Notes on running a subscription news service

A couple of weeks ago an acquaintance and I got into a huddle on how a newspaper/news organisation can build a successful subscription model for their business... I listed the following as the notes that I needed to keep in mind when building something where a consumer needs to pay regularly for the service. What prompted me to write this piece are tweets that The Ken founder Rohin put out there when there was a discussion about their model of business.

To begin with, for any subscription model to be a success the markers in the ecosystem has to be in place. These markers are what startup founders look for when they want to think up a business that can run the entire length of its lifecycle. My reasoning was that there are enough markers in the current Indian context that allows a news subscription model to not just survive but also make money

1.      Jio Effect – over 300m users who do not have enough content to consume

2.      The resurgence of Airtel and Vodafone-Idea – better ARPUs and focus on the quality of content

3.      Xiaomi is the largest smartphone manufacturer with a focus on the T2 and T3 cities in the country, Samsung has launched a phone in the Rs 10000 range for the first time

4.      TikTok had approximately 300m users in India – video is the largest phenomenon in recent years

5.      ALTBalaji has seen the change in users paying for subscriptions from being largely metro centric to now almost 60% of subs coming from T2 and T3 cities and towns

6.      Hotstar says around half of its users are now from the non-metro centres

My experience over the last 5 years has to lead me to believe that the profile of the potential audience basis the mobile phones is an interesting way to look at what they will consume. And this segmentation can be classified as follows:

1.      Free users – Mobile phone models below the Rs 7000 price point on Jio prepaid connections with 1 GB daily plan

2.      Freemium users – Mobile phone models between the Rs 7000 and Rs 12000 price points with prepaid connections with a 2 GB daily plan

3.      Premium users –

a.      Small value packs: Mobile phone models above the Rs 12000 price point with postpaid connections

b.      Annual packs: Mobile phone models above the Rs 20000 price points with postpaid connections

In addition, there were these 3 little points that many miss out, in the long run, to rake up numbers.

1.      75% of all inorganic installs (installs via a paid campaign) will get uninstalled in the first seven days of installation

2.      However, 80% of organic installs (people who installed of their own free will without being induced) remain on the phones for over 60 days

a.      Subscribers of a platform keep the app on their phones for over 180 days – almost 30 days after their subscription has expired

3.      Value additions like cash backs, extra access etc keep the app mortality rate low

What makes a user subscribe:  

Kevin Indig had the best description of the path to a subscription:

Content credit: Summary of the study “paths to subscription”, Source: API / Kevin Indig

The paths to subscription study found 9 different paths that lead readers to sign up for a newspaper / Online News subscription:

1.      Digital Paywall Converters

2.      Topic Hunters

3.      The Locally Engaged

4.      Social Media-Mobile Discoverers

5.      Journalism Advocates

6.      Life Changers

7.      Coupon Clippers ( in the Indian context – the bargain/cash back hunter)

8.      Print Fans

9.      Friends and Family

 Each path is driven by a different motivation (Path: Motivation ) :

·      Digital Paywall Converters: Access to more content

·      Topic Hunters: Topical focus, e.g. sports coverage

·      The Locally Engaged: Local news

·      Social Media-Mobile Discoverers: Being able to share news/content

·      Journalism Advocates: Want to support journalism

·      Life Changers: Have more money due to life event; moved to the area

·      Coupon Clippers: Looking for a bargain

·      Print Fans: Already subscribed to print

·      Friends and Family: Family bundle or being influenced by family

*Content Source: Kevin Indig

How do we get the subscriber numbers / achieve targets / Defeat the dragon?

1.      Direct installed base

a.      Via app burns and activations

b.      Via performance marketing

c.      Via word of mouth and pull (organic) due to innovations in content and product

2.      Indirect users

a.      Telecom partners

b.      Aggregation services ( Daily Hunt, etc)

c.      Travel Portals – offer 2 days free access to people leaving the target markets to travel to other parts of the country – a way for them to keep in touch with their home state/cities

d.      Working with Zomato, Swiggy, Ola, Uber etc as distribution points for the news app and for subscription generators

e.      Working with payment options like Phone Pe and Amazon pay to generate trails

The Triple Looped Growth Model for Subscription

(image courtesy Kevin Indig)

Before any paid service puts a paywall and starts a subscription service one needs to have the following in place:

1.      Content that is valuable and not accessible to free user

a.      Please note – this requires a far deeper discussion and I am not an expert on content

2.      Extras that make it lucrative to buy the subscription – what can we give the subscriber for the money he pays in addition to the news and features that are available

a.      Addons – lifestyle products and services, OTT options, Music which have perceived value for the consumer and has the potential to keep them hooked onto the service

b.      Can we work with the mainline advertisers to create a “bento” box of samplers that can be sent to the subscribers who pay for an annual pack?

3.      A 24x7 CRM desk to help subscribers facing a problem and to help guide free users to the subscription

4.      Data lake: a single data source across all offline and online businesses that allow us to track and suggest stories – a free user looking for career guidance across any of the interfaces can be given 2 / 3 HBR stories on career and suggested a few others which are behind the paywall, offering a 7-day trial pack

In short the news service has to be a feature-rich app/service that became a companion to almost everything that a user wants in his day - Think of the most addictive apps in use in the current era – almost every one of them caters to the aspirations and ego of the user – likes, and retweets and mentions are currency to social acceptance. Can the service explore what it can do with a news app that can potentially become the one-stop for everything that a user does in his day from the time she wakes up to the time that she goes to bed? Can the news that is showcased to the user on the home page be customised to the micro needs of the user at every stage of the day that he is in?

What I wrote down in that 2 hours over uninspiring coffee at the local Starbucks is the template for any subscription business. 

The ad-funded part of the business has to be played out differently from the subscription service.

Putting a paywall on your service because the New York Times / Netflix did it is not good enough. The faster the businesses realise this and get their teams aligned the better it will be for them.