A new INMA report explores smart subscription pricing for news media companies post-COVID.
A pandemic-driven subscription surge and the rise of segmented approaches to audience management are driving new urgency for sharper pricing strategies by media companies as markets emerge from the worst of COVID-19, the report says.
'Subscription Pricing: From COVID Bump to Sustainable Revenue' dives into why pricing is so important, why it's so difficult, and who is doing it well.
"Pricing is the fastest and most effective way for media businesses to increase profits," says INMA researcher-in-residence Greg Piechota.
"Yet while some media companies are well into prioritising their pricing strategy, many do not yet have a road map in place."
But he says most of the media industry learned in 2020 how important a pricing strategy is.
INMA senior editor Dawn McMullan, who was lead author on the report, talked to Piechota and pricing experts from FTI Consulting, Mather Economics and Piano. Case studies come from Dennik K in Slovakia, the Boston Globe in the US, Politiken in Denmark, Amedia in Finland and Malaysiakini in Malaysia.
Among key takeaways are that charging "more engaged" customers more over time - the "revenue maximising journey" - is generally accepted as a best practice. A digital subscriptions strategy will typically mean volume first - which COVID gifted the news industry - and pricing second. "Yet smart pricing is key to both acquisition and retention," she says.
Data, not gut feelings, must guide pricing strategy. Most media companies are not competing with the New York Times or Netflix, so prices shouldn't be based on those subscription models.
Media companies can't switch print readers who were paying more than US$40 a month to digital readers paying US$10 a month. "Those prices need to get closer," she says. "Research shows what price change individual customers will tolerate."
Customer lifetime value (CLTV) is also a key factor when determining pricing strategies. The goal with all of this: establish a business model based on a direct reader relationship that sustains journalism.
'Subscription Pricing: From COVID Bump to Sustainable Revenue' is free to INMA members and available for purchase by non-members. For details, click here.