Even as the Trump Subscriber Surge slows some, more and more publishers are asking themselves a renewed question: Can't we figure out a way to get more revenue from digital readers?
On Thursday, Conde Nast all but acknowledged that Vanity Fair would join The New Yorker as just Conde Nast's second publication to charge for digital access. Within six months, the Graydon Carter-edited Vanity Fair will try to cash in on the Trump Bump, that post-election phenomenon that matured into a subscriber surge in the first quarter of 2017. ["Trump Bump Grows Into Subscription Surge -- and Not Just for the New York Times"]
For Conde, the Vanity Fair plan should be seen as a wider company strategy move. Conde is exploring meters for titles beyond The New Yorker and Vanity Fair, sources tell me.
In fact, it was Wired's newly appointed editor-in-chief Nick Thompson who was instrumental in the New Yorker's digital pay progress, as he served as the magazine's digital editor before recently taking on the Wired job. Wired itself is a good candidate for a paywall strategy. The key: do Conde's analytics and consumer marketing staff believe they can convert a sufficient number of any title's digital audience to justify the work of a pay system?
It is The New Yorker's experience that has lit this fuse, selling more than a third of a million new subscriptions since Election Day.
Consider one number that tells you -- in short form -- everything you need to know about the strategy. Today, readers contribute 55% of all The New Yorker's revenue, helping pay for that staff of more than 200. For decades, however, magazines have relied on lower-cost subscriptions, and then dwindling higher-priced newsstand sales, for no more than a combined quarter to a third of overall income.
Importantly, The New Yorker understood the peril of Silicon Valley's misguided "information wants to be free" mantra early on. In 2001, David Remnick, three years after he became top editor, instituted a paywall when newyorker.com launched. It didn't go metered -- that wonderful Financial Times-inspired sample-but-don't-freeload model -- until 2014, but has since spurred the rapid increase in digital subscribers.
Editor's pick: Originally published April 14, 2017.
The New Yorker's 55% number serves as the linchpin in what I've long identified as the vital crossover strategy for print-based news media. Make reader revenue -- inherently more stable and easier to grow if nurtured with surpassing journalism -- a bigger contributor than ad revenue, and the long transformation to a sustainable digital future becomes reachable. The New Yorker crossed over in 2014. Today, both the New York Times and the Financial Times have reached the milestone of 60% reader revenue, or are very close to it.
Today, The New Yorker can claim 1.1 million combined print and digital subscribers. That's the highest number in its 92-year-history. It's fairly easy to correlate its surge -- amounting to 360,000 new subscriptions since Election Day, Conde Nast told me Thursday, as it freshly updated its public data -- to Donald Trump's election. In January 2017, The New Yorker sold 100,000 subscriptions, its biggest single sales month in history -- and the biggest ever for any Conde Nast magazine.
"New subscriptions have remained strong in February and March, up 295% and 194%, respectively, compared to the same period a year ago," says the company. I expected some decline, the expected slowing of the surge, and the company reports "some decline from February to March, but we are still tracking well ahead of 2016."
Yet, it was not simply his election that generated what was 222% growth, year over year.
It was The New Yorker's response to it. Those fast-growing print publications that have prominently risen to the times -- led by The New Yorker, the New York Times, the Washington Post, the Atlantic and Slate -- have profited. In fact, all ramped up coverage of the nation's unprecedented politics in the summer and fall. They saw subscription increases throughout the year, but the biggest bump happened post-election. In intuitively understanding the future value of aggressive national news coverage, readers have more widely opened their wallets.
It's no accident that Vanity Fair pushes into that class. In a classic Trump tweet, posted on Dec. 15, the President-elect declared the magazine " Way down, big trouble, dead!" and gave his short-form review of the editor: "Carter, no talent, will be out!"
In multiple ways -- from scornful reviews of Trump Grill ("Trump Grill could be the worst restaurant in America") to its subscription pitch ("The magazine Trump doesn't want you to read"), Vanity Fair uses the foil of Trump to sell subscriptions. It may be less subtle than the newly-adopted Washington Post masthead motto, "Democracy Dies in Darkness", which one top U.S. editor has suggested may be more appropriate for the next Batman sequel than for a newspaper, but it should be effective.
Building A Working Wall Isn't Easy
If there is a fun-and-games aspect to the push, it's also a deadly serious one. For a half-decade, news publishers have marched awkwardly toward increasing their reliance on reader revenue, with a relative few highest-quality, largely national publications finding in it a lifeline. Their formula: sufficient high-quality, differentiated news and opinion, delivered well digitally.
While more than half of the country's 1,375 daily newspapers have erected largely metered (allowing free sampling of five to ten articles a month) paywalls in the last half-dozen years, most have seen relatively little financial benefit from signing up new digital-only subscribers.
