The value of dig­i­tal edi­tions

The Insider - - CONTENTS -

Ear­lier this year I wrote an ar­ti­cle ask­ing, “Are dig­i­tal edi­tions dead?” The rea­son for the ques­tion stemmed from my con­fu­sion over why more pub­lish­ers don’t of­fer branded dig­i­tal edi­tions of their print pub­li­ca­tions, and for those who do, why so many of them rarely mar­ket them. In­stead of bundling them and pro­mot­ing them, many pub­lish­ers hide their dig­i­tal repli­cas in the bow­els of their web­sites.

And then there are those pub­lish­ers who re­strict the plat­forms on which they of­fer dig­i­tal edi­tions, fo­cus­ing on desk­top and tablets, while ig­nor­ing the fastest grow­ing mar­ket of all — smart­phones.

Per­haps they’ll can­ni­bal­ize their print rev­enue if they of­fer their branded edi­tion across all plat­forms. Or maybe they sup­port the claims by some pun­dits that no one wants to read dig­i­tal edi­tions any­more. Make no mis­take. Noth­ing could be fur­ther from the truth.

Dig­i­tal edi­tion rev­enue growth may not make up for losses in other ar­eas, such as print cir­cu­la­tion and ad­ver­tis­ing, but US$6B in rev­enue in 2018 is noth­ing to sneeze at. Imag­ine how much big­ger that rev­enue could be if more pub­lish­ers ac­tu­ally started to build, value, and pro­mote high qual­ity dig­i­tal edi­tions for their most loyal sub­scribers. The ques­tion is, are you mak­ing it easy for them to find and read them?

Dig­i­tal replica edi­tions/ePapers may not be for ev­ery­one, but they’re def­i­nitely val­ued by many to­day and will be even more so when pub­lish­ers are forced to put an end to printed pub­li­ca­tions in re­gions where dwin­dling print read­er­ship is mak­ing hard copy pro­duc­tion and dis­tri­bu­tion un­af­ford­able. The Globe and Mail (G&M) faced this dilemma last year in Canada’s Mar­itime Provinces and made a prag­matic de­ci­sion to shut down pro­duc­tion and de­liv­ery of all printed edi­tions in the re­gion.

The com­pany did, how­ever, re­place those printed is­sues with their very pop­u­lar Globe2Go prod­uct — an au­dit-bureau-com­pli­ant branded edi­tion built with award-win­ning tech­nol­ogy that read­ers could down­load and read off­line, with all the bells and whis­tles read­ers can’t get in print (e.g. mul­ti­ple view­ing op­tions, shar­ing, com­ment­ing, copy­ing, print­ing, em­bed­ded video view­ing, in­stant trans­la­tion, and on-de­mand lis­ten­ing).

G&M was able to au­to­mat­i­cally au­then­ti­cate ev­ery print sub­scriber within their apps to en­sure no reader was left out in the cold. And by not sub­si­diz­ing print dis­tri­bu­tion, the pub­lisher could in­vest more in qual­ity con­tent. Jour­nal­ism was saved, trees were saved, and sub­scribers re­ceived all the con­tent they wanted, any­where they wanted it — on­line, off­line, and in tablet and smart­phone apps run­ning iOS, An­droid, and Win­dows op­er­at­ing sys­tems — at a lower price than the printed prod­uct. Although it was not the lower price that drove con­sumers to stay with the dig­i­tal edi­tion; it was the qual­ity of the con­tent they val­ued.

Dig­i­tal edi­tions are the low hang­ing fruit

For pub­lish­ers look­ing to in­crease reader rev­enue, dig­i­tal edi­tions are the low hang­ing fruit ripe for the pick­ing. I’ve al­ways said that branded repli­cas were a niche prod­uct in a frag­mented mar­ket. It’s just one of many dif­fer­ent ways users choose to con­sume con­tent, but it’s also one of the few ways that ac­tu­ally gen­er­ates reader rev­enue.

Dig­i­tal edi­tions’ au­di­ence po­ten­tial

Ac­cord­ing to a re­port pub­lished by the Amer­i­can Press In­sti­tute (API) in De­cem­ber 2017, the way peo­ple con­sume con­tent is a func­tion of “be­hav­ior, at­ti­tudes, and be­liefs — not de­mo­graph­ics.” API’s re­search found that dig­i­tal sub­scribers tend to fall one of three archetypes.

1. The civi­cally com­mit­ted

Th­ese peo­ple sup­port mis­sions and ini­tia­tives that re­flect their per­sonal val­ues. They have a high will­ing­ness to pay, mul­ti­ple sub­scrip­tions, low price sen­si­tiv­ity, and high loy­alty. You can’t ask for more than that!

