Why publishers are creating vertical subscription products

This year Reuters found that 52% of media executives will focus more on reader revenues, and we expect this to grow more in 2020. Publishers can either focus on how to better convert and retain subscribers for their main news product or add additional revenue streams. Recently we are seeing more and more news organisations experiment with additional subscription products. To better understand this trend, join us as we dig into three reasons why vertical subscription products are bringing success for publishers including McClatchy, Handelsblatt, and The New York Times.

The business case for verticals

The first argument against launching a new subscription vertical product is the fear of cannibalization. Will full-subscribers who had previously been paying for the entire product downgrade to only paying for the subscription vertical content? Earlier this year Grant Belaire, VP of digital audience development at McClatchy, pushed back against this, arguing that the alternative is actually churning entirely. If a subscriber is looking to downgrade their subscription then it is better to at least retain them as a subscriber with the vertical, than to lose them as a subscriber completely. At McClatchy, they have long known that their sports readers are particularly engaged and loyal. While sports readers make up less than 20% of their total audience, they account for more than 50% of their page views and are three times more likely to return than other readers. To ensure they were best serving these readers, McClatchy released a subscription sports product called “Sports Pass”, allowing readers to pay for just sports articles. This has helped double subscription conversions in a week and has not shown any signs of cannibalization of their regular subscription sales. It has been so successful in fact that just this week McClatchy announced the launch of a new subscription vertical, focused on politics and the upcoming elections in the US.

Image result for sports pass + mcclatchy + grant belaire

Puzzles are another area where newspapers have long seen a loyal audience. That’s one reason why The New York Times has a standalone crossword subscription offer for $6.95 a month. In fact, the crossword is not even included in the regular digital subscription offer, however those subscribers can add it on at a lower cost ($3.24/month). The Times reports they have more than 500k crossword subscribers. To convert subscribers for this product, they offer a miniature puzzle for free so that readers develop a habit and ultimately decide to upgrade to the full, paid-for puzzle. It is interesting however to compare this approach versus The Wall Street Journal which found that encouraging subscribers to try their puzzles increased overall retention by 30%. We will explore how puzzles, among other factors, help develop reader habits in a forthcoming report, sign-up now to receive an early copy.

Getting a paying relationship with a user allows us over time to expand and let them see all the things the New York Times can bring.

Eric von Coelln, Executive Director, Puzzles at The New York Times

More than 50% of such crossword subscribers do not have a subscription, digital or print, to the Times itself. That means The Times is able to reach a broader audience with its crossword subscription than it does normally.

Esquire, an American men’s magazine published by Hearst, has also decided to reward their most loyal readers with a subscription vertical. This time however the offer doesn’t focus on a specific topic but instead on a specific writer: Charles Pierce, who has written on politics for the magazine for over twenty years. After seeing more than 60k people were visiting his stories every day and that page views for his stories were up 60% year over year, they decided to build a $17.99 annual subscription offer. Subscribers are able to access all of his stories, rather than meeting a paywall after three stories in a month. As Pierce on average files three to five articles a day, this is a significant amount of articles subscribers are now able to access.

Increase reader commitment incrementally

With the rise of registration walls, which ask readers to give their email to access content before asking them to pay, we have seen more publishers experimenting with incremental commitment. While registration walls may have sprung out of the need to fight back against incognito blockers, it also allows publishers to better convert readers as each “ask” is incrementally bigger than the last. Vertical subscriptions can be seen as another step in this process of incrementally converting readers to full subscribers.

Asking readers to pay for specific content is also more likely to convert. A study by the American Press Institute found that 23% of subscribers originally decided to subscribe because they were highly interested in a specific topic the newspaper was covering. That may be one reason why German publisher Handelsblatt recently launched a subscription vertical for the digitalisation of healthcare. Subscribers will receive an email twice a week with exclusive content to help them make better decisions in their professional lives. This new offer is just the beginning of more offers to come from Handelsblatt, all focused on specific professional topics.

From our current research on habits, we know publishers including The Guardian view their editions as their strongest products for engagement, clearly seen in their recent launch of a subscriber-only edition product. That’s also why we have seen publishers across Europe in particular launch new edition products for specific segments of their audience. One that has been particularly successful is L’Edition du Soir from Ouest-France, which can be viewed as another step in the full subscription process. Focusing on more entertainment and news stories in a lighter tone, this evening edition engages nearly 2 million readers every month. While not a true subscription vertical product, this example helps highlight how publishers are experimenting with incrementally converting subscribers with new products.

Stay competitive in today’s digital media landscape

Publishers might even be forced to launch vertical subscriptions if they want to stay competitive in today’s digital media landscape. We’ve seen more publishers launch sports vertical subscription products due to the emergence of sports-news subscription sites such as The Athletic. First launched in 2016, The Atheltic announced earlier this year that they had surpassed 500k subscribers, which they are expecting to double by the end of the year. Different than most newspaper websites, The Atheltic is ad-free, instead focusing on subscriptions only. They have expanded to nearly 50 cities across the US and Canada and cover roughly 270 teams from the NFL, NBA, MLB, NHL and college sports. Recently they also launched in the UK, providing staunch coverage of every Premier League football club in the country. This launch saw many top sports writers from newspapers in the UK jump ship to The Athletic, which might actually be part of their business model. The Atheltic’s co-founder Alex Mather made waves in 2017 in an interview with The New York Times when he stated their intention to attack the market until they were the last man standing rather bluntly.

We will wait every local paper out and let them continuously bleed until we are the last ones standing. We will suck them dry of their best talent at every moment. We will make business extremely difficult for them.

Alex Mather, The Atheltic’s co-founder

With that in mind, publishers would be smart to start investing in their own sports strategies and potentially developing new sports subscription products. We can only expect other verticals to come in the future as well, such as politics, fashion, and weather.

Mary-Katharine Phillips
Mary-Katharine Phillips
Media innovation analyst @ Twipe
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