Publishers, or at least Dovetail clients, are an optimistic bunch. According to Dovetail MD Julian Thorne, “59% of the respondents to Dovetail’s annual client satisfaction survey expected subscriptions to be better in 2011 than 2010.” But is this realistic? Deloitte’s Andrew Simmons pointed to further pressure on household disposable income to paint a rather bleak picture for subs in the year ahead.
Simmons said that publishers would need to focus on maximising revenue from existing subscribers because subscriber acquisition was going to be tough. Julian added that he could already see signs of this in recent subs price hikes from publishers.
With acquisition likely to prove harder, there would need to be even greater emphasis on retention, and, said Stuart Broughton of Datalytics, publishers are underperforming in this area. A recent research project they had conducted on behalf of the PPA had thrown up some alarming findings. Publishers were overstating their renewal rates, quoting figures between 75 and 95%, yet his analysis showed that actual retention rates were lower. In fact he found that, across the sector, 46% of all subscribers are lost by month 13. Perhaps more alarming than the figure itself was the fact that most publishers didn’t appear to know it! Worryingly, there is no common standard for renewal measurement, and Broughton urged the industry, perhaps through the PPA, to agree standard metrics for measuring renewal rates. There was also some evidence, he said, that the data publishers were getting back from their fulfilment bureaux was not always as transparent as it needed to be.
Broughton and consultant Peter Janes urged publishers to improve their understanding of churn – to map out the subscriber journey to locate the key drivers of churn and to then focus their retention activities at these points.
Broughton put much of the cause of the high levels of subscriber churn down to the Christmas factor, when, in consumer markets, as many as 1 in 6 new subscribers are acquired, most of these being ‘cash with order’ gifts. Now Broughton was not suggesting changing subscriber acquisition strategies, but rather adopting more sophisticated subscriber management strategies, in particular taking into account the original source of the subscriber when devising retention programmes.
Andrew Simmons pointed to two other macro economic factors which should keep publishers on their toes in the year ahead. Firstly, Deloitte had measured the disconnect between ‘time spent’ with a particular medium and ‘advertising spent’ on that medium. This disconnect is most marked in print, where the large amount of advertising revenue it still attracts is increasingly out of proportion to the time consumers actually spend with the medium. This situation is in inverse proportion with the web, where the increasing amount of time spent online is not matched by the advertising spend. Publishers need to be aware of this structural imbalance, because they are unlikely to be able to get away with it forever.
Simmons’ other point was that “over half of new computers sold are NOT computers”, by which he was referring to the burgeoning sales of smartphones, tablets and net books, which means that the computer experience is becoming more personal. Both publishers and advertisers need to be aware of the very different types of user experience across the different devices and adjust their content and commercial strategies accordingly.
Dominic Jacquesson wholeheartedly agreed. The future is mobile. Dominic didn’t sit on the fence. “Circulations of, and time spent reading, print publications will halve in five years, and smartphones and apps will take up most of the slack.” For anyone in the room still in denial, Dominic suggested they go talk to senior execs from fixed line telecoms, record labels, DVD distribution and hand held games consoles! This, he continued, is “your music industry moment; carpe diem or die.”
Gulp.
Besides panic, what should publishers do? Firstly, don’t get too hung up on platform because it’s basically going to be Apple and Android. Secondly, phase out your print-oriented production processes, because “issues are irrelevant in digital media; you have to decouple production of app content from print issues”. And, finally, don’t go down the print replica PDF route, because it will “damage your brand”.
Apps need to be open to your user and apps based on RSS technology are the way to go. And, continued Dominic, it is possible to design branded and creative RSS. Newspapers seem to have taken this on board, but not magazines. Dominic had some figures for US magazine app sales, which showed alarming drop offs after the initial launch, which he put down to the apps being over priced (“There is a £3 ceiling and lots of publishers are trying to sell above it.”), not offering sufficient value and apps taking way too long to download.
Integrated subs are the future, as demonstrated by the widely admired FT approach. There was some industry unease about whether Apple would move to plug the integrated subs loophole. Dominic thought that Apple were unlikely to do so, because of the 3cs; not wanting to alienate consumers, who like integrated subs, or infuriate content owners or, lastly, to give a boost to the competitor, Android. But, as Jacquesson said, Apple are “arrogant and unpredictable”, so who knows?
Dominic is a long standing critic of the replica PDF approach, which he sees as an unimaginative quick-fix. Looking at some of the reader feedback on the iTunes store for one leading title, Vogue, which has taken the replica route and you can see a theme emerging. One reviewer complained, “it took two days (seriously!) to download the December issue. What a waste. The app is too slow and the text is unreadable. All they did is jam together low resolution jpegs of the printed page.” Another criticised the “illegible captions on the full screen photos. An absolute waste of money until it’s completely revamped.” Yes, there were a couple of positive reviews, but the majority were negative. Compare those comments with the positive and frequently gushing feedback for those titles, like Good Food, Focus Magazine and Empire, who have decided to reengineer their content, and you can see that Dominic is not alone.
(There was also a fascinating presentation by Jim Bilton looking at the results of the Dovetail Subscriber Service Survey. Julian Thorne will be writing about this in detail in the March / April issue of InPublishing magazine.)
