A new study sheds light on what drives paid subscriptions for news
Paid subscriptions are all the rage in the media industry right now. Facing diminishing ad rates, publishers have turned to the paid subscription model as a way to draw revenue directly from the users that consume their content. Publishers ranging from The New York Times to The Washington Post to The Financial Times have announced they’ve reached north of a million subscribers. It seems like every day a different publisher is announcing the launch of a metered paywall or membership service.
But getting a news consumer to actually open up their wallet and subscribe is harder than it looks, and the space is only getting more competitive as publishers continue to launch subscription offerings. So what are the actions a publisher can take to make it more likely for a casual reader to convert into a paying subscriber?
A new study from digital publishing platform Twipe sought to answer this question. Researcher Mary-Katharine Phillips surveyed 4,000 news consumers across Europe and the U.S. to gain a better understanding of how they consume the news and what drives their news diet.
I interviewed Phillips about what percentage of news consumers are willing to pay for digital news, what drives them to subscribe, and what kind of news formats they prefer.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
Simon Owens: Hey Mary-Katharine, thanks for joining us.
Mary-Katharine Phillips: Thank you so much for inviting me.
You work for a European company called Twipe. What is that?
We’re based in Belgium and work on digital solutions for publishers. Tools related to editions, including analytics and engagement strategies.
It’s like a software as a service platform?
Yes, exactly. We develop the products to their needs, based on our platform. And we can add on different things like analytics and churn prediction tools.
What is your role there?
I have a mixed role. I work both in the business development team helping to launch our tools into different countries, but also as a media innovation analyst. In that role I do more research on the industry. We do a weekly newsletter where we do future of news stories, and then also long term research.
You do data-based research?
I work more on the industry research itself, and then we have some data scientists who work on more of the data research.
The reason I had you on is that you conducted this study that involved surveying over 4,000 news readers. What were you trying to find out in this study? Can you talk a little bit about the methodology?
Maybe I can take a step back first. Last year we launched a research project on reinventing digital editions. How can we bring the edition format to the digital age? In that initial research we looked a trend of digital-only editions — digital products that didn’t have print counterparts but were still in the digital format, meaning with a beginning and an end, a clear set of stories for each day.
Just to clarify, you identified two different kind of publications. The first is what we typically see on a news site. You call it ‘news flow.’ That’s what we get when we visit The New York Times or any news site; they have a dynamic page that’s constantly updated when new news stories come in and news breaks. And then you also identify something called a ‘digital edition,’ which is closer to what we think of with print, where it’s delivered once a day and it’s a very set-in-stone digital product that you scroll through. It’s not constantly being updated with new news. So at 5 p.m. every day you get this digital edition of this newspaper or magazine, and you’re not expecting them to be constantly publishing new articles throughout the day.
Exactly. That’s the difference, that you really have a set of stories at one point in the day, and then the next day you’ll publish brand new stories. There’s no breaking news alerts happening. That’s why we launched this research. We want to understand who are the readers who prefer the edition format, and who are the readers who prefer the news flow format. And is that something that’s changing, and how do you best support those two groups of readers?
So you wanted to understand that. Tell me about how you went about approaching that.
We decided to work in seven target countries. Six in Europe, including the UK, Belgium, France, Germany, Switzerland, and Spain. And then we also wanted to look at the U.S. to see if there’s some difference between those markets.
In there, we identified publishers we could partner with to get access to their readers and send a survey to them. And then we also published our survey through different channels, including social media, where we targeted a general audience, not specifically heavy news consumers.
From that we were able to ask them a set of questions. From the 4,000, we interviewed 30 of them in-depth to get a broader idea of how they prefer to read, their format preferences, and then also their attitude for paying for digital content.
How did you pick that 30?
We first had a base of a bit more than that, based on all the people who said they’d be willing to be contacted. And then we wanted to have a wide range of people. Different men and women from different countries, and then also different reading habits. We’d already been able to identify when they consume news, how often they consume news, whether they pay for it or not, and also their format preferences. So it was really as wide a range as possible.