Pub­lish­ers who demon­strate a real com­mit­ment to the com­mu­nity and part­ner with civi­cally-minded brands and in­sti­tu­tions are on the right path to prof­its with this au­di­ence. Com­bine that with an au­then­tic de­sire to con­nect and en­gage with them around their val­ues will go a long way to se­cur­ing this group’s loy­alty and fi­nan­cial sup­port.

2. Thrifty trans­ac­tors

Thrifty trans­ac­tors tend to have a mod­er­ate will­ing­ness to sub­scribe and are more dis­cern­ing about “value for money” than the civi­cally com­mit­ted. They are more se­lec­tive and price sen­si­tive as well. If you’re a pub­lisher that ap­peals to their spe­cific news topic, hobby, or in­ter­est (e.g. pol­i­tics, cook­ing, entertainment), you will find them more in­vested in your pub­li­ca­tion than a gen­eral news brand.

Pub­lish­ers of gen­eral news brands (of which there are far too many), have lit­tle chance of at­tract­ing and re­tain­ing the in­ter­est of this dis­cern­ing au­di­ence.

To thirty trans­ac­tors, gen­eral news pub­li­ca­tions of­fer noth­ing unique — noth­ing that demon­strates ex­cel­lence in key ar­eas of in­ter­est. It’s a “dif­fer­en­ti­ate or die” sce­nario with th­ese folks.

3. Elu­sive en­gagers

Th­ese sub­scrip­tion-averse read­ers are the most dif­fi­cult to at­tract and en­gage. They have a low will­ing­ness to pay, and of­ten view news as a com­mod­ity or “nice to have” prod­uct. They may take ad­van­tage of a new trial, but they’ll likely aban­don the site when the pe­riod ex­pires.

Pub­lish­ers can make money on this fru­gal, “don’t lock me in” au­di­ence, but only through di­ver­si­fi­ca­tion, in­clud­ing mul­ti­ple busi­ness mod­els, such spon­sored ac­cess, all-you-can-read, pay-per-is­sue, and pay-per-ar­ti­cle (to a lesser ex­tent).

Dig­i­tal edi­tions evoke emo­tional con­nec­tions with the prod­uct which car­ries value at a price

Printed edi­tions of mag­a­zines and news­pa­pers have al­ways been seen as premium prod­ucts within le­gacy me­dia’s port­fo­lio. They still bring in the most reader and ad­ver­tis­ing rev­enue per is­sue, which is why so many pub­lish­ers are hes­i­tant to aban­don it. But it’s a for­mat that is los­ing read­er­ship ev­ery year, par­tic­u­larly with au­di­ences who want any­time, any­where ac­cess to con­tent.

That be­ing said, printed me­dia still car­ries with it a sig­nif­i­cant per­ceived value with many news read­ers. They may not all like the for­mat, but they trust the con­tent more than con­tent from any other medium. And in the in­fi­nite stream of dig­i­tal de­bris that in­fil­trates their world, printed me­dia of­fers a re­prieve. There’s a be­gin­ning, a mid­dle, and an end to printed me­dia which gives read­ers the lux­ury of be­ing able to ac­com­plish some­thing — com­ple­tion achieve­ment.

And as more and more pub­lish­ers move to­wards charg­ing for con­tent that was once free, bun­dles that in­clude pre­vi­ously free con­tent and a dig­i­tal edi­tion are rec­og­nized by read­ers as an added value worth pay­ing for.

Trust, per­ceived qual­ity, value, and achieve­ment that comes with printed me­dia car­ries over to dig­i­tal edi­tion repli­cas, along with the will­ing­ness to pay for them.

Dig­i­tal edi­tions are a tra­jec­tory for sub­scrip­tion-based rev­enue, of­fer­ing no­tyet-cap­tured in­come po­ten­tial

That be­ing said, in­con­sis­ten­cies in pric­ing across mar­kets, par­tic­u­larly in the US, in­di­cate that there’s no clear stan­dard.

The mar­ket is mov­ing more and more to­wards a ‘win­ner take all’ sce­nario, where strong brands are cap­tur­ing the lion’s share of sub­scriber rev­enue. Mak­ing con­tent avail­able in mul­ti­ple plat­forms (app, replica app, web­site, print, etc.) al­lows for max­i­mum en­gage­ment of a pub­lisher’s core au­di­ence.

Dig­i­tal edi­tions of­fer strong po­ten­tial for at­tract­ing mil­len­nial read­ers, de­spite pre­vi­ous mar­ket fears

A num­ber of fac­tors such as the Trump Bump and the over­abun­dance of fakes news on so­cial have brought huge op­por­tu­ni­ties for pub­lish­ers, par­tic­u­larly in the US, and sur­pris­ingly with the elu­sive 18 to 34-year-old mar­ket. The num­ber of Gen Zs (aged 18-24) who paid for dig­i­tal news in 2017 rose from 4-18% and from 8-20% for Gen Ys (aged 25-34). That’s 30% of the to­tal mar­ket!

