You get what you pay for: The Times on the economics of online news
The consensus among publishers is people value news but their willingness to pay for it is low. To crack this conundrum, The Times has not only got better at articulating its value but is placing greater significance on better serving the readers that care about its news, instead of chasing scale.
How The Times in convincing readers its news is worth paying for
It’s not a novel approach. However, much of its success is predicated on whether a publisher can parlay its print legacy into a digital proposition that people are willing to pay for. Where many of its rivals have flirted with the idea, The Times has gone to great lengths over the last year to prove to readers that good journalism is no longer confined to the sheets of newspapers.
From its decision to jump off the breaking news merry-go-round a year ago to increasing spend on TV and radio ads, the news brand has given marketing a bigger role in how it proves the value of paid-for news. In the age of fake news, that value becomes of a greater importance, both to readers looking for truth and to publishers trying to build a sustainable digital business model.
The Times’ approach to marketing its worth as a premium news publisher is “unapologetic”, says chief marketing officer Catherine Newman, and could be set to take an even more unyielding turn as Newman outlines plans, developed in partnership with communications consultants Verbalisation, to stop giving away content for free to protect its biggest revenue driver: subscriptions.
Instead, the marketing executive sees growth coming from the publisher’s recently launched registered access model, which gives “viable leads” access to two articles a week if they register their details.
“The best way for us to market ourselves is by allowing people to have access to our content and our content is the best out there,” says Newman. “The challenge for us is how do we that - how do we get qualified leads. It’s about giving people more access to that content but viable leads not just pushing it out for free.”
Recognising the value of investigative news to democracy, which has been thrown into the spotlight at a time of great political change in the UK and on the other side of the Atlantic, the publisher protects its most high-profile, subscription-driving articles under this model. Recent examples include its interview with then President-elect Donald Trump, the businessman-turned-politician’s first UK interview, and its profile piece of prime minister Theresa May four months after her succession.
It sounds like a better trade-off than distributing content on social networks, none of which have developed a paid-for model. Distribution is key to spreading The Times’ scoops fast - evidenced by the speed at which its report that found household brands were funding terrorism and pornography online was picked up by news outlets across the world. But it's putting more emphasis on its ability to court new subscribers on its owned properties rather than relying on third parties, where readers expect everything for free, diminishing the value exchange.
“As a publishing industry we have charged according to platform, which when you think about it is crazy because if a journalist writes a piece of content and it's on the front page or it's on digital why would you say it's worth any less just because it's on digital? It probably goes to more people who may spend more time reading it. And the fact that it costs you less to produce is neither here nor there but actually you should be charging based on the value that you think the content is worth,” says Newman.
“So we have been trying to make sure that we get more people into our content but likewise safeguarding what we think the value is. As a marketer it's about making sure that we're having that conversation with our audience whether it’s existing subscribers or new subscribers, talking about the fact that it's premium news that is well worth paying for.”
In fact, so sure is the publisher of its value, that it hiked up its price by 20p last year for the first time in two years, which its editor John Witherow ardently defended at the time as “great value for money”. Despite a rise in cover price, the publisher boosted its circulation by 12% in January 2017 compared to the same period last year, to reach an average circulation of 451,261 according to the ABCs.
“If I think of the price migrations which we've done with our subscriptions over the years it's been one of our biggest revenue drivers,” says Newman.
“It’s about understanding the relationship that we have with our audience and making sure that we are playing that back into our marketing. It's all very well for others to say they can build an audience just because they slashed their price - I probably argue you rent that audience for a bit but you never really own then. And for any newspaper or media owner to have any sustainable kind of future - quite frankly we've got to get past that.”
That said, the publisher is cognisant that a boost in print circulation is a temporary win in a world where news is migrating online. The bigger challenge facing publishers is convincing readers to pay for online news when so much of it is free. In the Reuters Institute Digital News Report 2016 that studied 23 countries’ willingness to pay for news, UK readers rated one of the lowest, with only 7% of the population paying for online news.
However, the average amount readers pay for news subscriptions per year (£82) is higher than in any other region. So while fewer people are willing to actually pay for digital news in the UK, the value of those that are is significantly higher, not just because the Times can count on continued digital revenue but also because they provide more data for it through the subscription sign-in process which can then be monetised in a variety of ways.
And in the wake of political turbulence caused by Britain’s vote to leave the EU and the appointment of a divisive US president, the number of subscriptions to online news outlets is on the rise. The Times’ subscriber growth rate in the six months from July to January 2017 was up 236%, compared to the same period in 2015/16, boosted by its UK exclusive interview with President Trump.
To further insulate itself against disruption, this year the publisher is chasing an international audience. Newman claims the brand already has a significant amount of subscribers outside of the UK, mostly from expats who take their subscription abroad.
It’s a strategy that has worked for the Guardian. In September last year 63% of the the newspaper's unique browsers came from outside the UK. Guardian US delivered record online traffic in 2016, with almost 42m unique monthly users (ComScore, June 2016), representing year-on-year growth of 33%. Meanwhile, Guardian Australia rose to become the fifth most read news website in Australia in just three years, with a record reach 7.2m unique browsers in May 2016, an increase of 14% year-on-year.
But in line with Newman’s view that news shouldn’t be discounted to woo more readers, but rather hiked up to hone in on the valuable ones, the publisher is not currently offering any discount to its digital subscription for those from international shores. In fact, it’s digital welcome offer which gives new subscribers discounted rates is more restricted internationally than in the UK, while its home country still remains the number one priority.
It’s a move that Newman has borrowed from her days at the Financial Times, a pioneer in protecting revenue through various different streams, and one of the earliest adopters of a paywall. FT Live, its events arm, celebrated double-digit revenue growth in 2016, with sales up 17% cent year-on-year. Newman hinted that events could work to boost revenue to its branded businesses, such as The Sunday Times Wine Club, and at a larger scale building on its subscriber events, like the CEO summit.
“I think there's a huge opportunity and I think it's just prioritizing resourcing and making you keep the car on the road at the same time. Now we have a really good understanding of our readers, that has given us a really good foundation for the future to say if this is what drives our readers then these are the kind of additional businesses that would fit into that, and these are the ones that don’t. We have to stay true to our core.”
The Times will also take learnings from its sister paper The Sun, which after dropping its paywall in 2015 has since focused on building out revenue streams from its most popular content verticals, such as Sun Bets, and its fantasy football league Dream Team.
The Sunday Times’ hire of Lorraine Candy from Elle and relaunch of its Luxx magazine gives clues as to where these revenue streams will come from, while it could be set to introduce bespoke subscriptions for its specialist areas, including legal newsletter The Brief and political newsletter and podcast Red Box, suggests Newman.
The publisher arguably has no immediate cause for concern; its ability to court subscribers has stood strong in the face of industry-wide adversity. However, while the Times has invested in numerous initiatives to articulate its value, while ensuring it isn’t putting all its money-making eggs in one basket, is there a danger this strategy is ignoring the younger generation? A generation which, in line with recent Edelman Trust Barometer research, expects businesses to reflect their woes, wants and passions, and take an active role in improving the community, not just themselves?
“Young people’s expectation is that business has a really important role to play in not just selling products but actively working with young people, representing them, and investing in the areas that they think are important. Business is not off the hook, the responsibility is not all sitting in Westminster,” said Ed Williams, chief executive of Edelman UK & Ireland.