My first gig in journalism was finding stories in data, doing data-driven journalism. It wasn’t exactly a scene from Oscar-winning movie Spotlight (about The Boston Globe’s investigative journalism unit).
Sometimes it was about finding outliers and trying to work out the story behind them. Usually it was about visualizing something interesting. Readers especially liked pieces that told a straightforward story – and the easier the plot, the better the headline.
I switched several beats over the years. But I could never resist a good data story. That’s why I love reporting on quarterly results, mostly Big Tech but also media companies.
Recently, Disney announced its streaming service hit almost 95 million subscribers but average revenue per user (ARPU) went from $5.56 to $4.03. That means the company is using a lot of discounts and this approach is eating into its margins.
In Disney’s case it means the company started aggregating subscribers numbers, combining Disney+ and similar, cheaper offerings in India and Indonesia called Hotstar. This is not unusual in that part of the world. Technology and media giants are trying to capture the vast Indian market, using lower subscription prices.
Disney’s ARPU will decline in the short-term. But then it will stabilize and once the market is captured, prices will increase bringing the average back up. It’s a classic playbook move.
What The NY Times is showing us
When it comes to the media companies I am most obsessed with quarterly results from The New York Times Company. “The Gray Lady” has a clear goal: reaching 10 million subscribers by 2025. I am sure that by now even the last employee knows this and the rest of the industry is watching.
To reach that goal NYT is deploying familiar tactics – discounts, registering users, and keeping subscribers engaged. Here is Meredith Kopit Levien, president and chief executive officer, explaining this during the earnings conference call:
“But whatever the news cycle, I believe we are well positioned to deliver continuous growth, and in 2021, more growth than we drove in 2019. We’re more than a year into our registration-based customer journey, and we’re encouraged to see that while many readers convert immediately in moments of high news need, there are plenty of others who do so over time as they begin to understand and experience The Times’s breadth and value. And with each passing quarter, our understanding of audience signals and our ability to act on them grows, making it easier to drive conversion.”
Kopit Levien hints there (and also in this Recode Media episode) to something her predecessor has mentioned in many of his outgoing interviews. Basically, the more “touchpoints” there are between a subscriber and the product, the lesser chance there is to lose him or her.
In other words habit formation plays a big role and the Times is not shy to stress that.
But that is only one of many factors. NYT has almost halved the digital subscription prices for new subscribers for the first year. Again, a common practice, just like the Disney example I mentioned earlier.
With this strategy it comes down to two things. First, you as the “subscription seller,” buy yourself a year to convince your subscriber that when the price doubles after a year he or she understands the value of the product. So, there will be no cancellation.
Second, you as the publisher are taking a revenue hit not everyone can take.
If you can stand your ground on both of these issues you still did not win completely. The Times says they are investing a lot of resources into their journalism and their digital product.
Replicating success is easier said than done
Many publishers are looking at The Times and try to copy some strategies. There are lessons learned you can apply even to a smaller newsroom – original reporting beats press releases, people will pay for quality journalism, prop up your newsletter and podcast offerings, registering users leads them to becoming subscribers, and focusing on the most important beat for your audience makes you a valuable resource.
Each quarter, FIPP puts together a Global Digital Subscriptions Snapshot. Looking at the table with subscriber counts for the fourth quarter it is obvious The New York Times has a lead as if playing in another league, it’s 7,5 million subscribers are followed by The Washington Post with less than half of that.
During the investor call Meredith Kopit Levien mentioned again (she mentioned it first during the third quarter earning results conference call) that there are a billion people reading digital news, and an expected 100 million willing to pay for it in English.
It’s reasonable to expect the Times not to relax after reaching 10 million subscribers and march ahead. As we follow along the way, there are small lessons we (the others) can learn along the way but do not expect anyone to replicate Times’ success at the same scale and timeframe.
Photo by Wally Gobetz