I think some of the most interesting findings have to do with getting people to pay for digital news. Digital subscriptions are becoming a huge thing here in the U.S. The New York Times, Washington Post, Wall Street Journal are all announcing huge subscription numbers. Can you give me a sense of how publishers are embracing subscriptions outside of the U.S.? Were we behind the curve?
To be honest I think the U.S. has been a bit behind the curve when it comes to subscriptions, just because in Europe that was more established. You can see examples of publications across Europe that have strong subscription growth. It won’t be the same numbers as in the U.S. because they’re smaller markets, but if we look at a publication like the Times of London, they went to an edition-based strategy a few years ago and they now have 500,000 digital subscribers. They really focused on building their reader revenue strategy.
Is it because Europeans didn’t embrace the ethos that information should be free and that it could be advertising supported? Were Europeans more skeptical of that model from the beginning?
I think that’s a good word: skeptical. There definitely was an ethos that information should be free, and we even saw that when we interviewed the readers. I think there was less of a push in Europe for free content, but I think there were definitely a lot of the same issues in the U.S., as well as Europe, where publishers are trying to figure out how they can successfully adapt in the new age and encourage the readers to pay for content that often is free elsewhere.
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For people who decide to pay for digital news, what are the chief reasons?
One thing I found really interesting in the study is that people are willing to pay for a format that they’re not able to access elsewhere. For a lot of readers, this was the edition format. The constantly updating flow of information on your standard website, it’s hard to determine what are the important stories I should read now, and when have I read enough? The edition really provides the important curation for the readers. Here are the important stories, and once you’ve read these, you don’t have to worry about not understanding what your friends are talking about or missing out on something.
For me, the finding that format is an important characteristic for deciding to pay was really interesting. There’s also this idea that it’s not just news lovers who are willing to pay, people who are really invested in the news. It’s also people who read maybe only once a day, but they want it to be the curated stories of the day.
My sense is that if you want to get people to pay, you can’t just do commodity news, because you can just get that anywhere. Oil prices are up today. This celebrity has died today. This sports team has won. There needs to be something that really differentiates, you need to have exclusive content. Was that anywhere on the radar of why people were saying they paid for news?
That’s definitely true. A lot of content, as commodity content, it’s available elsewhere for free, and it’s the stories that aren’t being shared elsewhere that are more valuable to you. And that’s one of the biggest reasons we found that people don’t pay for news. It’s because they feel they can get enough of the content elsewhere so there’s not that driver to pay for it as a subscription, or even as a one-off.
One thing that I found interesting is that only 11 percent of people said they pay for news because they hit the paywall after running out of free stories. Metered paywalls are all the rage right now. I didn’t know what to make of that. I’ve heard that a very low percentage of people even hit those metered paywalls. It’s something like less than 5 percent of the readership. What role does the metered paywall play in getting people to subscribe?
The flip side is that the main reason people say they pay for online news is that they like getting the unlimited access to digital stories. I think it’s true that the vast majority of your readers aren’t hitting your paywall. We’ve seen a trend in recent years of publishers really tightening down their paywalls to having just a very limited number of stories available per month. Some newspapers started out with 20 free stories a month and are now down to fewer than five.
It’s true that if those people aren’t seeing your paywall, then they don’t have that trigger to subscribe. But if people do see it, then they’re much more likely to subscribe and find it valuable.
Yeah, The New York Times started out with something like 20 free articles and now it’s only five. And now they’re talking about doing dynamic paywalls, where they realize that different people have different thresholds before they convert into paying subscribers. So if you only read political stories, then it may take 10 free stories before you’re willing to convert, but if you consume business and tech content, it might take you only three free stories.
One thing I wanted to zero in on is the percentage of people who have no interest in paying for digital news at all. I wrote a column a few weeks back pointing out that past surveys have shown that the number people who aren’t willing to pay is quite high. These are people who will not open up their wallets no matter how much they like your publication. What percentage of people fit this category in your survey?
That’s something we found in our research as well. The vast majority of people who aren’t currently paying for online news don’t think they’ll pay for online news in the next year. In our study, at a global level, we had 56 percent of respondents say they were very unlikely to pay for online news. On the other end, we had 5 percent of respondents saying they were very likely to pay in the next year. And in between, people were unsure or neutral.
