The chief executive of The Telegraph has called for transparent auditing of the “wild west” of news industry subscription numbers, complaining that publishers are “counting them themselves”.
Nick Hugh says The Telegraph has set an example by having its figures audited by PwC and is converting new paying subscribers at around 1,000 a day. He says the publisher will reach 500,000 paid subscriptions later this year and is on course to double its operating profits, compared to 2018.
In an interview with The Drum, Hugh says subscription numbers are the key “single metric” by which The Telegraph measures success but that the publishing and advertising industries are lacking in data and common standards on subscribers and what they are worth.
“It’s a wild west at the moment when it comes to subscriber numbers, everyone just says ‘these are how many subscribers I have got’ and no one even talks about ARPU (average revenue per user) – they could be selling them all at £1 for all we know,” he says.
While the news industry produces its PAMCo audience data on digital and print readership, there is wide divergence in the subscription packages offered by publishers in a highly competitive market. “They are counting them themselves,” says Hugh. “What is a subscriber? How do you treat the same person that subscribes to two different titles? I have got no idea. How do you treat someone that might have bought a corporate subscription but never logged on? How much is free, how much is paid, how much is just given away at £1-a-year and is that really a subscriber?”
The Telegraph’s latest paid subs total of 426,468 was signed off in a quarterly audit by PwC. Over 50% are digital subs, which are a mix of premium £6-a-week Access All Digital sign-ups, and Standard package subscribers paying £2-a-week. Hugh is convinced that the ad industry will “start to push” other publishers to adopt a similar audited approach, especially as internet browsers move to block third-party cookies and data from logged-in users becomes all-important. Safari, Mozilla Firefox and Google Chrome have all recently clamped down on cookies.
Hugh says he is “so supportive” of these privacy-related restrictions because they will enhance the value of publisher data from registered readers. “I would argue that there will be no value to anonymous readers long term,” he says. “Because it can’t work from an advertising perspective and if [users] are not subscribing then how are you getting value out of it?”
Hugh arrived at The Telegraph as chief operating officer in 2017 from Yahoo, where he was vice president for Europe. He found the venerable publisher in a state of chronic decline with a worrying age profile and fast-shrinking revenues from print circulation and advertising. The stabilisation strategy he devised is based on rapid digital transformation and has the catchline ’10-1-23’, meaning 10 million registered users and 1 million paid subscribers by 2023.
His task is not made easier by the feud between the billionaire Barclay twins, who co-own the paper. Those tensions – already linked to rumours that The Telegraph is being touted for sale or part-sale – have escalated dramatically with a hearing at the high court which heard that Sir Frederick Barclay had been bugged by his nephew Alistair at the Ritz hotel, which the family owns. The Telegraph has not covered the story.
As The Drum visited The Telegraph’s offices on London’s Buckingham Palace Road last week, registered users had passed 6.1 million. High above the journalists in the newsroom is a dashboard that tells them that the daily tally for new subscribers is currently at 970. Hugh says that the rate of conversion of a registered user to a subscriber is “15 times” that of persuading an anonymous reader to take a paid subscription.
Very few daily UK newspapers currently require readers to log in to view content. Notable exceptions that operate a paywall are The Times (which has 539,000 subscribers and 5 million registered users) and the Financial Times (which has more than 1,050,000 paid-for readers across digital and print).
Several publishers are in a position where they are seeking to maintain open access and mass audience, but while trying to persuade readers to sign up. Reach, publisher of the Mirror and Express titles as well as a large portfolio of regional papers, last week revealed plans to pursue a digital registration strategy.
“While everyone is scrambling to get people to log in we are in a different position,” says Hugh. He predicts that many titles will see a decline in their web traffic as a result. “There will be some natural volume declines because that’s part and parcel of putting up registration walls.”
Hugh recently broke ranks with the industry by pulling The Telegraph out of the ABC monthly circulation figures by which the sector has traditionally measured performance. The Daily Telegraph’s final ABC, published for December, was 317,817, down 12% year-on-year. The chief exec says he no longer wished to take part in a process that he says paints a relentlessly negative picture of the industry’s prospects. “That was the metric everyone would write about every month and always a (story of) structural decline.”
He shocked some newspaper stalwarts again last month when he introduced an “unprecedented” 50p hike in the cover price of the broadsheet. He was braced for accusations that he didn’t understand the market. “It’s easy to say 'he’s only been in the newspaper industry for a few years and he doesn’t know what he’s doing, taking up the price 25% is madness'.”
But the pricing strategy, which he claims was well-understood inside The Telegraph, was about driving occasional readers to become subscribers. While the cover price rocketed, the price of a 7-day print sub stayed at £11.50-a-week. “I’m prioritising the subscriber over the casual reader,” says Hugh.
He says that, since the increase a month ago, “several thousands” of casual readers have taken subs. “Obviously I have seen a slight drop in circulation but less than I thought it would be and comfortably offset by the increase in cover price, so to me that’s been very successful.”
In October, it was revealed that Telegraph Media Group’s pre-tax profits fell by 88% to £1.6m in 2018. But Hugh says that operating profits, which were at £8.7m in 2018, are on a sharp growth trajectory. They will be up more than 25% for this year and will have doubled the 2018 figure by next year. He claims this amounts to a “very healthy” position with “a completely different mix of revenue” that means its future is “much more sustainable”.
Telegraph subscribers have an ARPU of £194, although Hugh accepts this will fall slightly as digital takes precedent over the more lucrative print. The 1 million subscriber target is “stretching but achievable”, he says. “One million people used to buy The Telegraph, a long time ago.”
On a wall at the back of the newsroom is a new mural which details The Telegraph’s rich history, from its debut front page in 1855 as the Daily Telegraph & Courier through to the siege of Mafeking in the Boer War, when Winston Churchill was its correspondent, and on to last July, when the paper’s former columnist (and Churchill biographer) Boris Johnson took the keys to Downing Street. The Telegraph, says Hugh, is “proud of the association with Boris Johnson and the fact that he used to work here – I think that’s good for us”.
Brexit was also good for the paper in converting registrants to subscribers, although it became “overly dependent” on that one issue, Hugh says. More recently it has found subscription growth in other topics, including coverage of the travails in the royal family. Telegraph journalists have constant access to data that shows them which stories are doing best in “retention and acquisition” of subscribers.
While some other newsrooms torment themselves over how to attract younger readers, Telegraph editor Chris Evans is not under such pressures. The Telegraph’s target audience is aged 35 and upwards and Hugh says he is “very comfortable” about that because “I actually don’t believe that the Telegraph itself is something that naturally appeals to very young generations”.
But since he left Yahoo and was warned he was joining the “ailing newspaper industry”, Hugh says there has been a shift in the way that news publishers are perceived, thanks to concerns around social media, fake news and political uncertainty. “There is a significantly increased understanding and awareness of the importance of quality journalism and the role that plays in an open and free democracy.”
What he wants to see now is an acceptance – from advertisers and the wider public – that such journalism comes at a price and increasingly demands the attention of a reader who is engaged, logged-in and identifiable. That change to subscription and registration is being driven by SVOD streaming providers, the BBC’s iPlayer, music platforms and internet services such as Go Compare, the price comparison site where Hugh is a non-executive director.
He even welcomes the fact that The Telegraph’s old rival, The Times, operates a subscription model. “It’s a good thing because you change consumer behaviour by all moving en masse,” he says. “If there’s understanding from readers that you have to register to access good journalism it lessens the barrier. And if you can grow the expectations that you have to pay for content – great.”