Notes on the membership model for news
I am starting to explore and plan some membership work and I’ve been collecting notes about the business model. A lot of this info comes from the recent Reader Revenue event at Montclair State University. Enjoy!
Membership is growing very quickly as a model.
- Aside from the New York Times, Washington Post, and Wall Street Journal, there are dozens of other outlets seeing real recurring revenue gains through membership models.
- Membership fits with for profit news companies in a way that donations don’t quite couple – for profit companies notably cannot make donations tax-deductible, although it may be possible to solicit donations around specific beat coverage by partnering with a local foundation.
- Examples of sites with “membership” offerings… Texas Tribune, Voice of San Diego, Minnesota Post, Vermont Digger, De Correspondent, Billy Penn/Incline, The Atlantic, Berkleyside, Rivard Report, etc.
- Membership is often tied to a soft meter but it is pitched in a different way. Certain user demographics, like ad blockers, may receive hard meter that is sold as a more traditional access product.
- The soft meter may allow users to browse with ads or pay for an ad-free edition, but membership entails a larger program, which can include special events, exclusive content, partner deals, and access to more features.
Small/local example: Shawnee Mission Post (Shawnee Mission, Kansas)
Made decision to implement soft meter in January 2017. Set price $5.95 per month or $64.95 per year after testing. Non-subscribers get 3 individual story pages free-of-charge each month. Announced advertisers February 2017, announced to readers in February, announced to readers in March, went live April 12 and hit 1,000 subscriber goal in 3.5 months.
Engagement & retention are interrelated & crucial.
A study by the Lenfest Institute correlated monthly retention vs. subscriber engagement. Rates tended to fall between 85%-98%, with the majority in the 92%-96% range. Subscriber engagement in this case can be defined as pageview consumption.
Retention rate also depends on pricing, and pricing is publisher-specific.
The size of the market does not dictate price.
The Lenfest Institute explored whether publications in larger markets tend to charge more. Their study found a weak correlation (r = -0.14), where a factor of 0.5 was said to be the margin for a strong correlation.
Some other notes regarding price…
- The annual price offers a 10% discount but works out to a 17% revenue increase over 2 years (given attrition).
- Trials were also noted to greatly increase conversion rate, up to a 50% increase sometimes (in this case introduced 15 months after initial product launch).
- There’s room to experiment and increase over time. Median price around $10/mo.
Meter baselines (Lenfest data)
The average stop meter setting has fallen from 13 articles in 2009 to 5 articles at present day. See the following meter limit distribution as percentage of publishers.
Meter experimentation (Lenfest)
- Geographic Targeting: Differing meter rules or messages based on a user’s location (in-market vs out-of-market)
- Referral Targeting: Differing meter rules or messages based on a user’s referring domain (e.g. search, social)
- Content Targeting: Differing meter levers or experiences based on a user’s content consumption
- Propensity Targeting: Differing meter rules based on a statistical analysis of a user’s likelihood of subscribing based on a combination of factors and attributes
- Dynamic Metering: Differing meter rules based on advertising demand, user behavior, or other factors that change day-to-day or throughout a day
- Ad Block Metering: Differing meter rules (or hard wall) for users with ad blockers
With work a conversion rate of 1-2% can be kept.
According to the same Lenfest study, this time looking at average paid stop conversion rate by months launched, a leading publisher and a lagging publisher were compared. The leading publisher had a conversion rate above 2% for the first three months and then settled.
- “Conversion rates are rarely steady – rather they have peaks and valleys that correspond to promotional activity”
- “Publishers performing below our leading range often have little (or ineffective) marketing / promotional activity”
- “1.2% paid stop conversion rate (PSCR) leading benchmark range.”
What is Paid Stop Conversion Rate?
Paid Subscription Sales
Unique Visitors Hitting the Stop Threshold
This is one of two key metrics for subscription programs. The second? Unique visitors!
A lot of this work depends on a soft meter. Conversion rates vary based on meter level. “Pricing and marketing matters,” note the Lenfest Institute. Stopping more readers may increase overall sales, despite a drop in conversion rate.
See industry benchmarks to the right (via Lenfest).
How does content play a role?
Lenfest Institute recommends that content be “timely, frequent, and consistent”.
Key metrics to track:
- Total pieces of content published digitally per week
- Total unique local stories produced per week
- Min, max, daily new local stories published per week
- Average engaged readers per story published
“Potential subscribers subscribe to news as a service. That means, in essence, that they’re paying for access to information that helps them live better.”
Topics: Public transit, traffic, utilities, new business, construction, developments, JOBS, politics, education, neighborhoods, public safety, sports, culture and arts news, shows, exhibits, events
Audience development – mental model
Likelihood of being a subscriber if you… (Lenfest data)
- Read 5+ articles per month 5-10x
- Read multiple categories 2-3x
- Access on multiple devices 2-3x
- Live in market area 2-3x
- Subscribe to newsletter 5-10x
- Follow on social media 4-6x
Reader journey: Awareness -> Experience -> Preference -> Loyalty -> Advocacy
Email ultimately plays a huge role in the engagement puzzle.
The meter is an excuse to stop the user, but the value proposition isn’t merely about access.
From the Membership Puzzle…
“Thick” membership models are more common at news sites that are manifestly mission-driven. Mission clarity: A focused, clear mission and strategy to go about delivering on it collaboratively.
The Membership Puzzle emphasizes participation in a variety of forms – keep your audience journey in mind!
There’s a lot more to discuss about membership. One of the undiscussed topics is how to balance membership with advertising and other revenue streams.
The north star there should be to prioritize first party data & ad sales. Programmatic ads are a good stopgap monetization strategy for AMP but use on your main site should be deprioritized as much as possible. Directly sold sponsorship and native content will provide a much higher eCPM and also be more likely to act as relevant content for your audience. House ads can also be used to promote membership and engagement activities.
Ultimately the average revenue per user will be much higher on a membership-monetized user than what could be had with advertising, even if advertising will remain a necessary leg to the stool.
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Penn State Trustee Jay Paterno shared an odd column yesterday promoting Saudi Arabia without the necessary disclosures about who paid for his trip.
Old but new to me.
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