Notes from the Edge of the Media Industry

We joined some of our clients in news media publishing at the Mather Symposium in Atlanta. We uncovered worthwhile insights about subscription growth, the next era of the news media business, and implications for advertisers who rely on media investments for new customer acquisition. 

The conference convened an international spectrum of news media publishers with a palpable sense of anxiety about the future of their industry. Overall, the conversations largely pointed to tactics that would extract maximum revenue from existing subscribers for as long as possible while grappling with an increasingly outdated model of search and social sourced "flyby" traffic monetization. Relatively fewer conversations focused on navigating a future with intentional audiences and creating more value with a product people really want to pay for, albeit with smaller traffic numbers.

Throughout the days in Atlanta we were constantly thinking about what recurring revenue products in other industries can learn from news media, and what news media publishers can learn from others. Our view across product categories and through the lens of repeat customers (audiences, subscribers, members, etc) is all about looking for the asymmetric opportunities that come from the successes of adjacent customer experiences. What consumers come to expect from one subscription product is often the result of their experiences with another.

Here's what we’ve been thinking about:

💁🏼‍♀️ "News-apathetic" and "news-avoiders" are a mischaracterization.

Younger generations of news audiences have been harder to attract and engage, presumably because they're less interested in the mostly negative and divisive content the news gravitates towards. Recent research reveals that these audiences are in-fact seeking news in other channels -- news seeking on TikTok is increasing amongst this demo as Meta and Google increasingly suppress core components of news. What the next generation of news consumers want is a better consumption experience and a calls-to-action. Most are not surprised by this fact when they stop to consider that the news product experience has been largely unchanged for a decade or more.
Read more from Neiman Lab

“What recurring revenue products in other industries can learn from news media, and what news media publishers can learn from others.”

🤖 AI for newsroom efficiency is the opposite of what's necessary right now.

Of course AI found its way into nearly every conversation, almost exclusively in the context of newsroom efficiency -- how can machines produce more/better/faster than journalists and what are the implications of extracting value there. This is a huge red flag and frankly, the wrong perspective for creating value. Rather than trying to produce the current product at lesser cost, we see the audience's experience with AI as a significant opportunity for experimentation at the moment. Asking questions like how might we create more value for the audience? What AI interfaces might they be willing to pay more for as a feature? What can be created on-top of human journalism to make it more engaging or even remarkable? Partnering newsrooms with AI to a superhuman collaboration without the journalists fearing eventual replacement seems like a more sustainable path, one that retains the unique proposition of the publication, and (re)builds trust with the public - a critical role of the news media right now.

🤔 News has what product companies need, and lacks the product thinking for innovation.

Most consumer product companies invest heavily in renting/reaching an audience in an effort to sell their product. So they carefully measure the total addressable audiences (TAM), identify the Ideal Customer Profile (ICP), and optimize with a Jobs-to-be-done (JTBD) approach to innovation and growth down a fairly narrow corridor of positioning. Meanwhile news media own an existing audience and have numerous complimentary products and revenue streams (ads, subscriptions, events, commerce, etc) but have yet to capitalize on the TAM (subscriber penetration in most markets is around 2%), don't fully understand their ICP (is it advertisers or the audiences? also, see above point about the next gen) and isn't thinking long term about building experiences that people can "hire" to complete their "jobs". There is a critical necessity to bridge this gap for news media to thrive in the next era. 
Read more from Lewis, Hermida, and Lorenzo

🤑 Total revenue optimization isn't viable… yet.

CLV is widely measured by the amount of money a customer (or segment avg) spends across all products and points of sale within a company. Customer accounts make this relatively easy for modern consumer product companies to track and adapt in ways that make their offerings worth more to their consumers - optimizing consumer spend where and when they feel like the product is worth more. In news media, there's few examples of revenue lines being tied together at the point of the consumer, though the consumer is indeed paying with their attention to ads, and with their wallet to subscriptions, and more. When accounting infrastructure is connected at the customer level, another world of opportunity exists to let customers show what the product is worth to them. 
Read more from Jack Marshall

🚢 "Rearranging the deck chairs"

We heard this phrase a few times. In lieu of long-term strategies and audience-first prioritization, much effort is still being placed on tweaks and trends suited to the current traffic monetization era that's quickly fading away. Some suggested that the industry needs to be realistic about the size of their audience, flyby traffic doesn't count, and start building things people are willing to pay for. This evolution has big implications for advertisers, potentially representing great opportunities for high-quality audiences worthy of higher CPM pricing, as long as they can overcome current concerns with the news context.
Read more from Laura Krantz McNeill

🐄 Pricing strategy to milk the loyal

A proud moment for some was the demonstration of subscriber revenue optimization through price-hiking those subscribers most loyal and least likely to churn. Fair game, though it feels a bit anti-customer if we're being honest. Because we can, does it mean we should? We're left wondering, how might we reward the loyal consumers for their long-term commitment and higher CLV such that we find and foster more like them?

🐪 ARPU vs Audience Size

In news media the "Cyclone" strategy of low intro rates that eventually increase is a common trait of the recently fast growing publications. It's a tactic built in and for the age of traffic monetization. It accepts as law, relatively high churn (~4% monthly, ~45% annually) and low ARPU as the best growth strategy. And yet it ignores the fact that most of these publishers are still struggling to make ends meet for a sustainable future. Growth and sustainability can be at odds in a recurring revenue business model. We have our doubts that this tactic will continue to drive growth into the next era.
Read more from INMA

📉 Expectations of an election cycle traffic bump are mixed, and after that it's bad news.

Typically campaign ads are good for the media industry, injecting more dollars into the market, but that also makes the market more expensive for evergreen advertisers. Interest in election coverage appears weak so far because of the repeat nominees, coupled with the traffic collapse, so a softer ad market should allow evergreen advertisers to maintain relatively stable efficiencies through the end of the year. In early '25 however, the advertising revenue opportunity amongst online publishers is going to change dramatically as AI, new traffic patterns, and cookie deprecation all come to bear their weight on the market.
Read more from MSG at The Press Gazette