Success of Digital Subscriptions Depends on Reader-Focused Newsrooms, Expert Says

The current buzz phrase in local news is “consumer revenue,” and its biggest segment—digital subscriptions—is getting the most buzz.

In a recent research report where he combed through how 500 publications handled the challenge, Matt Skibinski, reader revenue expert at the Lenfest Institute for Journalism, details the pitfalls as well as the benefits of digital subscriptions.

In this Q&A, Skibinski summarizes his findings:

In your report, you say quality local news is the starting point for any digital subscription strategy. Quality news, you emphasize, is a service that helps people live better lives. What does that mean and how much would that kind of coverage cost?

It’s really about how you direct the resources you have. News organizations need to be laser-focused on creating distinctive, unique, valuable content for their readers. And that means they may have to stop doing some things they are doing today.

If you’re a newspaper that’s been around for 150 years, the best way to have provided such a service 50 years ago was to have written about everything. Today, a lot of local news organizations have concluded that doesn’t make sense anymore.

In sports, for example, many subscription-based publications have stopped writing long game recaps from the night before because people can get that information elsewhere. Instead, they’re writing really interesting stories about the players and the organization or doing reports from behind the scenes or analyses. They’re focused on what they, uniquely, can provide that readers will find valuable.

I haven’t personally done research on how much it costs to develop that kind of content. But I have seen that when publishers decide that their most important customer is their readers—not advertisers or anyone else—what they start to focus on is content that’s valuable to those readers and not what gets the most clicks.

Are you saying that if local news publishers do this, then the cost of content that’s valuable to readers won’t be insuperable?

I think so. If you look at the success stories of publishers who have really invested in paid content and generated digital subscribers, for most of them, the goal they’re chasing is the number of subscribers they need not to be dependent on print—and that’s not too far off for quite a few of them.

We already know that a mix of digital subscriptions and advertising can support the cost of a newsroom, though maybe not as large as it was in print’s heyday.

Do you think local publishers in general really understand the significance of the proposition that they have to provide news that helps people live better lives—beyond lip service?

Some understand it fully and believe it fully, and some are still getting to that point. One of the companies I’ve worked with knew their business depended on how much consumer revenue they could get. That had been their strategy for several years. But when they looked at what their newsrooms and publishers were incentivized to do, it was all about pageviews.

The key performance indicator of the company was the opposite of what the people in the newsroom were being told to judge the content they produced. Being incentivized around pageviews is not the same as being incentivized around subscription acquisition or value to subscribers.

Will lagging publishers and newsrooms catch up fast enough?

The short answer is yes. What I’ve seen in the past year to 18 months is that a lot of organizations, out of necessity, have been coming to terms with the need to move faster. You’ve seen a lot of the big newspaper companies, in particular, put their focus on consumer revenue. And digital subscriptions are the hot topic at industry conferences, events and accelerators for that reason. A number of the largest newspaper chains and independent publishers are having the same conversations where the question is, “What does success look like for our content?” and how to align that with the success of their business.

A key metric for a local publisher in acquiring subscriptions is the “stop” rate for metered content. What is that and why is it important?

The stop rate is the percentage of readers who hit their limit of free articles—and have to subscribe to read more. Under that model, the stop rate is a measure of how many readers were engaged enough to be stopped at the limit—say, five articles for that month.

There are two ways to increase this number. One is to make the meter or access rules tighter—maybe three or even one article that’s free. The second is to get people more engaged with your content. Then, you’re no longer looking just at generating more pageviews—you’re looking at engagement and a sense of value among your readers. Readers who go to the full five free articles a month are your hot prospects for digital subscription sales.

If a potential subscriber, Sam, has been stopped at five free articles in a month, what does the publisher do to convert Sam to subscribing?

It’s basically a combination of marketing tactics. One thing we’ve seen again and again is that if Sam is stopped in, say, mid-September at his free article limit, that doesn’t mean he won’t come back in October for more free articles. The second thing is that if Sam keeps coming back in future months, your likelihood of getting Sam to subscribe is pretty solid. But you have to make an offer to Sam and tell him why he should subscribe.

So, you don’t give up on Sam because he was stopped?

Definitely not. Being stopped at five articles should not be the only time that Sam hears from you. He should get an email from you. He’s seen you advertise on Facebook and Google and other places: “We’ve got this great subscription product, it’s very valuable, and you can try it at for a low introductory price.”

Do most publishers have data showing them exactly how many of their free readers were stopped?

Yes, but they may or may not know their identity. They may know that “user 8702” was stopped on Sept. 15, and they can send them another message in two weeks or whenever they want. But they could do a lot more marketing-wise if they knew the stopped readers’ identities.

Could publishers set up a system that would capture the identity of their free users?

Yes, but the tradeoff is that you would need to require the user to be logged in and authenticated to view content, and that creates friction that is a barrier for the user.

What’s the solution?

To get reader identities, many publishers are investing in great newsletters and other features where email addresses are given voluntarily. Right now, the most effective marketing channel to acquire new subscribers is email marketing to reach newsletter members at the right time.

At the beginning of the digital era, most local news publishers devoted major space to comments from their readers. But then reader comments mostly migrated to the social platforms, like Facebook and Reddit. As part of their strategy to convert readers to subscriptions, should local publishers revisit featuring user comments?

Someone should test that for real. If you could create a great comment space, with moderation and topics that are relevant and interesting, I can imagine that having a potential for reader conversion. But publishers need to figure out what their unique value could be in convening this kind of conversation space—otherwise, users will stay on the platforms they’re using for commenting.

You should start by asking, “How much value does that provide to readers? How much will it contribute to their subscribing or staying subscribed?” I haven’t seen enough publishers testing these propositions.

At the end of your report on subscription revenue, you talk about retention of subscribers after they sign up. What did you discover?

It’s an issue that too many publishers start thinking about too late. Their first goal is: acquire, acquire, acquire. But you may acquire subscribers at the expense of retention in the long run.

Retention should be a big part of local publishers’ subscription business because getting more subscribers becomes harder and harder over time. Thankfully, retention and acquisition are driven by the same factors—the quality of the editorial content and reader engagement.

What’s the desirable conversion rate?

It is 1% to 2% per month among readers who get an offer.

Could it conceivably be higher, like, 3% or 4% monthly?

Absolutely. But you have to look at your three most important metrics—the reader stop rate, the reader conversion rate, and the retention rate. You can look at them individually, but they’re really a system. If you’re stop rate is too low, you could have a 20% conversion rate and it wouldn’t produce very many subscription sales. Or you could have a high stop rate, and a low conversion rate, and still be growing your business. All three metrics interplay, and no matter how many subscribers you generate, it’s all for nothing if you can’t retain them.

A final question—with local news publishers now emphasizing subscription conversion so strategically, is there still room for ad initiatives like the one Nucleus Marketing Solutions is now mounting with its 170 newspapers and their 150 million readers?

Absolutely. If you look through publishing history, there are very few examples of thriving newsrooms that depended solely on ad revenue. But there are also very few examples that depended solely on subscription revenue. Most news businesses, like those with Nucleus, have a mixture of consumer and advertising revenue to support great journalism.

Tom Grubisich (@TomGrubisich) has written “The New News” column for Street Fight since 2011. He is also working on a book about the history, present, and future of Charleston, S.C.