One of the first industries that come to mind when the topic of bundling is mentioned is entertainment, TV and Hollywood. The cable networks had amassed vast numbers of customers by packaging related and non-related TV stations together and forming a bundle that was much cheaper than it would be by buying access individually. 

Unfortunately, at the same time, these TV bundles also included too much stuff people just never watched. (Sure, the situation is a bit different when you compare the US and Europe, which is a fragmented market in itself and each country is a little bit different).

It was the age of bundling, adding seemingly (!) more value and raising the prices of the overall product. There was no other way. Then over-the-top services like Netflix arrived and the shift started happening.

Not that Netflix is seen as an unbundled product, it was very much a bundle from the beginning, especially before the streaming wars began. But Netflix was strategic in building a library of things people wanted and suddenly could get in one place.

There was a time when you could enjoy watching Disney, Marvel, Netflix originals, DC Comics movies, shows and popular TV series (Office, Parks and Recreation, 30 Rock…) from across the board side by side. Not anymore. To do that now, you need access to at least three different streaming services.

After this unbundling, you could observe another round of bundling. Each of the production houses (Disney, WarnerMedia and others) decided it would be more beneficial for the future to have a direct relationship with their consumers. The problem was that the competing offer had to be appealing.

So, what do you do? Well, you build a more compelling bundle. Disney acquired Fox, WarnerMedia is merging with Discovery and Netflix keeps spending 17 billion dollars a year building its own library of originals.

Push for bundling in The New York Times and raising the value of the subscription

Now, news subscriptions are different, but there are some lessons in the wider media industry to be learned from. For example, if you are going to create a bundle, do it right – and, as Netflix did before, choose what people want to consume the most.

In a 2012 research paper at Harvard Business School, Timothy Derdenger and Vineet Kumar investigated the practice of bundling as a product strategy and identified how consumers make choices between products and bundles.

“The primary well-known explanation for the profitability of bundling relies on homogenization of consumer valuations. We find that mixed bundling dominates pure bundling,” they wrote in the paper.

Greg Piechota, a researcher-in-residence at INMA, recently examined the NYT’s subscription and bundling strategy and history in a blog. Historically, American newspaper readers most preferred reading local news, sports news, comics and advice columns. You could put all of these into one category – news.

But NY Times is finding the most success with offering on top of that non-news products like Games, Cooking and product reviews at Wirecutter. It’s quite the diversification, yet still in line with what newspapers have historically done.

The difference is, that they never really doubled down this much on those verticals. And honestly, if you are not in the same league as the Times, you most probably won’t be able to build such verticals.

Nonetheless, as Piechota reminded us in the blog, even the NY Times can hit and miss. As a young parent, I was following with much interest the start of the Parenting vertical. The paper even laid out the underlying research that went into building it on their product blog.

Skip three years later and the Parenting section is very much looking as any other, without its distinct launch design. You will not find a blog post describing how it didn’t work out, but clearly, this was not the hit they expected.

Yet parenting and family is one of those verticals news outlets in Europe are finding success with by building niche audiences around (newsletters, podcasts). Another reminder for smaller and medium-sized news outlets, especially in Europe, that not all lessons learned from the likes of NY Times are transferable or universally applicable.

More recently, ValueAct, an activist investor, has bought nearly 7 percent of The New York Times Company’s common stock and said it would push for changes to some of the publisher’s business operations.

ValueAct had conducted research that showed many consumers were not aware that The Times sells a bundled subscription to its products, which include news, games, a cooking app and the sports publication The Athletic. The investor said that created a potential growth opportunity.

I knew of the “All Digital Access” subscription, but being a basic digital subscriber (€8 every 4 weeks) I never really stumbled upon this offer. I went down the rabbit hole of finding it. Unless you google the exact name of the bundle, you most likely won’t find it. It’s not accessible from the basic subscription page of The Times and there is no shortcut from the user account.

There are smart people working there, so I believe there is a reason why it is so well hidden. My assumption is that it is easier to first get people on board and then start upselling. A strategy the German Bild has successfully tested and adopted.

The bundle is priced at €22.00 every 4 weeks. It includes access to Games, Cooking, Wirecutter and The Athletic.

It’s going to be interesting to see how NYT approaches the upselling strategy. At the moment, what I think many can learn from the Times’ strategy is how to make the subscription more valuable, for example, by adding paid newsletters.

