Five on Friday: Subscription Practices, Paywalls and Postal Rates

Featuring the U.S. Postal Service, WarnerMedia, Reuters and the FTC

This week’s Five on Friday features postal rate increases that the News Media Alliance says could put some publishers out of business, and the Federal Trade Commission's desire to crack down on deceptive subscription practices, but doesn't have a plan in place. Also, we’ve got updates on WarnerMedia since the company announced its merger with Discovery, Inc., and Reuters’s postponement of its metered paywall. For those looking for a new challenge, we have top subscription job opportunities to share, a Five on Friday favorite!

News Media Alliance Says Postal Rate Increases Could Put Some Publishers Out of Business

Last week, the U.S. Postal Service (USPS) announced proposed increases to its postal rates that are as high as seven times the rate of inflation, in some cases, said the News Media Alliance. Because of these potential price hikes, the organization is concerned about the severe impact this will have on small publishers.

“This increase will have detrimental effects on small businesses, including small-market and rural newspapers that cannot afford the increased costs, particularly as they strive to recover from the economic impact of COVID-19,” said the News Media Alliance in a May 28, 20218 post.

“These excessive rates not only threaten publishers and newspapers throughout the country, but they are being introduced at one of the worst times for small businesses that are struggling to recover from the economic impact of the COVID-19 pandemic. The Alliance is deeply concerned that these rates will force small market, rural and minority-owned newspapers to cut back on distribution, leaving their communities less well-informed. We urge Congress to hit the pause button until a more up-to-date evaluation can be done on the need for and potential impact of these extreme rate increases,” said David Chavern, News Media Alliance President and CEO.

USPS said the proposed price increases are part of the organization’s “Delivering for America” 10-year plan for financial sustainability and service excellence. If the Postal Regulatory Commission approves the changes, the new pricing would go into effect August 29, 2021. The proposed prices are as follows:

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The News Media Alliance is concerned that a proposed price hike for postal rates could put some publishers out of business.
Table provided by U.S. Postal Service.

The average price increase for market-dominant mail like first-class mail would be 6.8%. USPS said the price increase would help make up for declining revenue for first-class mail. In the last 10 years, mail volume has decreased by 46 billion pieces, or 28%, and it continues to decline. First-class mail volume has decreased 32%, and single piece first-class mail volume, like letters, with stamps has dropped 47%.

“November’s PRC ruling allows the Postal Service higher rate authority in establishing prices for mailing services,” said Joseph Corbett, CFO and executive vice president, in the USPS’s May 28 announcement. “Aligning our prices for market-dominant products will allow us to grow revenue and help achieve financial sustainability to fulfill our universal service mission.”

WarnerMedia Updates: Name, Kilar’s Status and CNN+

In late May, AT&T announced its plans to spin off WarnerMedia which would then merge with Discovery in a deal worth $43 billion. Since we brought you that news, there have been a few new developments. Here is the latest news.

Company Name Announced

Earlier this week, David Zaslav, CEO of Discovery, announced the name of the company once the merger is complete: Warner Bros. Discovery.

“Warner Bros. Discovery will aspire to be the most innovative, exciting and fun place to tell stories in the world – that is what the company will be about.  We love the new company's name because it represents the combination of Warner Bros.' fabled hundred year legacy of creative, authentic storytelling and taking bold risks to bring the most amazing stories to life, with Discovery's global brand that has always stood brightly for integrity, innovation and inspiration,” Zaslav said in a June 1, 2021 news release.

Zaslav, who will lead the new combined company, added, “There are so many wonderful, creative and journalistic cultures that will make up the Warner Bros. Discovery family. We believe it will be the best and most exciting place in the world to tell big, important and impactful stories across any genre – and across any platform: film, television and streaming.”

Status of WarnerMedia CEO Jason Kilar

Kilar was the founding CEO of Hulu and a senior vice president at Amazon before joining WarnerMedia as CEO in May 2020. His status was unknown after the merger announcement. In fact, some say that Kilar wasn’t aware of the deal as it was being negotiated. Rumors were circulated that he would leave WarnerMedia following the announcement, but that is not the case. For now, Kilar is staying with the company, reports the Wall Street Journal.

“My plan and my focus is to remain here in my CEO role at WarnerMedia. I am not thinking right now about postmerger. There will be time to consider that topic in 2022,” Kilar said. “I believe we have unfinished business, and the work of the next year can and should be extremely fulfilling as the world continues to see what we are capable of doing.”

