Monetising password sharing: what publishers can learn from Netflix

25 February 2020
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Password sharing is something digital media companies such as Netflix have had to deal with for a long-time. That’s why it is surprising to see that a study of publishers by Digiday found that 76% do not take any special steps to stop subscribers from sharing their login info.

Recent research estimates Netflix loses more than $135 million each month due to password sharing. This figure comes from a survey that found just under 10% of Netflix customers share their passwords, amounting to roughly 15 million users. If they were able to get these extra users to pay, that would be equivalent to six months of its projected growth in subscribers.

Still, Netflix has made light of the password sharing problem in recent months. They even went viral last month for a tweet saying the only real way to have free Netflix was to share passwords with a subscriber.

While we haven’t seen as much research into the financial impact password sharing has on publishers, imagine what it means for your reader revenue if a similar 10% of readers share their subscription login info. To better understand how publishers should be reacting to the rise of password sharing, we’re digging into some of the lessons we can learn from Netflix and the like today.

Missing a key audience

What’s interesting about the password sharing trend is that it is mainly younger consumers that mooch off others’ subscriptions. In a survey on Netflix password sharing, 35% of millennials use another person’s login info, while only 19% of Gen X and 13% of Baby Boomers do.

We know publishers today are trying to reach this elusive audience: the next generation of news consumers. So it stands to reason that there is still value to be found in readers accessing content, even if they are not yet paying for it. From a recent Reuters survey, we know many news consumers first build a news relationship with the brand that was common in their household growing up, so even if younger readers are accessing the news via a parent’s subscription, at least it is a touchpoint in further building that reading relationship.

We would be very curious to hear the results of any publishers who dig into their own audience to better understand the problem of password sharing across the generations. Do younger readers not consume news content or are they simply not paying for it?

Risk of technical friction

Publishers are faced with limited options if they try to stop password sharing from a technology standpoint. Subscribers expect to be able to access the content they have paid for anywhere they are, on whatever device they are using. So publishers have to think carefully through the number of devices they limit a subscriber’s account to access content on. One subscriber might check the morning’s headlines on their phone in the morning, scroll through the homepage over lunch on their work desktop, and check for updates in the evening on their laptop. Add in a tablet or secondary mobile and one subscriber can easily access content on five different devices. Let alone what we might consider protected password sharing, such as sharing subscription info with a partner or children still living at home. Simply restricting access to a limited number of devices can cause more headaches for your customer service department. Even restricting access to geographical areas can cause problems for long-time subscribers trying to include their news habit on a vacation.

However, not attempting to curtail password sharing can also cause problems for publishers, as it limits what they can do with personalisation. That’s why back in 2013 Netflix introduced multiple user profiles on the same account, so that recommendations could truly be tailored for the individual users. In a recent Reuters report, more than half of the surveyed media executives said they would be doing more with personalisation and automatically recommended articles this year, so accurate data is becoming only more important.

However this does not necessarily mean publishers should also offer multiple profiles on the same subscription account, as subscribers might be more likely to keep their passwords secure if they think sharing their account will muddle their product experience otherwise. For this tactic to be truly effective though, publishers must actually offer a personalised experience based on reading behavior. It is also interesting to see how Netflix’s multiple user profiles seem to have increased consumer tolerance, or even desire, for personalisation. Until recently, it seemed the general reader consensus was skepticism over the use of personal data to personalise the news experience.

Solution: monetise sharing

With all this in mind, one key way publishers can react to password sharing is by monetising sharing. Just like Netflix makes it possible to pay extra in order to access content on multiple devices at the same time, publishers can think of how they can encourage subscribers to share access in a sanctioned way. To achieve this, publishers will first need to decide which type of sharing they want to allow: members of the same household, extended family members, or more?

Most publishers today do allow some wiggle room in their subscription policies. During the INMA Subscriptions Study Tour in New York this week, the team at The New York Times shared that they allow some subscription plans to share “bonus subscriptions” with one or two other users, which allows the other users to login with their own email and password. This has the added bonus of creating a layer of friction that is helpful for retention, as the subscriber will have to explain to their family or friends that they have now cancelled the subscription.

In France, Le Monde gives subscribers a 50% discount to offer a new subscription to someone else. Similarly, The Washington Post discourages subscribers from sharing their login info by giving them a bonus subscription they can offer for free.

We believe that our subscribers are our best ambassadors. So we encourage our premium subscribers to share access with new readers to help them discover the breadth of The Post’s content and the quality journalism.

Miki King, The Washington Post’s VP of marketing

This idea of monetising the act of sharing the subscription has the key benefit of encouraging subscribers to store value in the news products. If a subscriber knows others are relying on their subscription, they are less likely to cancel the subscription. We know that is one of the keystones of building the daily reading habit, as explored in our recent research “Reinventing Digital Editions: Habit Forming News Products“.

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