Instead, the local dailies have seen some limited success in getting print subscribers to pay for "all-access", print plus digital, at a higher price. It is the national publications (and a few select regionals such as the Boston Globe, Minneapolis Star Tribune, and L.A. Times) that have sold the most digital-only subscriptions. (A bonus about most digital-only subs: Younger-than-baby boomer readers buy them.)
The New York Times -- with more than 1.3 million digital-only subscribers -- leads the pack worldwide; expect a glowing Times' first quarter report when CEO Mark Thompson announces financials on May 3. Two weeks ago, manwhile, The FT announced that its own digital subscriptions had grown 14% year over year, up to a record 846,000.
What kind of challenge does Conde Nast face as it moves to expand on its New Yorker success story?
Vanity Fair can claim a larger U.S. digital audience than The New Yorker, for starters. In the below chart, provided by Comscore, Vanity Fair doubled its readership year-over year, to almost 19 million.
U.S. Multi-Platform Unique Visitors (000)
Source: Comscore US Multiplatform Survey
That outsized growth, far exceeding the good growth of The New Yorker (15%) and of Wired (14%) should provide fertile ground for selling digital subscriptions. Further, Vanity Fair's larger audience, 25% greater than The New Yorker, portends some success.
It's impossible, though, to equate the titles, or compare either to Wired. The New Yorker enjoys a one-of-a-kind ranking in reader esteem; that intangible undoubtedly drives that digital reader inclination to subscribe.
The New Yorker's paywall currently allows six free article views a month, with videos unlimited. That's the sweet spot it's found. In the audience trade, that's called propensity modeling. Allow more free page views and a publisher reduces the number of readers who hit the "paywall", and thus likely the number of new subscribers. Allow fewer page views, and publishers may cut off too much traffic, taking a hit to their ad revenue. Publishers allow from as little as one free "metered" view to 20 per month.
Consequently, Vanity Fair will have to play with its metered number. Within the industry, it's understood that no more than three percent of all those coming to any given metered news/magazine site in any given month will agree to pay.
However, that one to three percent of total audience can make this new reader revenue stream valuable.
Price? Or Value?
Further, it's not just the number of digital subscribers, of course, that's important, but the price they pay today -- or tomorrow.
The New Yorker recently priced up yet again in 2016, to $99 a year for a renewal. Buyers can opt for digital-only or print-only for $89.99, or pay the $10 extra for both. The majority of new subs take the bundle -- at the same $99 price point. As of the end of last year, The New Yorker reported 107,149 digital subscribers and 953,397 print subscribers. That print number, though, includes those who take the print-digital bundles. In fact, says Conde Nast, the majority of print subscribers pay that little bit extra for "all-access."
The New Yorker experience matches one encouraging learning among those most successful with paywalls: It's been more about value than price among the early digital-only subscribers. They can be priced up, with relatively little direct churn -- if the content creates habit.
And, price is what The New Yorker has done, with a speed I seldom see in the industry.
In the past five years, it has increased its subscription price by 64%. When it priced up last year, it moved to $99 from $69.99. (Introductory subs go for a dollar a week for 12 weeks).
Such pricing, with good results, parallels the newspaper experience of The Boston Globe. The Globe has told me it's gotten little pushback to its major increase to $1 a day from about 60 cents a day.
How many more magazine and news publishers can start restricting digital access and get new reader revenue? Time Inc., Hearst and Conde have each made their forays. They had hoped the 2010 iPad would cement a paid digital magazine reading behavior, but that hope flamed and then largely flickered. Today, it looks like magazine pushes will be quite selective, though many publishers noodle "membership", a paywall-less reader revenue approach that offers payers "premium" content or experiences. In a world of now infinite free content, readers set a high bar, demanding both a high level of excellence and of exclusivity.
If Donald Trump proves one foil -- and one of the best examples of accidental lead generation - the furor over fake news aids reader revenue roll-outs as well.
Says David Remnick, "There is this thing in this world called fake news. It's not new. The technology of its spread is new. Conspiracy theory and disinformation and out and out bullshit were not invented by the internet. And they weren't invented by Russian intelligence or American intelligence or the Trump campaign or politics. All of this has been around for a very long time. It's just been deeply, deeply accelerated by all the factors that we know." That's the negative.
The positive for the news businesses? Readers see value, and want to support, publishers whose work serves as an authentic antidote to phony. "I think there's a reaction to that that is emboldening and encouraging," says Remnick. And, at least at this point, mildly enriching.
Watch More from TheStreet Columnist Ken Doctor:
- Ken Doctor Explains Why Univision Buying Gawker is a Great Thing
- Paywall Economics can Make or Break a Publication
- Is Donald Trump Making American News Media Great Again?
- Ken Doctor Talks Univision, Gawker and Ecommerce's Return to Publishing
- Ken Doctor Reveals the Trump Bump in Media
- Ken Doctor Thinks the Subscription Model is Back!
- Ken Doctor Talks Media and Gawker's Ecommerce
- Gawker's Secret Sauce Was Its Affiliate Channels, Says Ken Doctor