John Stankey, AT&T CEO, said in a statement, “Jason’s leadership and capabilities have been central to positioning WarnerMedia for renewed growth, and I am excited about what we will see during his second year at the helm.”

WarnerMedia to launch CNN streaming service

But wait, there’s more. Multiple media outlets have reported that WarnerMedia is going to start a new streaming service for CNN, which may use the not-so-creative moniker of CNN+. Though details have not been announced, Jeff Zucker, chairman of WarnerMedia News and Sports and CNN Worldwide revealed the news to staff a week. The service is expected to launch next year.

The initial “Warner Bros. Discovery” wordmark for the proposed company. Image courtesy of WarnerMedia.

Reuters Puts Proposed Paywall on Pause

Reuters was poised to launch a metered paywall for its news website, Reuters.com, on June 1, but a possible contract breach with financial date provider Refinitiv has caused Reuters to put things on hold for now. Refinitiv is Reuters’s biggest source of income, representing 50% of revenue. Refinitiv used to be part of Thomson Reuters, but when it was sold to the London Stock Exchange Group, part of the deal was a 30-year agreement with Reuters in which the news division was guaranteed annual payments of at least $336 million for news and editorial content until 2048.

Reuters reports that editor-in-chief Alessandra Galloni told staff last week about putting the paywall on pause, along with a new legal news section of the website. The company is in talks with Refinitiv’s parent company London Stock Exchange Group to resolve the matter.

“We are still working through our plans for the relaunch of Reuters.com as a subscription,” a spokesman for Reuters said.

A representative from the London Stock Exchange Group said, “The foundation of our partnership is strong and we will continue to work together to delivery for all of our customers.”

Reuters News revealed its plans for a metered paywall in April. After viewing five free articles per month, readers will need to pay $34.99 a month to get access to Reuters’ news coverage on business industries including legal, sustainable businesses, healthcare and autos.

In a statement, chief marketing officer Josh London said, “Professionals need direct access to industry knowledge, data and insights from expert sources, and Reuters is pleased to offer our trusted, impartial and accurate news coverage through a premium offering.”

Reuters’ primary competitors include Bloomberg News who charges $34.99 a month for digital and $39.99 for all access, and Wall Street Journal (owned by Dow Jones) who charges $43 a month for print and $45 a month for all access. Reuters also lists the Associated Press, French news agency AFP and Getty Images as primary competitors.

Reuters Puts Proposed Paywall on Pause
Image: Bigstock Photos

FTC Won’t Tolerate Deceptive Subscription Marketing Tactics, But How Do They Stop Them?

We are all part of the subscription economy, whether we are subscribers, subscription or membership companies, subscription technology providers or payment processing providers. And we’ve all heard the horror stories and read about the multi-million-dollar fines companies like ABC Mouse, AdoreMe, SiriusXM and eHarmony have made for utilizing unclear and deception subscription marketing practices. The federal government is tired of it, and they want to take action.

In a phone interview with the Washington Post, James Kohm, associate director of the Federal Trade Commission’s enforcement division said they are trying to figure out the best way to address a growing problem. They are also looking at tools such as law enforcement, regulation and consumer education to stop deceptive subscription marketing practices.

“Clarifying the rules really does have a big effect,” Kohm said.

Part of the problem, the Washington Post wrote, is that the subscription economy has grown faster than federal regulators can enforce consumer protection laws. As a result, as we noted in our article about the importance of cancellations as part of the subscriber journey, states are enacting legislation to protect their own consumers.

Several areas are of particular concern – free trials, auto-renewals and cancellations. When terms and conditions are not clearly and conspicuously stated, and consumers have not expressly opted out, consumers can unwittingly subscribe to services they want to try before they buy. “Trapping” subscribers this way may temporarily reduce churn for subscription companies, but it ultimately hurts those subscription companies through higher churn, lower customer lifetime value, poor reputation, bad online reviews, complaints to the Better Business Bureau and even class action lawsuits in some extreme examples.

Aside from state legislation and civil enforcement, the best solution falls to the Federal Trade Commission. They are in the process or reviewing nearly two dozen rules, including 16 CFR 425, the rule concerning the use of prenotification negative option plans in subscription marketing. Changes to that rule have been in the works since 2019. It is not clear when subscription companies or consumers can expect the rule to be updated.

For more on this topic, read “Federal Officials Look to Crack Down on Deceptive Subscription Marketing Practices at Broad Range of Firms” by Yeganeh Torbati on WashingtonPost.com.

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