I think this gets back to the idea of education. In the interviews I did with readers, I kept hearing ‘why should we pay? They’re already doing well. I see ads everywhere, so they must be making a lot of money from this.’ And so they feel that they had to pay for the content, that the newspaper is getting two streams of revenue from them. And they think, ok, the advertising is fine from me.
What are some of the other reasons people don’t pay for news? Isn’t one of the reasons that there’s such an abundance of free news?
Yeah, so that was the main reason. People really thought there’s enough news I can find elsewhere. Also there were a lot of people who could access this paid content through a different means, for example trying to come through social rather than a direct link, so that you have one story free.
Another thing I heard through interviews was ‘oh, this news isn’t relevant to me. It’s not something I use that often.’ For me it seems like that’s a mismatch, the person hasn’t found the right publication or the right stories that they’re interested in.
There’s also the element of people being skeptical or not trusting the news. This was more common in the U.S. and the UK. We didn’t see it as much in the other countries.
You said that 56 percent of people would never pay for digital news.
Just to clarify 56 percent of people who aren’t currently paying for news wouldn’t pay in the next year.
It might be hard to have an apples to apples comparison to some of the other surveys I looked at, but some of them suggested that as high as 80 percent of the population said they would never pay for news. What do you think this says about the digital subscription model, that only a small percentage of the population would even consider it? Does that mean that there’s really a ceiling, that this model won’t be the silver bullet that will save the news industry?
For me, I view it as the opposite. There is a small percentage of people who are going to pay, but those are your really loyal readers that will be really beneficial to you. So instead of chasing that broad reach of reaching as many people as you can, because those people aren’t the ones who are going to subscribe and have a loyal relationship with you, you need to focus on the loyal readers who do want to pay, and try to figure out how you can deepen their engagements and their relationship.
Of course there is a ceiling at some point. But I do think there’s a lot of room to grow for some publishers.
Do you think the number is flexible in terms of the number of people who are willing to pay? It seems like it goes up every year. Between 2016 and 2017 in one survey, they found the percentage of people saying they’d pay for news doubled in size. Is it just a matter of reeducating people that journalism has value?
I think that’s exactly it. I’m actually optimistic about this trend, because I think people are waking up after believing for a long time that everything on the internet should be free. Now we have people paying for Spotify, paying for Netflix, and that’s starting to develop that habit of paying for online content. And so people are starting to realize that journalism has value, and they have to pay for this if they want it to survive. It’s a positive trend. Even though it’s still small now, I think it’s possible to retrain people and provide some education. Because I do think a lot of readers don’t fully understand the business model of newspapers and the struggles they’re facing.
I had one interview with a British reader who was completely convinced that her local newspaper was doing well and that she didn’t need to pay for it, and even when I tried to explain to her that this newspaper was struggling, she really didn’t believe it. It’s not something that had ever crossed her mind before. I loved her quote that ‘advertising should be enough for them,’ and when I asked her how she interacts with the ads, she said ‘oh I have an ad blocker.’
It seems like people like us who work in the industry, we’re constantly reading news about how much publishers are suffering on the advertising front, that most of the money is going to Google and Facebook, that advertising rates are cratering because there’s too much supply and not enough demand. But it seems like, from your findings, that news isn’t bleeding over into the mainstream. They just see ads everywhere and assume those are paying the bills.
Yes, I ask anyone who’s listening and is surprised by this, is to talk to someone outside of their bubble who isn’t as invested in this industry, to get their point of view. Because once you start talking to people, you realize this is a widespread belief, and it’s something they need to be educated on.
Another thing you studied was news format preferences. There’s the news flow, which a lot of publishers adopt where it’s a constantly updated stream. And there’s the edition format, where it’s delivered in one compact format. I was surprised by how many people preferred the edition format. You would assume that everyone wants to be constantly updated on the latest news. What’s the breakdown between the two?
