Dinosaurs and Digerati: The Way Forward for Subscription-Based News Apps

The Internet offers news the way trees offer pollen. In a supersaturated market, what chance is there that anyone will pay, and pay on a regular basis, for news delivered by app?

Illutration representing a subscription news mobile app with the title trend report

Source: Bigstock and Subscription Insider

Let’s get right to it: The print news business is slowly dying, and mobile apps are not an eleventh-hour cure-all. There’s been a lot of research on this very question, and there is not a lot of wiggle room. Here’s an overview of the results, and we’ll get to the wiggle room, such as it is, later.

The market for mobile apps is huge and rising. News publishers are increasingly creating apps to deliver content. Here’s total smartphone use as a percent of total U.S. population:

(Source: Statista)

That’s 223 million Americans this year, and, forecasting out, 264 million by 2021. And what percent of those smartphone users are installing mobile apps?

(Source: eMarketer via Statista)

That’s a lot of users installing apps. And what kinds of apps are those smartphone users enjoying?

(Source: Verto Analytics via Statista)

That’s from a May 2017 report, and look! The news and weather category is in seventh place, with 64.3% of users engaging with weather and news apps. This is a ray of hope for online news producers. I wonder if any of those apps are especially popular?

(Source: comScore via Statista)

Well, the 20th most popular app is The Weather Channel. Which is certainly “news content,” after a fashion, albeit supplied via free download. Still, the infographics above are not discouraging. The total smartphone/tablet market is huge, use of apps is widespread, and news and weather apps are popular.

How about paying the bills? Let’s shrink the market from those who download and use apps to those who might be willing to pay. Only 14% of app developers are using subscription-based business models to keep the lights on, and that’s for all apps, not just news.

(Source: VisionMobile via Statista)

So 14% of app developers are looking to make money through subscriptions. More to the point, how many actual smartphone users are paying to subscribe to news apps in 2017?

(Source Reynolds Journalism Institute via Statista)

Long story short: About 12% of smartphone users are willing to pay for news app subscriptions. That is a crucial datum, as it represents the real paying market that will be a lifeline to online news publishers – to some online news publishers. We’ll come back to this lower down.

But first, how do people feel about paying for their news? Several researchers have asked that question, and the results may discourage the journalists and news junkies out there. Researchers at Meclabs asked whether respondents would be willing to pay for news (in a few different ways):

(Source: Meclabs; YouGov via Statista)

The big blue bars are the large majority of people who would never pay for news, no how, no way. Only about 5% to 6% were very likely to subscribe to news, even when you throw in all the digital archives and enable micropayments and loyalty points. Another 4% to 5% were somewhat likely. That 9% to 11% of app users has a special name among online subscription-based news publishers – “my customer base.”

The same research asked respondents to agree or disagree with a couple negative statements about subscription digital news:

(Source: Meclabs; YouGov via Statista)

That’s just 7% to 13% who can see the value in paying for news. As for the great majority, who can blame them? It’s easy to get what you want online for free, from Apple’s standard-issue iPhone News App to Google News and, yes, The Weather Channel. Among the tech savvy crowd (and the intersection between “news junkies” and “tech savvy” is a pretty big set), you can rig your Twitter feeds to subscribe for free to your mayor and school board members, state legislators, reporters covering local and statewide news, nonprofits, pundits, local retailers, and more – all of them together working for free to replace the local newspaper.

When Hurricane Sandy took out our electricity for a week and punched a hole in our roof, it was my wife – a journalist – who used Twitter (and our car charger) to keep us entirely up to date with all that we needed to know. For breaking hyperlocal news, it’s hard to imagine paying for a service that would do less and cost more – more than zero!

But as we saw above, a good ballpark of a smidge over 10% of smartphone users just might be willing to subscribe to a news app. And if you are not trying to be Wal-Mart or Amazon, there’s a reasonable and profitable business model that caters to a part of the 10% of the 250 Americans who have mobile devices. This is the wiggle room I mentioned at the top of this piece. Sure, the daily newspaper is (probably) going away, and the reach of the daily newspaper is gone, too. But news apps do have a way forward.

