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Harnessing the Power of the Subscription Economy: Lessons from Digital Media's Leading Innovators

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Subscription-based services are, no doubt, a defining feature of the digital era. For the magazine industry, the subscription revenue model is nothing new.

Even so, digital subscriptions bear little resemblance to its print predecessor. The effects were far-reaching. To survive, magazines needed to rethink everything about media consumption. Recent years dedicated to experimentation and collaboration are paying off, as magazines reach breakthrough stages in digital maturity.

CDS Global's Beth Roy and Folio:'s Tony Silber take a look at four industry leaders whose commitment to innovation helped pave the way for media's digital subscription success. Roy and Silber present valuable insights from ESPN, Hearst Magazines, Meredith and August Home.

Grab our related white paper:
http://slideshare.net/cdsglobalinc/magazines-and-the-new-subscription-economy

Connect on Twitter:
Beth Roy, CCO, CDS Global - @BethAnnRoy
Tony Silber, VP of Content, Folio: - @TonySilber

On the Web:
http://cds-global.com
http://foliomag.com

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Harnessing the Power of the Subscription Economy: Lessons from Digital Media's Leading Innovators

  1. 1. #CDSGlobalSummit @CDSGlobal Harnessing the Power of the Subscription Economy Tony Silber VP/Content, Folio:/min, @tonysilber Beth Roy CCO, CDS Global, @BethAnnRoy #CDSGlobalSummit @CDSGlobal
  2. 2. Pivot to Success 1 • The digital revolution, the increase of free content available and the proliferation of mobile/tablet devices. • These forces of economic disruption have required the print-magazine industry to adapt, on the fly, amid predictions of imminent decline.
  3. 3. Pivot to Success 2 • Suddenly, the world is zeroing in on subscriptions, a model that media companies have used forever.
  4. 4. Pivot to Success 3 In “Building a Strategy for the Subscription Economy,” Gartner analyst Chris Fletcher defined it as a market reaction to a growing range of technology products that can be delivered digitally to devices ranging from tablets to smartphones and mobile devices.”
  5. 5. Pivot to Success 4 And a model that never had much relevance outside the print- media industry is finding favor as a smarter way to sell a whole range of products, including movies, music, books, software and even clothing and food.
  6. 6. Pivot to Success 5 By 2015, Gartner predicts, more than a third of Global 2000 companies selling non-media digital products will be generating incremental revenue through subscription-based services and revenue models, on the order of 5 to 10 percent.
  7. 7. Pivot to Success 6 • For publishers, a retooling opportunity is at hand. • Today, a subscription must be about more than dutifully delivering an issue. • And because publishers (and all businesses) often struggle with how to think differently, we’ve compiled four case studies that represent the state of the art in magazine-company creativity in the subscription economy.
  8. 8. CDS Global Positioned to Pivot 7 CDS Global’s eHub solution named an Emerging and Niche Player in the December, 2012 Forrester Research Inc., report: “Market Overview: Subscription And Recurring Billing Solutions 2012” by Peter Sheldon, Senior Analyst
  9. 9. CDS Global Success Stories 8
  10. 10. Success Story 1 - Meredith Meredith Converts a Thousand Points of Data Into a Subscription Powerhouse 9 “Instead of presenting product offers based on historic models and views of customers, we’re now integrating active behaviors and actions that are being taken in real time on our sites.” —Janet Donnelly, Meredith
  11. 11. Success Story 1 - Meredith Meredith Converts a Thousand Points of Data Into a Subscription Powerhouse 10 • Real-time data allows them to be more dynamic and responsive, giving them the added flexibility in bundling and pricing. • The company is paying close attention to what channels subscribers use to engage with online products and tailoring content to the channel. • Data, more of it and better crunched, lies at the heart of the Meredith effort.
  12. 12. Success Story 1 - Meredith Meredith Converts a Thousand Points of Data Into a Subscription Powerhouse 11 Traditional model of customer retention: Flood a subscriber with one-size-fits-all offers to renew. New model: “If we know that someone signed up for a food newsletter, we know they have a food affinity, and if they’re on our website through a mobile browser, we know they have a digital propensity. So we think maybe we should present an Every Day With Rachel Ray digital edition.”
  13. 13. Success Story 1 - Meredith Meredith Converts a Thousand Points of Data Into a Subscription Powerhouse 12 • Meredith analysts comb through real-time information generated from watching how the audience engages with the brand digitally. • Information gleaned from 800 distinct data points–up from 400 five years ago–is dissected to help stitch together highly targeted and personalized offers. 12
  14. 14. Success Story 1 - Meredith Meredith Converts a Thousand Points of Data Into a Subscription Powerhouse 13 • The result can mean building out a title to reflect what subscribers value. Allrecipes.com, long a digital-only title, now has a print version. • Launched last year with a 500,000 ratebase, it is expected to hit 1.1 million with the February 2015 issue. 13
  15. 15. Success Story 2 - ESPN ESPN Leverages “TV Everywhere” Model With Mobile Subscription Offering 14 “The subscription model is building more and more steam in the television/media industry, from both a financial and critical point of view.” “Look at the lightning success of streaming services from Netflix, Hulu Plus, and others to see that companies are eyeing this model, which is impervious to the cycles of the advertising market.” —Robbie Caploe, Editorial Director of Cynopsis Media
