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What’s Impeding the Growth of Digital Paid-for Content? Research from Vindicia & MTM Reveals That 74% of Industry Execs Cite the Lack of Unique Digital-First Content as a Challenge

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Vindicia , the leader in business to consumer digital services monetization, today announced findings from a research program it commissioned with MTM to explore European publishing industry perspectives on the development of direct-to-consumer revenues from digital content, products and services. While most newspaper and consumer magazine publishers remain committed to print products and growing their digital advertising revenues, it showed that paid-for digital content offerings, products and services are considered an important strategic priority. The research focused on four key markets: the UK, Germany, the Netherlands, and Sweden.

The study found that, although developing successful paid-for services remains challenging, the industry has made considerable progress: higher-quality newspapers are widely adopting digital subscription models, while magazine publishers are pursuing a diverse range of paid-for opportunities. Opportunities vary widely, publisher-by-publisher and market-by-market, but successful businesses will need premium brands, high-quality content, technology platforms, data and analytics capabilities, and top digital talent.

Findings from the study included:

  • A consensus that digital subscription models can help to grow publisher revenues. This is especially true for higher-quality newspapers, with paid-for memberships, freemium models and flexible paywalls emerging as viable strategies. Publishers typically offer some content for free, looking to grow traffic and maintain their editorial reach and reputation, while driving subscription take up with premium or added-value content, special sales and introductory offers.
  • Charging for digital content online is challenging. Industry executives cited the proliferation of free digital content (91 percent of surveyed industry executives), a lack of unique digital-first content (74 percent), and poor-quality user experiences and value propositions (70 percent) as key factors impeding the growth of paid-for digital content revenues.
  • Investment is crucial. To succeed with digital subscription models, publishers will need to continue investing in high-quality content, technology platforms, data and analytics capabilities, and top digital talent – maintaining and developing brands and services that are valued by, and cater to the needs of, their digital readers.
  • Consumer magazines are less confident about the prospects of growing revenues from paid-for digital content. This reflects the more diverse nature of the sector, the enduring appeal of magazine print products, and, in many cases, disappointing experiences with digital editions or replicas. However, many magazine publishers are hopeful that bundling (combining digital content subscriptions with other paid-for offerings) and aggregation platforms (selling a selection of curated content from a range of magazine brands) will help to grow online content revenues.
  • Digital diversification opportunities vary. Alongside digital content sales, industry participants are also looking at digital diversification opportunities, developing new revenue streams from premium services such as ecommerce, dating, and gaming and gambling. 62 percent of surveyed publishers see the development of new paid-for services as a top strategic priority. It was widely acknowledged that developing successful offerings is challenging. Publishers need strong relationships with their readers, the right technical and product development capabilities, excellent digital marketing skills and an ability to invest over time.

“Experiments with paywalls and subscription content began back in the 1990s, but some have been disappointed with the industry’s slow progress and occasional dissatisfaction with paid-for content, so we wanted to explore what publishers at the coalface believe will and won’t work,” said Kevin Cancilla, head of global marketing, Vindicia. “With a consensus that digital subscription models can help grow revenues, but that charging for digital content online is challenging, it’s important that publishers invest well – choosing the best revenue streams for their brands and using technology to deliver.”

“The study shows signs that premium digital services are entering a new period of growth and development,” said Jon Watts, managing partner and co-founder at MTM. “Publishers now have several key priorities: to develop strong premium brands, to deliver high-value content and compelling user experiences and to use technology, utilising state-of-the-art analytics, customer insight and digital marketing capabilities.”

Quotes from Study Participants

"We've seen that users are more willing to pay if they feel they are getting a great user experience and access to exclusive content," said Gadi Lahav, head of product at the Financial Times. “We've always taken a flexible approach to paid content. Allowing sampling of journalism is a really important part of attracting new readers and subscribers, and we're seeing this approach to access becoming increasingly popular in the industry,”

“Our business was transformed by having immediate access to relevant data and a tech team that can respond quickly. We’ve built a great bottom-up system – enabling our tech team was key,” said Gadi Lahav, head of product at the Financial Times.

