather build out a much more robust offering and charge 4-5 figures a year.
When it comes to niche publications, I find this approach appealing. I’ve talked at my own company about the difference between a subscription and a membership. The differences are subtle, but they do exist.
A subscription is what Bloomberg, The New York Times, and the other major media brands offer. You get access to the news. It feels like a true trade of dollars for content.
A membership feels more like a partnership. While it is a trade of dollars for content, there’s more associated with it. It takes a variety of products the company offers and bundles them together. By doing this, I would wager margins increase because you’re getting a flat fee versus having to sell things bespoke.
Here’s a hypothetical… You put out 20 reports a year for $500 each, hold two conferences for an average ticket price of $1,500 and have the smartest analysts in the space. You could create a membership for $5,000 and the person gets access to the full library of reports, a ticket to the event and access to quarterly analyst conference calls where they can get their questions answered.
By mixing these various products together, you only have to sell once.
This distinction between subscriptions and memberships is super blurry, though, so different people will have different definitions. And the truth is, a subscription is not a bad business. You simply have to answer the question: why am I offering this?
In my opinion, there are only two ways to justify a subscription:
You have exclusive news.
You offer depth to a specific topic through various channels (my membership model)
Let me dive into both of these.
If you have a subscription to The Information, you know they don’t publish a lot of content. At that media bootcamp I mentioned, Jessica Lessin specifically said she would have her team publish fewer stories if she could.
Their model is to only report on exclusive stories. They do a phenomenal job at it, covering things that no other media company does.
That’s worth subscribing to. As an investor, do you want to miss information that could impact one of your investments? Absolutely not. You’ll spend hundreds of dollars a year for that one piece of information.
Now, The Information does a good job of offering more for that subscription—and I might even call it a membership as they continue to grow—but it’s this exclusivity that really matters. If you have a subscription to The Wall Street Journal, they may not have a story that The Information does, so you need to subscribe to both.
To offer exclusivity, you need to give the journalists freedom to explore. This is gritty investigative work. A story might take weeks or even months to come together.
But if the news is important and you’ve got the exclusive, it might be enough to convince readers to pay.
Depth with membership models
I already covered this above but, in my opinion, this is the right approach for most niche B2B publications.
When blending various products together, you get a stronger community and can demonstrate the value of your moat. If you couple that with member-only content or events, it creates an even stronger bond between members and the publications.
Like I said, I am a big fan of this approach. If you’re exploring this and want to talk through this, hit reply and let me know what you’re thinking. I spend more time than I like to admit thinking through these types of products.
Buying something for the subscription
Let’s say you agree that you can’t put a paywall on a pig, but you also know that you need to start generating user revenue. Only diversified businesses survive. What do you do?
If you’ve already looked at your business and determined that there’s not a membership play there, then I would look externally. I’ve written about this before, but the difference between whether you should offer a subscription or not can be as simple as a small bolt on.
From my piece about smart acquisitions:
In your niche, are there sub-niche products that you can bolt onto your brand? Skift’s approach of buying a subscription product made perfect sense and I imagine there are plenty of other opportunities out there similar to this.
If you run a publication about the business of eSports, for example, and there’s a small team doing analysis out there, can you combine the two to then generate user revenue?
If you’re already profitable, you win. Use that resource to pick up small pieces to bolt onto your content offerings and that could be enough to answer the “why” of subscriptions.
Thanks for reading! Reader revenue is incredibly important, but it only works if you think about it correctly. If you have thoughts, be sure to hit reply. If you have colleagues that would find this newsletter useful, please share it. And if you’re new, hit subscribe. See you on Friday!