A sign that there is actually money to be made: Amazon’s long-simmering service to make it super-easy for anyone to jump into the subscription content business got an official launch in April. Called “Subscribe with Amazon,” the service offers a one-stop location that customers can use to manage a wide range of subscriptions, including media subscriptions.

According to Sarah Perez at TechCrunch,

  • Many of the digital subscriptions available on the marketplace were things Amazon was already selling – like news and magazine subscriptions … It also offers consumers a single destination where those subscriptions can be managed via an online dashboard. … Amazon is also selling subscriptions to publications, like The Wall Street Journal, Chicago Tribune, The New Yorker and Consumer Reports. Others live at launch include Texture, LegalZoom, MileIQ and Tawkify.

So what does inspire a tech-savvy news junky to actually pay for news online? There are three scenarios that make sense: excellence, community, and valuable content.

Take a look at these two relatively old infographics on news app popularity:

Illutration representing a subscription news mobile app with the title trend report

Source: Bigstock and Subscription Insider

0)]

(Source: StepLeader via Statista)

Illutration representing a subscription news mobile app with the title trend report

Source: Bigstock and Subscription Insider

1)]

(Source: Pew Research via Statista)

With a caveat for 4-year-old data, after tossing out the free news providers, we see that there are subscription-based news apps are not only popular but also hit the high mark as the best general news sources in the business: The New York Times, Wall Street Journal, and Washington Post. Even with the glut of free news on the Internet, there are a lot of people willing to pay good money for the very best news from the most reliable sources. That’s the top of the excellence ladder, and there’s not much room at the top.

There’s no question, however, that reading news on native apps is transforming journalism. According to Ken Doctor at NiemanLab:

  • As some of news brands’ most loyal (and most paying) readers pile up minutes on iOS and Android apps, we may see the native app join with the open web as one-two punch helping define the next generation of the news business.

An academic researcher named Merja Myllylahti confirmed the advantage of higher quality in an analysis of two news publishers, The New York Times and Fairfax Media, one of the largest media companies in Australia and New Zealand. In a blog post about her research paper, Myllylahti wrote:

  • My recent research focused on the digital strategies of Fairfax Media and The New York Times Co. While the two “journalism institutions” pursue different digital strategies, the outcomes for two newsrooms are somewhat different. The New York Times strategy is based on digital-only subscriptions, whereas Fairfax is betting on its digital property listing service (Domain). The main difference between the two is that while The New York Times continues to invest in its newsrooms and expand internationally (it has journalists filing stories from over 150 countries), Fairfax continues to chop newsroom jobs. It’s currently planning to cut 25% its newsroom staff from its Australian flagship papers to save $A30 million.

It’s a telling sign of the global consolidation of the digital news market that this New-Zealand-based researcher feels the most logical comparison point to the local (granted, large) newspaper is The New York Times. Competing with the New York Times, professional competence and run-of-the-mill excellence is probably not enough. In the shrunken global marketplace, general news coverage is going to be a hard sell online unless you have another angle. Two of those potential angles are (1) offering excellent quality news to a community, and (2) offering excellent quality news that is rare or unique to a devoted audience who really values it. Let’s look at those two approaches.

The line between “member-supported” news media and “subscription-based” news media is fading away, and that makes sense when one path towards sustainable news distribution is community-based. In its spring 2017 fund-raiser pitch, Hawai’i Public Radio erases that line:

  • Sustaining membership is like a subscription… the amount you choose is automatically deducted each month from your credit card or checking account.

One well-placed insider not only agrees but thinks that nonprofit broadcasters need to phase out government subsidies entirely and shift business models toward subscription. Howard Husock, a member of the Corporation for Public Broadcasting Board of Directors and a Barak Obama appointee, believes that local news broadcasters need to prioritize community-level support. When news consumers get their NPR and PBS content directly from NPR and PBS (presumably over the Internet), there’s no reason for local stations to redistribute that content again.

  • In a new era in which consumers can bypass the stations, it makes sense for local stations to keep the funds they raise themselves – and to use them to build what the nation needs today: strong producers of local content, especially local journalism. … The end of federal support for public media won’t put an end to the system. Instead, it will call for it to adapt and find its way in a new media era. Revisiting its model five decades after it was established is not too much to ask.

