Dominic Young, founder & CEO of Axate, wants the news business to learn from the best brands and make products customers want to pay for. Can Coca-Cola’s thinking reverse the decline?
I was recently asked if I could offer some examples of businesses that have pivoted from a pure subscription business model to one driven by casual sales.
Even outside the context of the news, I was stumped. I was frustrated that I couldn’t think of many until I realized there was a glaring – and fundamental – reason why.
News is commercializing backward.
I can’t think of any other sector that has pivoted from a successful, mass-market, casually-purchased approach to an exclusively closed-off subscription one… let alone one that had then tried to pivot back the other way.
Can you imagine Coca-Cola, which sells 1.9bn servings daily, deciding that instead of being available in every drink-selling outlet in the world, they would only sell through their own shops? And only to people willing to pay a fixed monthly amount, regardless of how much or how little Coke they drink?
It’s just a mad idea. But it’s what the newspaper industry, inadvertently, has done. No wonder it didn’t go well.
Obviously, the news industry’s partial pivot to subscription didn’t happen in one jump. It started its internet adventure by removing pricing altogether and offering its products free to all, relying on advertising revenue to pay the bills. Consumers were rapidly programmed that news had no value – by the very organizations providing it.
The story since then has, to sum it up brutally, been one of retrenchment and chaotic retreat from digital products and financial disasters. Detached from its previously successful retail models, floating free online and trying to plug leaks constantly, news organizations haven’t so much steered their own course online as been blown around at the mercy of constant storms.
The few titles that can have re-introduced consumer payment in the form of subscription. Those who can’t are trying their best to survive in the rapacious and hostile advertising maelstrom – the resulting product experiences devaluing news even further in the eyes of consumers.
A flourishing news publisher is a critically endangered species: spend any time at news industry conferences, and most of the success stories would be better framed as “less failure” stories.
This double-digital pivot to free and then – for some at least – back to charging customers has not gone brilliantly. There’s a pretty small cadre of subscription-based news publishers looking to the future with confidence, and few of those are truly mass-market.
Casual newsstand sales previously drove significant volumes for newspapers, as much as 100% of sales in some markets. Restricting your customer base to those willing to subscribe – typically less than 2-3% of your audience – means cutting yourself off from the vast majority of those who would otherwise be your customers.
It’s Coca-Cola saying, “Sorry, no. If you won’t sign up to buy 100 bottles a month, you can’t buy any.”
The numbers point to an industry that has now reached its inevitable and predicted tipping point: the pool of potential subscribers has been exhausted. Just look at the low-ball subscription offers you’ll now see everywhere, illustrating how far most will go to prop up that headline subscriber number.
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25p per week for a whole year? Another offers me four months for £1. Don’t mind if I do! That’s under 1p per day! But then it jumps to £26 per month. That’s a 104x price increase… hmmm. Suddenly, I don’t mind if I don’t. It’s worse, in fact, because even at subscription prices as low as zero, most visitors will still refuse to sign up. The market has reached and passed its peak.
So, if price reductions don’t work, what’s left?
Are we stuck?
Of course, we’re not.
We still have hundreds of millions of users trying to access our stuff, even if many of them go away disappointed either by our paywalls or our ads. The vast majority are not yet customers, a significant minority are ex-subscribers, and an even smaller tranche currently pays monthly fees in return for their – often quite infrequent – access.
Any market with huge amounts of unmet demand ought to be a tempting and vibrant one. Yet the news industry regards it with something close to despair. It’s as if the internet, having thwarted us at every turn, has robbed us of self-belief along with our ability to thrive.
Nothing we have tried on our own has worked, so we’ve spent the last decade or two following the monopolistic mega-platforms into their world. For the news industry, as it is finally learning, that world might be better named The Void.
But we all know what most users want, not least because we’re readers ourselves.
We want to be able to read whatever we want, whenever we want. If we’re going to pay for something, we want it to be worth it, and we don’t want it to be a massive hassle, or a massive cost. We don’t want to subscribe and then have to remember to cancel, and we don’t want to have to sign up separately for multiple titles we might only occasionally want to dip into.
Even if we habitually return to the same titles again and again, we want the right to change our minds every now and then. We want to be able to try new things, and we don’t want to pay for things we’re not reading.
Today, I fancy a Pepsi. So shoot me.
All publishers know that the huge majority of their would-be customers are like this. But the platforms don’t want any part of it because it doesn’t align with their own business models – or ways of thinking.
So, the news industry has had to make do. They picked from the tech sector menu of options, dominated by the needs of those platforms, shaped by SaaS business thinking. They are hemmed in by the limitations of a self-serving banking system, making small digital transactions more expensive and hassle than handing over a coin in a shop. Add a near-religious reverence for the need to generate and ‘own’ data and users, and you find only one option in the middle of the Venn diagram: subscription.
Publishers had to try to make the best of it, and customers had to put up with it.
Very few, it turns out, are willing to do so.
A whole ecosystem has sprung up around trying to make all this make sense. Accepting as axiomatic that subscription is the right and only model, the publishers, numerous service providers, and consultants have devoted a huge amount of time, energy and cost to trying to prove it. This keeps them very busy, and busy feels good.
Implementing clever tech, for example, which promises to analyze data and find the irresistible offer for each individual visitor, sounds exciting. The excitement palls as that irresistible offer drifts towards 25p per week or less. But there’s always an external factor to blame and another project to focus on.
Much of the news industry has become so used to rationalizing their failures as to have become almost addicted to the reassuring observation that they’re not alone. They are suspicious of ambition or innovation because they have stopped believing it is achievable and everybody is in the same boat.
It means they’re willing to ignore the most obvious explanation for their failures: people don’t want to buy what they’re selling. They have taken their mass-market product, wrapped it in a luxury goods business model, and found out that there aren’t enough customers out there who want that.
Now is the time to turn back to basics. Think like marketers. Think like Coca-Cola.
How can we ensure that when customers find us, they find our product and our price to their liking? How can we ensure they want to return and become regular customers? How can we make sure more people find us and can try what we have to offer? How can we make sure our customers and the products they buy aren’t limited to affluent elites?
Those four questions can be answered with a very small tweak to the business model: bringing back casual sales. Engineering the foundation for that is the project I have spent the last few years on, and now any publisher can do it.
Having built that foundation, one more question arises. Is the product good enough? Most online news publications have evolved little from being an on-screen version of what used to be printed on paper every day. But if there’s an audience out there, ready, willing and able to pay, we can be sure that some brilliant entrepreneurs and creators will find ever-better ways of addressing them.
The internet is changing. The platforms’ power and dominance are on the wane. It’s no time for a wait-and-see approach.
Now is the moment for the news industry to be innovators again, to be those entrepreneurs. We need bold, visionary, restless leaders to show the way; leaders who are not content to settle for being the slowest failer while waiting for a passing bandwagon they can jump on. Leaders who are brave and confident enough to say and believe they can do better.