Ideas for building a bundle and premium features that work

As I mentioned earlier, the main driver for a bundle or a premium subscription (another name for a bundle, if done right) from the point of view of the publisher is to increase ARPU – average revenue per user.

There is also a secondary reason. As it turns out, a bundled product can decrease churn. In a recent interview with Stratechery’s Ben Thompson, The NYT Company CEO Meredith Kopit Levien shared that subscribers to its bundle offer stay subscribers for longer, they engage more,and the revenue per user and their lifetime value is higher.

It would be interesting to see a benchmark or comparison across more markets from at least a handful of publishers to see whether this translates universally.

For example, when looking at case studies of publishers that revamped their newsletter offering, almost everyone I have come across said the lifetime value (LTV) of the subscribers who also get at least one newsletter was much higher than the average LTV of all subscribers. One European publisher told me it is almost 30% higher.

I know, this must sound like a broken record to many, but having a comprehensive newsletter program is one of the best wins you can introduce to your digital subscription strategy. And as successful publishers are showing, it needs to be re-evaluated. If a newsletter isn’t working, stop doing it and try something else. Subscriber-exclusive newsletters are another tactic.

The Washington Post and the Polish Gazeta Wyborcza have shown success in getting premium subscribers by offering an extra subscription or 30-day free access to friends and family. In terms of building new product features into your subscription, this should be a fairly easy one to implement.

When it comes to bundles, there is more work needed and as Greg Piechota reminded us, building a vertical is risky and doesn’t always work out as planned (e.g. NYT Parenting). Sure, you can try or look around for existing ones and strike a deal or acquire someone.

Let’s look at some examples that didn’t really work out. You may not know, but Piano, one of the largest subscription, analytics, and content personalization platforms for news and media businesses, started as a national paywall in Slovakia in May 2011. The idea was to have a unified access to premium content.

If a subscriber converted at a certain news outlet’s page, that got 40% of the revenue, 30% went to Piano and 30% was distributed between everyone depending on time spent by the subscriber.

The project lasted five years. Publishers left citing not enough control over subscribers, others didn’t like the way the money was distributed. The smaller the outlet was, the less visits it got, and that also meant less money.

This bundle was a great product for readers – one subscription to rule them all – but, unfortunately, almost impossible to pull off for competing news publishers. Owning your subscribers, even though that number might be smaller, is still a big advantage.

I have yet to come across a bundle of news outlets that decided to offer a joint product and call the result success for both. In 2020, The Information and Bloomberg partnered on a single subscription for both outlets priced at $499 a year, which was $315 off both subscriptions if you were to buy them separately. More than two years later there is no information about this, and the offer page is also gone. Clearly, it didn’t work.

When building bundles, I would start with media adjacent businesses. The Czech news portal iDnes.cz reached 100,000 digital subscribers. The most interesting thing about its subscription is that it doesn’t only offer access to news and sports, but also access to movies, audiobooks, tickets and experiences (2-nights of free glamping, discounts for electrobikes, etc.).

In two and half years of its existence, subscribers bought more than 42,000 tickets. By far, the two most popular benefits were access to audiobooks (almost 100,000 downloads) and movies (more than 112,000 views).

In an interview with the American businessman Jim Barksdale, who served as the president and CEO of Netscape in its heyday, he was asked whether bundling and unbundling is something that is taken in decision when deciding to invest in a company.

He had an answer that I think is still relevant today: “Most companies when they’re building strategies don’t ever use the term bundling. They just think of adding strategic advantages to their products. If they can add it to their core, they add it and try to be as efficient as they can be, because there are efficiencies in bundling. And there are synergies related to bundling. You don’t have to redo a lot of the core services when you put products together. But, I doubt most strategies were ever built using the term, ‘let’s bundle.’ Or, ‘let’s unbundle.’”

To reiterate, it’s not about having the most or best (features, benefits) in general. It’s about giving your subscription offer a strategic advantage and meeting the needs of your audience.

Maybe it is audiobooks that you are missing (and I continue to preach that for any publisher with a successful podcast offering, audiobooks should be next), or discounted tickets or a free extra subscription for anyone of your choosing. The list is almost endless and there is no one answer that fits every market.