The number of people willing to pay for online news now roughly matches print paid circulation, and will soon be substantially greater, with publishers increasingly demonstrating that their strategies are influencing industry outcomes

Our thesis is that subscriptions work in some cases, but that a more systematic reader-first approach benefits all cases, recalibrating management focus to media’s core purpose

Effectively implementing such an approach is a more radical, transformative development than is sometimes assumed. The winners will deploy sophisticated, bespoke audience acquisition and retention funnels and undergo detailed appraisals of the trade-offs necessary for optimal user experiences

Contents

News media have been online for more than 20 years, and on mobile for a dozen

Why reader-first models are taking off

• The current state of play: why the shift from advertisers to audiences is urgent and permanent
• What is the scale of the reader payments opportunity?
• Readers are surrounded by free options; news avoidance and subscription fatigue are rising
• The difference between transition and transformation
• A reader-first strategy has to acknowledge there are trade-offs: “do more” is not a strategy
• Lessons from other media: successful online businesses replace clutter with clarity
• An overview of the most common reader revenue models
• An overview of the UK press
• The local press is a particularly difficult challenge
• News industry in a hostile digital marketplace
• Case studies
• The New York Times: building a reader-first quality, general global news provider
• The New York Times: advertising, like content, is a premium, quality, scarcity game
• The New York Times: beyond the core into vertical expansion
• The New York Times: products to drive users through the funnel
• The Seattle Times: a City newsbrand’s reader-first model
• The Seattle Times: content and reader services anchor the model
• The Seattle Times: balance of funding to maintain independence and community relevance
• Politico: vertical specialist coverage for professionals, with a consumer layer
• Politico: product development with the subscriber at the heart
• The Athletic: native vertical development, focused on quality sports coverage
• The Athletic has momentum and is entering the UK
• BILD: building the reader-first model for a popular newsbrand
• BILD: continuous innovation drives new learnings
• BILD: A few notes on Axel Springer’s digital thinking
• The Guardian: bridging the commitment to free access with a compelling donor model
• The Guardian: challenges and opportunities for Phase 2, to 2022
• The Guardian: diversifying reader access, services and revenue
• Tortoise: native news media eschews news-breaking to focus on underlying news themes

Concluding thoughts

• Where we have got to
• Management can often be a key obstacle
• What are the drivers of membership, subscriptions and audience retention?
• Building a reader-based model means attracting and converting readers
• Conversion needs to optimise messaging and user flow
• Costs and benefits of transformation
• Appendix: a selection of UK reader-revenue models

List of charts/tables

Figure 1. UK advertising spend national and regional news brands (£m)

Figure 2. Trust in traditional media for general news and information (%, 18+)

Figure 3. % of people that made a news payment in last year

Figure 4. % of people that paid for any online news in the last year

Figure 5. % of population that see a paywall less than once a week

Figure 6. Proportion that agreed with each attitude towards the news

Figure 7. Illustrative transformation costs in time and money

Figure 8. Reader-first model vs Reader and advertising combined model

Figure 9. Regional digital access, Spotify app

Figure 10. An overview of the most common reader revenue models

Figure 11. Reader revenue models of UK national newspapers

Figure 12. Monthly digital-only subscription price, UK national newspapers (£)

Figure 13. Circulation and advertising as a share of revenue (%)

Figure 14. Digital advertising revenues, and as a proportion of company revenue

Figure 15. NYT digital subscribers as of quarter's end (000)

Figure 16. NYT ARPU YoY change (%)

Figure 17. NYT conversion funnel (000)

Figure 18. The Seattle Times digital subscribers

Figure 19. Circulation and advertising as a share of revenue (%)

Figure 20. Monthly churn rate of digital subscribers

Figure 21. The Seattle Times’ donation funded Investigative Journalism arm

Figure 22. Politico Europe policy verticals (left) and horizontals (right) for Pro

Figure 23. Development timeline of the Brexit Pro policy vertical (left) and subscribers to Politico free newsletters as of March 2019 (right)

Figure 24. Top 30 sports news websites in the US by unique users (m, lha) and engagement (mins, rha), March 2019

Figure 25. Funding rounds for The Athletic ($m)

Figure 26. Feedback at the end of articles on The Athletic

Figure 27. Axel Springer revenue (€bn)

Figure 28. BILDplus subscribers

Figure 29. BILD NEWS monthly app downloads (Germany)

Figure 30. Guardian News & Media costs and revenues (£m, y/e Mar 31)

Figure 31. The Guardian’s membership tree

Figure 32. Guardian mobile in-app monthly revenue ($)

Figure 33. Tortoise member growth

Figure 34. UK local & regional news advertising spend (£m)

Figure 35. What are the drivers of membership, subscriptions and audience retention?

Figure 36. New NYT cooking and crossword digital subs (000)

Figure 37. Facebook group for Slate Plus Members

Figure 38. Aftonbladet subscription flow for direct carrier billing

Figure 39. Enterprise Value/EBITDA of publicly listed companies

Figure 40. Appendix: a selection of UK reader-revenue models