Quality news shifts to a paid-for model

February 8, 2017

Excerpts from an article by Frederic Filloux on Monday Note

Several forces are pushing value-added news toward subscription-based models. Seizing the opportunity will require major changes—such as developing a strong customer culture. A long way to go.
There are solid indications that more people are willing to pay for news. This is reason for prudent optimism when contemplating the future — but a clarification is required before going further: this applies to genuine value-added/original news produced by newsrooms, not to ersatz, largely recycled, superficial commodity information. Big difference. The former is inherently expensive and difficult to streamline. The latter is cheap to produce at scale and some players in this category will continue to thrive in distributed content ecosystems, mostly on video.

Last week, discussing its quarterly earnings, the New York Times reported spectacular growth for paying readers: + 276,000 net new digital subscribers for the last three months of the year. “The single best quarter since 2011, the year the pay model launched”, according to the company. The Times now has 1.6 million digital subs who brought in $223 million in 2016 (Q4 financial statement here) — a revenue line that didn’t exist six years ago.
A look at the ARPU compared to unpaid models (such as Buzzfeed) and distribution platforms shows the importance of paying subscribers in the Times’ economics. The ARPU of a digital subscriber is 7x higher than the average non-paid reader of the NYT, and 46x higher that the advertising revenue spread on the Times’ entire audience.

While precise figures have yet to emerge, many news organizations that rely on subscriptions feel the same trend. From Brexit to Trump, the rise of populism favors a flight to quality information .
This should be a cause for celebration. But it order to consolidate this shift, news organizations— especially legacy ones — need to undergo substantial transformation in the way they treat their clients.

Read the full article on Monday Note.

And check out Zuora’s guide – 3 Creative Acquisition Strategies for Print-to-Digital Publishers