Media and the Murdochs

When Mark Reinke landed nearly four years ago as News Corp’s Managing Director, Consumer, there were all manner of rumblings – media and the Murdoch’s were an unforgiving combination for all, including a well-regarded CMO from banking and insurance. 

News Corp had reached about 400,000 subscribers in its portfolio when Reinke arrived. Earlier this month it pushed through the million threshold. Reinke admits living inside a media company, as opposed to buying its audiences as a blue chip advertiser, is another world. Financial services has a ‘high degree of customer inertia’ but media is producing  product and reinventing distribution at a “much faster rate” than most sectors. 

“Media is not one industry, it’s a set of industries each going through incredibly tortuous transformation,” he told Mi3 in this week’s podcast with Tim Rowell, the APAC boss of global subscription publishing platform, Piano.

“The business models are changing entirely. That's not so true, I don't think, in financial services. And that's because media is increasingly global, you're competing with global players. In many other industries that's true to an extent but local brands have high degrees of inertia in their customer base. In media it's much faster. And I think the thing that's been most salient for me is the perishability of the product. These are 365 days-a-year businesses. You're producing new products every day. You have to find audiences for these products on platform and off platform. So you're constantly reinventing the recipe, which is in equal parts exhausting and exhilarating.”

Old and male

When Reinke landed at News Corp its 400,000 subscribers across the portfolio were structured by state territories. The profile of new subscribers was predominantly male and older. Fast forward nearly four years and the publisher has a million subscribers and Reinke has overhauled the federation into a central network and “centre of excellence” model. And today new users are increasingly younger and female although Reinke is under no illusion of how hard and from where the next wave of customers will come. 

“The way we got to the 1 million, I think, will look quite different to the way we grow to the next million,” he says. “To get to 1 million, we had to double down on a few things. We doubled down on local content – increasingly local content: our mastheads are the virtual town squares of the communities that they serve and Covid exacerbated that. We doubled down on data, putting the most powerful insights we could in the hands of our journalists – not just how many people are reading stories, but understanding who is reading them. The economic value of every single piece of content written is in real time so that we can make resource allocation decisions," adds Reinke.

“We've launched six new brands in the last twelve months into sport, into mindfulness, into wagering, into younger audiences. So that's been important. But I think the next twelve months, the next two years, looks quite different. We're seeing the next wave of growth will be younger, more diverse, lighter readers. News means something different to them. News doesn't mean current affairs exclusively or politics. It means fashion, food, sport, entertainment. So we are setting ourselves up to be able to serve a much broader range of content and to deliver it increasingly via multimedia. And we're moving faster. Video first, but certainly multimedia. So I think the next wave of growth looks quite different.”

More like Instagram

But will the younger set, where Reinke is seeing fertile growth opportunity with new products, pay? They have been notoriously difficult to convince so far. “Look I think the data proves otherwise,” says Reinke. “Younger users are paying for music, they're paying for content generally but their expectations are high – the expectation on the user experience, the utility, how it's bundled, how it's packaged, how personalised it is. They will pay and they are paying but not necessarily for the product we had three years ago, or even one year ago.”

Outside these new content bundles aimed at the younger set, Rienke has launched mindfulness, puzzles, food, sport and wagering subscription products that are not traditionally linked to a newsmedia publisher. But these are the new, often smaller but profitable sub-segments Reinke is hunting at News Corp. He says a new subscription product is sustainably profitable at 30,000 subscribers now that the tech stack and team are in place to scale niches. 

The Australian’s younger spin-off, The Oz, is a case in point, says Reinke. 

“It's built as a news site but the experience is very social,” he says. “Five stories in the morning, five stories at night, vertical panels, horizontal navigation. It feels like Instagram, it feels like a completely different surface. So that's much younger. We’ve built an audience well north of 500,000 unique readers in a very short time [six months] and so we can see that propensity to engage. But we've got to deliver it increasingly differently.”

Journos as subscription funnels

The data-driven drive at News Corp has spawned some disgruntlement on the editorial floors – journalists lament the value of their stories being driven only by their ability to convert subscribers. 

Reinke treads carefully. “Two things are absolutely true – if we can create journalism so good that people will pay for it, then we create a sustainable model for journalism which allows us to reinvest in tomorrow's journalists, in cadets, in digital news academies,” he says. “Recurring revenue gives you great confidence to do that. So I think all of our newsrooms really understand that. They really understand that recurring revenue models are a great path to reinvest in journalism.