So it would ap­pear, that con­trary to ear­lier as­sump­tions, mil­len­ni­als do show a will­ing­ness to pay for con­tent. And that will­ing­ness doesn’t nec­es­sar­ily de­cline as one looks at the gen­er­a­tion fol­low­ing them. Other stream­ing ser­vices seem to have made the no­tion of pay­ing for sub­scrip­tions more palat­able.

“The suc­cess of dig­i­tal sub­scrip­tion ser­vices such as Spo­tify, Net­flix, Hulu, and Ama­zon Prime have nor­mal­ized dig­i­tal sub­scrip­tions in con­sumers’ minds. This, in turn, has made it pos­si­ble for news pub­lish­ers to make real progress in this area.” James Hewes

Pres­i­dent and CEO, FIPP @jhewes

Ear­lier this year, PressReader con­ducted in­de­pen­dent mar­ket re­search on news­pa­per and mag­a­zine read­er­ship in Canada and the US and learned that, when com­pared to peo­ple 35 and older, con­sumers aged 18-34:

• Value in-depth anal­y­sis more than their older coun­ter­parts

• Make more use of re­lated sto­ries links on­line

• Have a higher ten­dency to sub­scribe to mul­ti­ple pub­li­ca­tions

• On av­er­age, pay the most in sub­scrip­tion fees on a monthly ba­sis

In­ter­est­ing, don’t you think?

The Trump Bump may be wan­ing in some ar­eas, but there is still an op­por­tu­nity with younger read­ers, so don’t give up on them. They are, af­ter all, the fu­ture of the Fourth Es­tate and our democ­racy.

Dig­i­tal edi­tions pro­vide new op­por­tu­ni­ties for per­son­al­iza­tion and bundling

The more so­phis­ti­cated your un­der­stand­ing of your cus­tomers, the bet­ter you’ll be able to tar­get them with of­fers and con­tent that res­onate. Ask­ing for and track­ing pref­er­ences, shar­ing data across de­part­ments/con­tent of­fer­ings, and test­ing of­fers with var­i­ous seg­ments will all go a long way to help op­ti­mize sub­scriber rev­enue.

Of­fer­ing dig­i­tal+print bun­dles will also make your con­tent avail­able in mul­ti­ple ways giv­ing sub­scribers what they want — the right con­tent, in the right for­mat, through the right chan­nels, at, hope­fully, the right price.

Con­trol your own des­tiny

Dig­i­tal edi­tions of­fer read­ers and pub­lish­ers many ben­e­fits, but un­less peo­ple know about them, they’re like trees fall­ing in a for­est — no one will hear them when they fall and die.

By hold­ing on to ev­ery print penny and not ac­tively pro­mot­ing their dig­i­tal edi­tions over fear of can­ni­bal­iza­tion, pub­lish­ers will soon find them­selves in the same sink­ing boat Block­buster did when it held on tight to its DVD busi­ness, even though it had stream­ing

tech­nol­ogy (2002) five years be­fore Net­flix (2007). Even as late as 2009, Block­buster ex­ec­u­tives re­fused to ad­mit that its strat­egy was dead wrong.

"Right now, we are the leader in the ren­tal video busi­ness in the US. To the ex­tent that the in­dus­try moves more dig­i­tal, we plan to stay the leader. We know con­sumers are re­quir­ing more from us and we have no wish to lose our lead­er­ship." Kevin Lewis

Se­nior VP Dig­i­tal Entertainment Block­buster (2009)

Mean­while, Net­flix ac­tively pro­moted stream­ing, de­lib­er­ately can­ni­bal­iz­ing its own DVD busi­ness. I don’t need to tell you how that worked out. Okay, I will. ;)

In Septem­ber 2010 with US$1.1B in rev­enue losses, and a value of only US$24M, Block­buster filed for bank­ruptcy. Net­flix rev­enues have sky­rock­eted to over US$11B.

It takes vi­sion and an en­tre­pre­neur­ial spirit to can­ni­bal­ize ex­ist­ing prod­ucts and busi­ness mod­els in or­der to pave the way for a more lu­cra­tive fu­ture. Dig­i­tal edi­tions are not an endgame; their life­span is lim­ited. But they are step­ping stones to new dig­i­tal rev­enues and op­por­tu­ni­ties to at­tract and re­tain brand­loyal sub­scribers for the fore­see­able fu­ture.

Think about it. And then, let’s talk!

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