Too big to bundle: the bifurcation of subscription strategies

Last week the NYT’s chief executive Mark Thompson warned other publishers to be wary of jumping into bed with Apple’s soon-to-be-announced news subscription service. He told Reuters: “We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else. We’re also generically worried about our journalism being scrambled in a kind of Magimix (blender) with everyone else’s journalism.” Later on in the interview he cited the example of broadcasters giving Netflix their most valuable shows before they quite realised what a competitor the streaming service would ultimately be, warning against giving your usurper the tools needed to supplant you.

If anyone knows what they’re talking about when it comes to subscription success, it’s Mark Thompson. The New York Times’ triumph in that area is held up as a shining beacon for other news companies to emulate. It has a new target of 10 million subscribers by 2025 after it surpassed its own targets for subscribers in the latest quarter, and has undertaken a very smart approach to onboarding new subscribers through offering free student memberships. It has even kept up its ‘Trump bump’ pace despite predictions (including mine) that harnessing an ephemeral national mood was an unsustainable business model in the long term.

Apple takes a bite

So when Thompson says that news publishers should beware of whatever news subscription service Apple is about to launch, everyone will sit up and listen. Similarly, it’s vanishingly unlikely that publications like the Washington Post will get on board with Apple for much the same reasons. They don’t want to undercut the direct relationship they have with an audience, they don’t want their articles to be lost in the noise or wrongly attributed to another publisher (or worse, to Apple itself) and they certainly don’t want to lose any money as a result. Even if the WSJ apparently does…

From everything that we know about the new Apple News subscription service, it also appears that media companies will be handing over a significant amount of power when it comes to the ability to sell subscriptions in their own right. Pocket Lint’s Maggie Tillman says:

“At the moment, to access paywalled content, users need an active subscription. Apple doesn’t sell subscriptions; it merely authenticates subscriptions purchased outside of Apple News. Past reporting seems to suggest Apple News will significantly change with the introduction of a news subscription service. You can expect to directly pay Apple a monthly fee to access paywalled content from all participating publishers.”

Media companies – and particularly the news publishers – have been burned by handing over power to distribute and sell their news content before. It’s a well-known issue, and part of the enthusiastic response to Thompson’s statement is that so many similar endeavours have failed to get off the ground entirely.

There is also the very real imbalance between the need for any old content from Apple, and the needs of the publishers to invest in quality content that sets itself apart. As Dominic Young (founder of micropayment system Agate, so take this with a grain of salt) says:

“Publishers, of course, have to invest in content. When it comes to getting paid they’re at the mercy of an algorithm, uncertain and variable. Apple, having used the publishers’ products as the lure, can relax and see its profits increase. But for publishers to thrive, they need a reliable way to connect their popular success to their revenue.”

But the reality is that most most media companies simply don’t have the luxury of summarily turning Apple down. Without a subscription base on the scale of the NYT’s, or a membership base on the scale of the Guardian’s, the opportunity to get millions of eyes across your content, even on the reported 50 percent revenue split, is too enticing simply to ignore. Those smaller publishers might look at their own efforts to date in subscriptions and decide that it’s best to be bundled in with other publishers (and the entertainment content that might help subsidise it). Mark Thompson is undoubtedly right to be concerned about brand erasure, but he’s speaking from a platform that most other media companies will never reach on their own. For them, it’s less a matter of ensuring continued success and more about survival.


Chris Sutcliffe

enquiries@trippassociates.co.uk

Martin Tripp Associates is a London-based executive search consultancy.

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