We were surprised too. We ran our numbers many times to make sure we had them correct. Globally, it’s a very even split between the edition format preference and the news flow preference. At the global level, it was 49 percent preference of edition, versus 51 percent for news flow. What’s really surprising is that this breakdown holds true among different age groups. We studied 18 to 35, 35 to 55, and 55+. It was a very similar breakdown in the age groups, and then also among the countries.
There were a few countries, such as Germany, that had a much higher preference for editions at 65 percent. But the rest were very close to half as well.
It does seem counter intuitive. Why do you think it is? We hear about this cliche of ‘information overload.’ Is that why they prefer single editions, because they feel too frazzled and they need just one edition that tells them what the most important news of the day is?
Exactly. I think for some people, they’re not as invested in the news as people who work in the news industry may be. They want to keep up to date, they don’t want to miss out on anything. But they also want it to be something they’re looking forward to and not a chore. So for editions, it has that editorial selection, where you know someone who has read everything and has a global view on the news has told you these are the stories that are important for you to know today, and once you read these, then you can step away until tomorrow at the same time.
It provides that value for people. It’s a very nice reading experience. It doesn’t have the invasive ads you might see on a news flow website.
You also found that edition readers, they check the news fewer times during the day than people who prefer the news flow format.
They’re more likely to check the news only once a day. On average they only check the news between one and five times a day. Whereas the news flow readers check more than 10 times a day. They’re really the people who want the latest news, who want the breaking headlines as soon as they happen.
I thought it was interesting that people who prefer the editions happen to be more loyal readers. They might be the people who are more likely to pay for subscriptions.
This was an interesting finding. The people who prefer editions are more likely to only consume news from one title in a week. So they have a much deeper relationship with that news brand, and on the flip side they’re also less likely to seek out free news online, and they’re less price sensitive. They are more loyal, and more willing to pay for the news. Which for me is a major breakthrough for publishers to focus on these readers and provide the products for them to capture their revenues.
It seems like there are more and more membership platforms where the free content is the news flow content, but if you pay like $5 a month you get access to a special email newsletter that’s sent once a day. This is closer to the edition format. Possibly, and I’m just spitballing here, if a newspaper is thinking about launching some kind of subscription platform, maybe they can make the subscription part something like an edition format that comes once a day, and then designate their free content for the news flow. The free content is marketing for the website and getting people into that purchasing funnel, but then once they convert a reader into a paying subscriber, then they deliver that paid product in edition format.
I think that’s right. In this research we’re saying edition readers are an important segment and they’re the segment that’s more likely to pay for your news. And so you can do the news flow on your website, bring in people, and also cater to people who want the breaking news. And then, with the digital edition, provide a service that is worth paying for.
You noted that Germany was more likely to prefer the edition format. Did you notice any other differences in preferences for news content across different countries?
There were some very interesting conclusions on how people consume news. Newsletters stand out in Belgium. 34 percent of the Belgian population say they’ve gotten their news from a newsletter in the past week. What was also interesting was that France has a lower usage of social media for their news.
I’ve already mentioned that the U.S. and the UK had a higher number that said they don’t pay for the news because they don’t trust the news. We can see this in how the stories are playing on in the US and the UK with the brexit stories and people not knowing if they could trust the media.
What’s also interesting was that with Switzerland, they had a low usage of podcasts. We definitely see that the U.S. has a higher adoption rate of podcasts.
Podcasts were low overall, with only 11 percent using them for news.
Very low, but when you look at it through an age lens, you’ll see that the 18 to 35 segments, they have the highest adoption of podcasts.
I actually just wrote a column published recently about why all these publications are launching daily podcasts, because they view them as loyalty builders where they hopefully convert listeners into paying subscribers. The Financial Times uses their podcasts as a marketing tool. It’s growing with younger people, and those are people who are going to be future paying subscribers, so it’s good to get them hooked on a podcast, which is a very intimate medium, so you can get them to be loyal to your news organization.
Exactly, and I think you can definitely consider a podcast as an edition. It’s something that’s time capped. You know that a podcast is 20 minutes, and I have 20 minutes set aside every day so I can listen to this. Or every Tuesday I have 35 minutes that I listen to this weekly podcast. It’s the curation of the stories that’s valuable. People start to really appreciate it and then move on to paying for them.
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