Writing for NiemanLab, Shan Wang makes the important point that while a community may be geographic, on the Internet, it is as likely to be a community of those with similar interests, passions, beliefs, and professional interests. Here’s a quote from the president of one such community, this one based around issues of justice, called The Marshall Project:

  • “There are a lot of ways to define ‘community.’ We know it can be built around geography. But there should also be a community of people who care about climate, a community of people who care about criminal justice.”

This entire article is really a must-read. For example, consider the point that serving a community does not always mean giving goodies and perks for every subscription tier. Rather, the important thing is to give members that sense of community that means they are paying — contributing — to a greater purpose.

  • The specific tiers of The Marshall Project membership program, and the benefits that come with being a regular reader-donor-member, are still being worked out, and could range from a members-only impact report newsletter, to early access to any events, to swag (though neither Payne nor Bogert sounded too enthusiastic about tote bags).

    “I don’t feel like we should just be in the business of quid pro quo. Let’s see this as a teaching and learning opportunity: That investigation you liked from us took our reporters almost a year and dozens of FOIAs,” Payne said. “Good journalism comes at a cost.”

The point here is not that community members subscribe for the tchotkes, but because they believe in the mission.

An excellent example of a digital news publisher transitioning to a subscription business model with a public broadcaster vibe is Talking Points Memo. Take a look at the recruitment screen that touts the benefits of its subscription offering, called Prime:

Illutration representing a subscription news mobile app with the title trend report

Source: Bigstock and Subscription Insider

2)]

TPM Publisher Josh Marshall has been blogging about his latest membership drive. His insights are worth a read:

Marshall is remarkably open about his plans and finances:

  • As recently as 2014, membership fees made up 6% of our total revenues. That percentage rose to 16% in 2015 and hit 27% in 2016. My goal is for it to hit 50% in 2017. That is a very ambitious goal. But I think we can meet it. We now have just under 20,000 subscribers and we are going to shoot for having 30,000 by the end of the calendar year.

He notes that the subscription model offers greater financial stability. And he understands the heart of it:

  • The publications who have a body of readers who truly value it, rather than just being one of many drive-by places on the web, will survive and find they’ll thrive in new ways.

The takeaway here is NOT that for-profit publishers should convert into nonprofits! Rather, learn from nonprofits who are turning listeners into regular paying customers – people who subscribe to news apps are more likely to continue to do so if they feel they are not just paying for information, but that they belong to a group of like-minded people who are contributing to something bigger than themselves. For-profit news publishers can foster that feeling by:

  • Issue advocacy, through editorial stances in reporting and op-eds.
  • Partnering with nonprofits, charities, and trade organizations.
  • Strong engagement in community building on social media.
  • Excellent customer support and responsive editorial engagement with subscribers.

But just as valuable as fostering a sense of community, offering information that is not easily available elsewhere is a winning business model for news app publishers, even in the age of the Internet. Whether it is a deep dive into sports or hard-to-find news for venture capitalists and investors or the inside track on Hollywood, those who need specialty information are willing to pay for it.

Insider Take

The number of general news brands that can survive on subscription is dwindling, and that’s more true for mobile-focused publishers than for print. Only the highest level of quality general news will survive the continuing shake-out, and when a business model includes competing with the likes of The New York Times and the BBC, a publisher needs more. Two hooks that can make the digital app subscription model work are: a community-orientation that rewards loyalty and passion, or a specialty-information orientation that offers rare, trusted, and authoritative news. 

Up Next

Register Now For Email Subscription News Updates!

Search this site

You May Be Interested in:

Log In

Join Subscription Insider!

Get unlimited access to info, strategy, how-to content, trends, training webinars, and 10 years of archives on growing a profitable subscription business. We cover the unique aspects of running a subscription business including compliance, payments, marketing, retention, market strategy and even choosing the right tech.

Already a Subscription Insider member? 

Access these premium-exclusive features

Monthly
(Normally $57)

Perfect To Try A Membership!
$ 35
  •  

Annually
(Normally $395)

$16.25 Per Month, Paid Annually
$ 195
  •  
POPULAR

Team
(10 Members)

Normally Five Members
$ 997
  •  

Interested in a team license? For up to 5 team members, order here.
Need more seats? Please contact us here.