Netflix or Newspaper – What Subscription is the Future for Media?

The same discussions are going on in every media company board room in 2017, how can we grow our subscription business.

Of course media businesses are also exploring how they replace their beloved advertising revenue which for some is declining slowly and for others is falling off a cliff at a rapid rate.

The rise of sponsored content or native advertising which some reports say will represent 75% of all advertising revenues within 5 years fills media execs with both glee and dread in equal measure as they debate the church versus state argument.  

Many are also off exploring how their brands and business models can be tweaked to become event, data, software and E-commerce businesses. Whilst at the same time journalists working at both traditional and digital media companies fear for the financial future of their employers as the latest Mynewsdesk Global Journalist survey demonstrates.

The biggest opportunity short term for all media companies however is growing both subscriber revenue and user bases as recent reports by the likes of the New York Times have identified.

Question is which type of subscription is the future for Media?

Bold Move by Dagens Nyheter

Next week sees the Sweden’s leading national newspaper, Dagens Nyheter, owned by the Bonnier Group make a bold move to boost subscription revenues. It is increasing it’s premium print subscription prices from $49 to $61 a month – a whopping 25% increase.

Is this a desperate move to replace declining advertising revenues or a calculated move which recognises its readership is prepared to pay for quality journalism and a great user experience or something in between. Time will tell but I like the fact they are testing these boundaries.

Due to the oligopolistic nature of the Nordic media markets the propensity to pay for news is highest in this region of the world with Sweden (20%) second only to Norway (26%) in their population’s willingness to pay for news according to the recent Reuters Digital News Report.

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It is probably this fact that makes the leadership team confident that this bold move may well pay off.  
Dagens Nyheter with its $61 per month subscription for its print experience is now far more costly than its anglo saxon high quality rivals with the New York Times pricing it’s monthly premium print offering at $36 and the Times of London at $48.

Competing in the Subscription Economy is Tough

In years gone by media execs simply had to look at their print based competition to set prices and entice new reader subscriptions.

The subscription economy of today looks very different though. Competing for a readers, viewers or listeners attention in 2017 is about competing in the streaming subscription economy and the fact is that for 499 SEK ($61) that it will cost you to subscribe to Dagens Nyheter I can buy these 4 services which will deliver quality original content across music, film, tv and audiobooks.   

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Is quality journalism, delivered in print really worth x5 what Spotify or Netflix will cost you? Maybe for some that care about quality journalism, the role it plays in a democratic society and for those that want that print user experience then this is a price well worth paying.

Is it a Question of Demographics?

The Economist has recently described what it terms as “the grey quake” as one of the biggest phenomenons to affect business over the coming years.

Those over 60 constitute the fastest-growing group in the populations of rich countries, with their number set to increase by more than a third by 2030, from 164m to 222m. Older consumers are also the richest thanks to house-price inflation and generous pensions. The over-60s currently spend some $4 trillion a year and that number will only grow.

But similarly the likes of the Boston Consulting Group have also found that only 15% of businesses have a business strategy directed towards the elderly.

Well is the answer to this subscription question simply to look at different customer segments and provide the right product for them. The American Press Institute findings are just the latest in a line of research that shows that the older you are the more likely you are to pay for print.

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With over 30% of Sweden’s population over the age of 55 is this the bet that the Dagens Nyheter leadership team are taking with their significant price increase.

Sure many of this group have their Spotify and Netflix subscriptions too but the question is how far does their willingness to pay for quality journalism in an experience they have grown up with stretch … we will soon find out.

What about the Micro Subscription

So if media companies can stretch the willingness to pay of their older customer and apply this strategy for the next 10 years what can be done to both attract and montetize the younger age groups.

Well the New York Times and the Dutch media startup Blendle offer us the answer here.

Earlier this year the New York Times , as part of its Beta product group, which also includes experiments in the entertainment and health verticals, spun off its Recipes section into a digital subscription product. The price point $5 a month.

In another development in the micro subscription market Blendle have added significant investment this year with Nikkei, owner of the Financial Times joining both the New York Times and Axel Springer as investors in the company. Do they see the future of media subscription revenues coming here … maybe.

More importantly though as well as their micropayment model where users pay around €0.35 to access an individual article they have also launched Blendle Premium, a subscription product where users can access 20 articles a day from multiple publications for €9,99 a month.

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With only over 1 million users and only 150,000 paying users worldwide it is too early to say just yet whether the Blendle subscription or a subscription just like it is the future for digital media subscriptions.

There are many naysayers in the media executive ranks who are outwardly fans of innovation but inwardly executing a strategy based on maximising cashflows from legacy products and business models.

If you asked many music and movie executives 10 years ago about the future of Spotify and Netflix you would get a similar reaction to some media executives today.

If I were a betting man I would say that that services like Blendle are exactly what will make up the majority of digital subscription revenue in the future. Question is how long will this take? Quicker than we imagine, in my opinion.

 

 

 

 

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