(This is a partial recap of the presentation made at the Advantage European Users meeting in Lisbon on 26-27 September 2019)
A year ago, at the Advantage European User meeting in Paris, I first presented the major trends in the publishing industry, identified from various conferences, visits to prospects and customers, and a close monitoring of the industry. I mentioned the rapid shift of subscriber portfolios to digital, new topics such as retention, print resistance, GAFA divorce, and new tactical approaches to circulation and reader relationships. A year later, I wondered if I repeated the experience, could I hope for something new? To my surprise, the answer was yes. In less than a year, some themes have reached a new phase, others have accelerated their development and new ones have emerged. I summarized six of them during this year’s presentation.
Digital speeds up
The New York Times remains the most closely watched index for the industry. For years, its progress, initiatives and ups and downs have fueled the hopes of a sector that is undergoing profound change. On the portfolio side, its growth remains strong with nearly 200,000 additional digital subscriptions each quarter. The portfolio of 3.7 million subscriptions (including print) reached nearly 4.7 million at the end of the first half of 2019. This increase is buoyed by vertical subscriptions (crosswords and cooking recipes) which account for nearly 700,000 subscriptions. CEO Marc Thomson's target of 10 million subscriptions in 2025 remains in place.
The success of the New York Times in acquiring digital subscribers is not unique and other examples are numerous. These include the Financial Times (800,000 digital subscribers, or 75% of the circulation), the Boston Globe with 112,000 digital subscribers (for the first time more than print which, in fact, is declining), Le Monde in France, which has increased from 120,000 in 2018 to 200,000 (up 14,000 per month) and Dagens Nyheter in Sweden, which balances print with 165,000 digital subscriptions (up 2,000 per week). And some magazines are joining the movement, such as Wired, whose paywall last year accounted for 100,000 digital subscriptions, and also helped increase print subscriptions.
The youth and international segments are two important targets for sustaining growth. For the youth market, it is first a question of getting future readers used to the consumption of online press. The New York Times reported that 3 million students are able access the newspaper free of charge through the generosity of 30,000 donors. The Economist has a more conventional approach with reduced rates for this target audience, as well as specific associated products. The Financial Times, meanwhile, goes through the universities to boost subscriptions, encouraging students to use the publication as an educational resource. Finally, the Norwegian Schibsted approaches the target by format, with the Peil app specially designed for younger readership.
For the international market, strategies are also diverse, with the New York Times aiming for a "second newspaper" status (with a reduced rate), and the Guardian identifying itself as a "global" daily with an audience of international donors. Finally, Mediahuis, with the acquisition of the Irish Independent, wants to expand circulation within the Irish diaspora.
Paywall success and new challenges
With the collapse of advertising revenue, subscription revenue has become the main goal among publishers over the last five years. In 2019, nearly 52% of executives say that these revenues are the primary objective for their company. Paywalls and digital subscriptions took off over this period and the FIPP index shows an increase of 3 million between 2018 and 2019, from 10 to 13 million digital subscriptions. Key players in the publishing world such as Condé Nast have decided to put all of their titles behind the "wall". For Bob Sauerberg, ex-CEO of Condé Nast, a subscriber who pays for their content is much more qualified and valuable than a free visitor.
With expansion, paywall practices have become more sophisticated. The most common is the freemium model (45%) where specific articles are designated by the publisher as either free access or paid-only. Next in popularity (32%) is where the print and digital versions are packaged together. Metered paywalls are only used by 11% and that number is declining. The "hard" model, which allows no access without payment, is used by 8%. Other variations ("dynamic," "hybrid," "geographic," "thematic") are being tested but the numbers are small.
The metered model has undergone the most transformation. For example, during WAN-IFRA Day in Paris, the Boston Globe reported that, in the last five years, the number of free items they allow readers to access has gone from 13 to 5 to 2. In addition, the time span in which the free articles are counted has increased from a month, to 45 and then 60 days. Each time, the tightening of constraints has encouraged the conversion of visitors into paying subscribers. Other publishers such as Le Temps de Genève have abandoned the model in favor of the freemium, recording much better results for both digital and print.
The growing use of paywalls adds to the success of dedicated solutions. Historic leader Piano raised $22 million in 2018. The French Company Poool has signed multiple contracts with French publishers throughout the year.
Nevertheless, paywall extension is causing a backlash in the form of "paywall blocking.” Several methods of circumvention have always existed, such as the publication of articles on social networks and the use of "private browsing.” But Chrome's August 2019 update made it more difficult to detect the "private browsing" mode, raising fears that this method would cease to exist. Eventually, other methods were discovered to detect such browsing, but publishers are moving quickly towards mandatory registration, as the New York Times did in September. The growing questioning of cookies, especially for third parties, can only accelerate this trend.