"But what we've done is not so much focus on what are the targets for subscriptions, albeit I'd be the first to say that we definitely have aspiration there, what we've done is put the power of that data in the hands of every journalist," he adds. "Really what we're trying to do is bring our journalists, our editors, our section editors closer to their readers. So yes, you can see how many people subscribed to an article – are they young, old, what demographic, what psychographic? Are they affluent or not affluent? What geography? From there you can start to work out how to create more stories that people want to read – because every journalist wants to create stories that people see and read," says Reinke. 

"That does not mean we don't do investigative journalism, that we don't really pursue our purpose. But it does mean that we do put that power, rather than keeping it in some commercial black box up on another level in the building, we do put that power into the hands of our journalists so that they can see where their journalism is resonating."

He insists: "It's not all about subscriptions. That's an important metric. It is ultimately about creating audiences and creating journalism that is so good that we can monetise it through many different paths. But what we definitely do and don't apologise for is giving our journalists the truth of performance of their content and the engagement of audiences with that content.”

Data changes the story

So has this new data-led strategy changed what and the way journalists approach stories?  

“Unquestionably” says Reinke, citing a case last week on a popular story about interest rates and the impact on first home buyers, which at first glance, signalled more of these yarns to this audience was fertile territory.

“When you had a look at the data to that story, though, the audience was actually older, about 60 years old in this case,” says Reinke. “So it was the bank of mum and dad – parents looking for the kids. So a rewrite of that story wasn't necessarily then helping younger people get into the market, it was mum and dad.”

Piano APAC boss Tim Rowell sees this challenge to conventional editorial assumptions on what works repeated regularly, worldwide. 

“I agree with everything Mark said. I would just say this: The reason why a user converts is not because they just read one article. I think this is often a sort of misnomer that editorial teams have: ‘Has my article driven this many subscriptions?’. What we know is, on average [globally], a user has to see an offer, an invitation to subscribe maybe ten times before they actually convert. They've had a relationship and they've had behaviour on that site that eventually leads to a conversion. There might be one article that tips them over the edge – but that is not the sole reason why they become a subscriber," says Rowell. "I've always been a bit nervous about journalists being ranked on that kind of thing because I don't think it tells the whole picture. But it is really important from a commissioning perspective that journalists get sight of that data – because it can really help them to develop content. As Mark says, it’s really serving a need and in that case, the need for the bank of mum and dad.”

48 hours to strike

Still, Reinke holds on the data News Corp Australia sees about the early evidence required to build to a subscription.

“Typically when you bring someone in you've got about 48 to 72 hours to build the right behaviour,” he says. “If you don't get those first 72 hours right, honestly, our data shows the chance of you moving up that staircase [to a subscription] is quite low. So there's a lot of effort early. This isn't a buy-a-product and set and forget. It’s introduce your new user to the best of your network. Increasingly what we're seeing is breadth matters," adds Reinke. 

"We run a model which is recency by breadth, by depth. So bringing you back regularly, it’s breadth that matters. If you just read one area, the chances are you won't get up that staircase. But if you're reading sport, some fashion, some food content, that utility that comes from this product starts to really resonate. So much of what we're doing is trying to, on a recency basis through things like alerts on apps or newsletters delivered to your inbox every day, is introduce you to a broader range of content and then give you the space and UX and the customer journey to be able to discover within that content a deeper reading, listening or viewing experience.”

Rowell has a swathe of other behavioural data from Piano’s subscription platform, much of which challenges editorial convention. He says “certainly since the mid 90s” newsrooms have been obsessed by the volume of users and by pageviews “because they were chasing an advertising model”. 

70 per cent of users visit a site once a month

He says it’s clear today that 70 per cent of users to most websites worldwide consume just one piece of content per month.

“You could argue they're irrelevant because they're not loyal, they're not the heart of that business,” Rowell says. “But you shouldn't really worry about them because, conversely, roughly 9-10 per cent of users are consuming 70 per cent of pageviews. So it's really that 10 per cent of the audience you really need to think about. That's where you will be able to develop additional revenue streams. That's where you can develop subscribers from," he adds. 

"When we play that stat back sometimes, certainly to people in editorial roles, it makes them sit up and take notice because what they then see is they can focus their editorial strategy on a particular audience – and then develop that in a way that serves their needs and arguably, actually enables editorial teams to focus their work."

Sleeper service

Equally, even with signed-up subscribers there are, at first glance, some terrifying data points. “Sleepers” is one segment which Rowell and Piano have seen as a global trend. 

