Why Digital Subscribers need to Pivot

Reuters reports some trenchant and surprising views from David Carey, President of Hearst
Magazines.

Hearst’s digital strategy differs from its competitors in that it charges for digital subscriptions whether or not a person is a print subscriber to one of its magazines…………

Carey argued that the cost to subscribe to a monthly magazine, which ranges from $12 to $15 on average, is low enough to charge more for other products.

“We feel if people want the content in multiple formats they should pay for it,” he said. “At our price points we don’t feel compelled to offer another free product to the end user. We could always pivot back into it. We don’t want the word ‘free’ connected to content in this medium.”

The key comment here may well be “We could always pivot back into it”. I am taking this to mean that Carey  already knows that the position that Hearst has taken is wrong and they will have to change course. But the stance that Hearst has so far adopted is harmful to its interests and are likely to slow the adoption of digital subscriptions for its magazines. Here are the five top reasons why it is a blatant mistake to aim to sell digital subscriptions to your existing print subscribers:

  1. The existing print subscribers absolutely hate it if they are asked to pay again for a digital subscription to a magazine for which they already have a print subscription. As a consumer it just doesn’t feel right to pay for the same content twice. The iTunes pages for Hearst’s magazine apps are full of complaints from aggrieved print subscribers.
  2. Many/most consumer magazine companies are taking the view that print subscribers have a right to complementary app access. If consumers are cheesed off at being charged additionally for app-access to Esquire, but your competition, e.g. The New Yorker, is providing free access for print subscribers, which way is the undecided consumer going to jump?
  3. The consumer magazine companies loudly complained at the launch of the iPad that Apple was being greedy in charging a commission of 30% for all transactions sold through iTunes. But Apple’s rules allow magazine publishers to provide free app access to existing customers. No charge from Apple for this and Apple does incur a small transaction and distribution cost for providing free access. ‘Thank you Apple’ but how come the magazine publisher feels it right to charge existing subscribers an additional $1.99, or $19.99 (on which a 30% commission will go to Apple)?  Apple’s rules say that existing subscribers can have access through iOS for free and the publisher is blocking that free access. Who is being greedy now?
  4. The other big beef that the consumer magazine publishers have with Apple is that through the intervention of iTunes they will lose ‘control’ of their subscriber lists and the valuable consumer data that goes with knowing who your subscribers are. When Conde Nast freely enfranchises a print subscriber by providing complementary iPad access, Conde Nast retains its subscriber information and retains the renewal opportunity. When a formerly print subscriber to a Hearst magazine jumps across to a digital sub in iTunes, Hearst loses a 30% commission to Apple, it loses a print sub and it loses customer data. The customer who has bought access to an app through iTunes will almost certainly renew through iTunes. As a publisher you only get one bite at this cherry — and it is not easy to reverse or to “pivot around” that transfer in customer loyalty. If you wish to keep ‘control’ of your audience, you need to maintain and cultivate your connections with the customer by providing access across as many distribution channels as possible.
  5. A magazine’s existing print (and digital) subscribers are the best evangelists for a magazine’s quality and active users of an iPad app will spread the word. When a publisher has a cool new app in the iOS newsstand, one of the best ways of ‘getting the word out’ is to encourage the existing subscribers to use it. They will become contented and effective agents of promotion.

I should declare an interest. Exact Editions has a simple and economical way of enabling the existing print subscribers to a magazine to take out complementary digital and iOS subscriptions. Print subscribers are required to complete a simple form which allows us to verify that they are indeed current subscribers.

HALI subscribers claim form

This approach could easily be extended to other platforms. Exact Editions would be very pleased if the Amazon, Barnes & Noble and other tablet platforms were to move towards allowing existing subscribers free access within magazine apps on those platforms. Amazon does allow some print subscribers to gain access via their Kindle. If tablets are forced to adopt this ‘open-ness’ to publisher-sourced subscriptions as a basic requirement, customers would be less at risk of lock-in. Incidentally that would be a good way of providing Apple (and Amazon) with some healthy competition. As a result the magazine publishers would really end up being in the pivot position: Hearst not Amazon or Apple would be in the position of deciding who gets what.

Advertisements