"We have really strong fashion and lifestyle brands and we see a major opportunity to use them to build specialist digital services. These services need to deliver a new type of experience. They need to be more like coaching, one-to-one personalised interactions, then audiences will be willing to pay for them," said Krischan Lehmann, digital director at Condé Nast Verlag.

“There are two different types of news consumers in Germany. The first type simply wants news updates and is only interested in headlines – this type of content is available for free and reaches millions of readers. The best way to monetise these readers is via advertising. That is the old way. The second type wants deeper insight and analysis or opinion from journalists. They are willing to pay for quality content. This is the new way. However, there are still very few customers of the latter type today,” said Alima Longatti, head of direct marketing & CRM, Condé Nast Verlag.

“We’re confident that digital will drive revenue growth, but significant growth won’t happen over the next three years. Most magazine publishers are simply not ready for it,” said Stina Abenius, publishing director at Aller Media AB.

“Metered paywalls probably work much better for news content. Magazine publishers engage readers with storytelling around their passion points, rather than producing high volumes of newsworthy content,” said Michel Koch, CMO at Time Inc. UK. “Ecommerce can add significant value if you’re smart with your technology investment and can find exclusive high-margin categories that work with your brand. There’s no point in setting up a mass market offering as you’re then competing with the likes of Amazon.”

“Memberships will be great for special interest publishers. Take cycling, for example – it’s a massive market and cycling enthusiasts would be happy to pay for membership of a cycling-related club, providing them with a way to connect with like-minded people and offering them easy access to cycling gear and advice,” said Michel Koch, CMO at Time Inc. UK.

“People will always be drawn to quality content – that’s why they come to your website. If you invest in a strong and differentiated content proposition, you will definitely have a good starting point for making money with new digital products,” said Ronald Bouwman, sales manager ad sales at NRC Media.

“Most magazine content is niche – people will pay for aggregators who can super-serve specific niches… for example, boat enthusiasts being able to get all boating-related content in one place,” said Unn Edberg, Executive Vice President at Chef. “Memberships will work for brands that can build communities around a specific passion point or interest.”

The research programme consisted of four main stages:

1. A review of industry data on publishers in four key European markets to establish a baseline of industry knowledge about existing digital paid-for products and services.

2. A series of in-depth interviews with senior publishing industry executives, exploring perspectives on digital paid-for content and other products and services.

3. An online survey of executives in the four European territories, quantifying their views on challenges and opportunities in digital paid-for content, products and services.

4. Executive seminars held in London, Amsterdam, and Stockholm, discussing the nature and scale of the opportunities for publishers.

Click here to download the full report.

About MTM

MTM is an international research and strategy consulting firm, focused on the media, technology, communications and advertising industries. MTM helps companies understand and respond to digitally-driven change, providing award-winning consumer and industry insight and analysis, advice on strategy, growth and business development, and support for organisational change.

For more information, please visit www.mtmlondon.com.

About Vindicia

Vindicia, an Amdocs company, set out to transform the way business is done. Today, recurring payment engines and billing are commonplace. Vindicia believes a subscription platform should pay for itself. Ours will. Our SaaS platform automatically resolves failed transactions so you retain subscribers longer. By combining big data analysis, strategic consulting and proprietary technology, Vindicia will generate significant new revenue. Consumers today share, store, view and purchase goods in ways unimaginable before – and Vindicia removes the barriers between the consumer and the goods they want. That's why our client list reads like a who's who of subscription businesses. If you need a complete subscription management solution there's one choice – Vindicia.

For more information visit www.vindicia.com.

Copyright © 2017 Vindicia, Inc. All rights reserved. Vindicia, the Vindicia logo, Vindicia CashBox, Vindicia Select, ART Advanced Retention Technology, and the designated trademarks herein are trademarks of Vindicia, Inc. in the U.S. and/or other countries. All other brands or product names are the trademarks or registered trademarks of their respective holders.

# # #

Contact information

For Vindicia
Astor Sonnen or Flora Haslam
Finn Partners
+44 203 217 7060
vindiciapr@finnpartners.com

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