“One of the more interesting pieces of data we pulled out of our aggregate dataset was actually, if you looked in any given month, a very high proportion of subscribers weren't consuming any content at all. They're paying money, they're not logging in and they're not using it. It sends fear through editorial teams – why are they not consuming anything? And then you look at it over a three month period and you see that they do come back and they engage and they consume content. They use it when they need to," says Rowell.

"I think, again, it's a shift in understanding of how readers behave. There's always been an obsession in newsmedia that there is a correlation between loyalty and the volume of consumption and that user has to come back every single day and consume loads and loads of content. There are many reasons why someone will subscribe to a new service and a key one is they have some kind of affinity or loyalty to that particular brand. And at a time when they really need trustworthy content, content that they believe to be of value, they will go to that brand. The pandemic accelerated that trend to a large extent. And I think this is why we saw subscriptions grow so dramatically."

Subs – from 70 per cent to 15 per cent growth

Globally according to Piano’s data, Covid subscriptions peaked at year-on-year average growth rates of 70 per cent. Reinke says News Corp Australia’s compound growth rate over the past six years has been 20 per cent. All publishers and most media houses are going to be rethinking their strategies for the next two years to keep that sort of CAGR growth in place, he says. “We'll all have to convert lighter users with different products, with different strategies, and we'll have to prove that we're worth what’s paid for. We have to prove we are an indispensable part of life.”

But Rowell says for publishers to get there, old habits must die. 

“The critical thing is there needs to be harmony between three key areas in a news organisation: the editorial team, the product team and the subscription or the marketing team. That's always been a bit of a challenge with media companies where there's been that sort of degree of conflict between commercial teams and editorial," he says.

"It's also that this is a data driven strategy that is a new skill. The analytics team at a media company used to be a bunch of guys who sat in the corner and no one really spoke to them until the monthly report was due. I think now everything is dependent on data and editorial teams are looking for insight into what they should write more about – what works and what doesn't. The subscription team are looking at little percentage points of where they want to drive an improvement.”

Reinke concurs on wholesale change. “Even the same piece of content has to be packaged differently to find an audience on a specific platform. We have teams creating hundreds of pieces of video content a week that show up on Google as a web story, show up on Facebook as one piece of content just edited slightly differently. So that's very different. To Tim’s point around product UX, increasingly great content is at the core of this – but it still has to be packaged and delivered in a way that is thoughtful and considered and does shift with the type of user that wants to consume it.”

Netflix versus newsmedia growth 

So finally, to the economic headwinds and whether publishers are about to face the same subscriber growth pressures as the army of video streaming services. Reinke says Covid “brought forward demand” so new growth pressures are mounting – but Rowell does not expect the hit for publishers that is underway for subscription-based video streamers      

“We don't see any evidence of that at all,” says Rowell. “What we see, certainly within streamers, is that coming out of Covid it's inevitable there will be cancellations of multiple streaming products that people have within a house. I've got four children. I think at one point we had six streaming services just to keep everyone entertained. That's just unrealistic. And actually what we've also seen is the content distribution deals on those streaming platforms is making it easier to cancel some of those services," says Rowell.

"We're not seeing that within media. We are not seeing mass cancellations. To Mark’s point, we're just seeing that the growth rate has fallen. Maybe somewhere between five per cent and 15 per cent is the kind of growth rate you're seeing year on year. For news media subscriptions, that's still pretty good. But I think it reinforces Mark’s point that you've got to work a bit harder now. You've really got to work much harder to attract that audience and crucially to attract that new audience, because as a subscription model develops, it's about incremental improvements, it's small growth and putting that audience in. You're going to pick up your loyal audience relatively quickly, so you do have to move beyond that," he adds.

"The way I sum up what we see is actually this concept of membership taking over from the idea of attracting subscribers. A membership is a relationship and that membership may contain additional benefits. Within a consumer environment I think bundling is inevitably a way of building greater value from that relationship and that subscription. News Corp is certainly ahead of others in the way they're approaching that.”

AI critical

For Reinke, News Corp’s future consumer revenues looks like this: “AI-driven personalisation is a significant part of where everyone is going – not one-to-one but modes of consumption. We want to shift both the mix of content and how it's presented. The other thing that we're constantly looking for is the signals for tomorrow's audiences. We’ve built quite a sophisticated capability to scan and look for those conversations that are emerging but not on our platforms. We're looking for what the town squares of deep interests are today and whether we can satisfy those needs. So there's a whole range of new capabilities to do that.”