  16. 16. Success Story 2 - ESPN ESPN Leverages “TV Everywhere” Model With Mobile Subscription Offering • Introduced WatchESPN in 2011. • Targets the growing ranks of those who want to access programming via mobile devices. • Available to credentialed subscribers to cable systems that carry ESPN. • Key is real-time authentication • Delivers streaming on-demand video of live programming and events that air on more than a dozen channels on the ESPN broadcast platform. 15
  17. 17. Success Story 2 - ESPN ESPN Leverages “TV Everywhere” Model With Mobile Subscription Offering 16 The app model could help stem the flow of subscribers from the network and pay-TV providers. According to Nielsen, between September 2011 and September 2013, ESPN shed some 1.5 million subscribers who either cancelled pay-TV or switched to packages that didn’t carry the network. That’s noteworthy, but still only a fraction of the 98-million homes that have access to ESPN.
  18. 18. Success Story 2 - ESPN ESPN Leverages “TV Everywhere” Model With Mobile Subscription Offering 17 • The WatchESPN initiative could be interpreted as a desire to on the part of ESPN to position itself for a future that will have a very different content distribution model. • For now, though, the network insists it’s about broadening viewer access to ESPN content through existing distribution channels.
  19. 19. Success Story 3 - Hearst Successfully Increasing a Subscription Price 18 “We think this will provide a good example of how you take a highly engaged audience and serve them on a dimension that goes beyond just the magazine, and in a way that’s economically beneficial.” —John Loughlin, Hearst EVP
  20. 20. Success Story 3 - Hearst Successfully Increasing a Subscription Price 19 • O, the Oprah Magazine, has a fiercely loyal community of 2.4 million. • So how do you leverage that community beyond a standard subscription, and deliver enhanced value too? • Hearst’s solution: “O’s Circle of Friends,” a three-tiered service offering a much more complete experience with the brand.
  21. 21. Success Story 3 - Hearst Successfully Increasing a Subscription Price 20 Hearst sees the program attracting 100,000 people over the course of three years. As of early August, some 1,000 had signed up within the first 10 days, and most were at the premier level.
  22. 22. Success Story 3 - Hearst Successfully Increasing a Subscription Price 21 • Tier 1: Basic tier add-ons span full digital edition access, a gift subscription, advance notice of O special events, an e-newsletter and easy sweepstakes entry. • Tier 2: adds in a second gift subscription and a keepsake box of luxury beauty items. • Tier 3: The $199 level adds in a personalized birthday card from Oprah, a surprise gift from the O List, and “test-and-keep” opportunities.
  23. 23. Success Story 4 – August Home Publishing One Company’s Strategy to Boost Subscriptions: Raise the Price 22 “We had projected about 32 percent of a group in our early renewal file would go for this, and we got about 64 percent. The response was far better than we ever expected.” –Don Peschke, CEO
  24. 24. Success Story 4 – August Home Publishing One Company’s Strategy to Boost Subscriptions: Raise the Price 23 • Less-than-projected direct mail performance combined with the need to increase revenue- per-subscription in January led August Home Publishing to place a counterintuitive bet: that a price increase would fix the problem. • The company decided the two titles’ subscription revenue stream couldn’t be shored up by lowering the price and waiting for the numbers to improve.
  25. 25. Success Story 4 – August Home Publishing One Company’s Strategy to Boost Subscriptions: Raise the Price 24 • The lure for getting Cuisine and Garden Gate subscribers to pay $29—up from $24 and the only choice? • A special edition available only to renewing subscribers. • A bi-monthly magazine with heavier paper stock • Perfect-binding instead of saddle stitching • 16-page insert with special editorial content
  26. 26. Success Story 4 – August Home Publishing One Company’s Strategy to Boost Subscriptions: Raise the Price 25 • The results? Two-year renewals surged well beyond normal, accounting for 80 percent of the new subscriptions sold in the first round of renewal offers.
  27. 27. 26 Takeaways and Action Items For the Subscription Economy
  28. 28. Takeaways and Action Items for the Subscription Economy 1. Think more like a brand. Publishers should build out an array of assets that can be offered as part of a total brand experience. Merchandise offers, tickets to events, value-added content packages and other perks can be added to subscriptions to enhance their value to the subscriber. 2. Gather more and better data. Data is becoming the backbone of better efforts to slice and dice subscribers and understand their behaviors. The tools to understand exactly how individual subscribers are consuming content and engaging with the brand are now available. And it’s essential to crafting targeted renewal and subscription enhancement offers. 27
  29. 29. Takeaways and Action Items for the Subscription Economy 3. Single View of Customer Allowing consumers an easy-to-access single view of all of their purchases is critical. 4. Be more proactive. By increasing the frequency and quality of communications with subscribers, publishers can position themselves to keep customers in the fold and broadening their engagement with the brand. 5. Transition from paper billing to plastic with recurring billing. This is critical for your success. 28
  30. 30. #CDSGlobalSummit @CDSGlobal ?QUESTIONS
  31. 31. #CDSGlobalSummit @CDSGlobal THANK YOU

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