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Setting up a digital subs or membership scheme from scratch

Recurring revenues from a new subs or membership offering are a welcome revenue stream but setting one up takes considerable effort. Publishers need to go into the process with their eyes open. Carolyn Morgan outlines the steps they need to take.

By Carolyn Morgan

Setting up a digital subs or membership scheme from scratch
“If you are planning a membership, explore who they want to connect with and why, and in what forums or events.”

In the last year, several publishers have approached me to develop a digital subscription or membership for their audience. Most had previously allowed completely free access to their online content, funding it through advertising. A few had charged for print subscriptions or event tickets. When you have no history at all of paid subscriptions or membership, where do you start?

In this article, I will outline the approach I have taken for publishers, with some practical steps for the journey from free digital content to paid recurring revenue. One key principle: it is very hard to charge for something you previously offered for free. A successful subscription strategy usually involves developing something new or adding value to content you already have.

‘Subscription’ and ‘membership’ are often used almost interchangeably, but they are subtly different. The value in a subscription package is largely in the content provided. A subscriber consumes it solo and doesn’t expect to be part of a community. Membership, however, puts the community first, and packages tend to include events, online forums, or other ways to share views and connect with fellow members. Pure publishers might focus on subscriptions, and events-led businesses on membership, but ultimately each brand and market is subtly different. The process described in the steps below will help you decide what is right for your market.

1. Audit where you are now

How do you currently segment your audience? What is the relative size of each segment and how do they interrelate? For each segment, investigate what content and topics they consume now. Look at site analytics, email click patterns, search terms or social engagement. Review what your competitors are doing – are they offering paid subscriptions, what is included and how do they price them? How many registered users are on your database, and which segments are covered?

Also, review your own content, and consider what exclusive or proprietary content or services you could offer – or develop. Build from your strengths and what differentiates you from your competitors.

2. Identify who is most likely to pay

You don’t need all of your audience to pay for subscriptions. Many publishers happily run a mixed model, with some free content openly available and funded by advertising, and premium content behind a paywall for a subset of the audience. It’s quite common for only 2-10% of your audience to pay to subscribe. Analysing your segments, can you identify which groups may value your content highly? In consumer markets, this might be the more experienced or older groups. In B2B markets, a subset of corporates or advisors or government readers could be prepared to pay more. They should be your focus in the next step.

3. Research your audience

Start with a simple online audience survey. If you already have engaged newsletter recipients, so much the better. Paying subscribers are more likely to be drawn from regular readers than casuals or new entrants. Gather basic demographics so you can identify segments, and ask why they read your content – is it to learn new skills, make the right buying choices, discover more about the market or industry? What other paid subscriptions do they hold – a clue to what they value. And test out the response to your initial ideas for your subs package.

Armed with this insight, the next step is one-to-one interviews. This could simply be short phone or zoom calls. If you attend industry events (or run them), that is a good way to assemble a group. Gather a reasonable sample in each of your main target segments. Ask them about the market, and their objectives, where they have frustrations or information gaps. If you can design content and services that will solve a problem or make their life easier, you are halfway to a valued proposition. Test out your own ideas as well: probe what they want more of or less of and ask for their wish list. If you are planning a membership, explore who they want to connect with and why, and in what forums or events.

4. Design your proposition

Now you have the ingredients to design your subscription or membership proposition. What can you offer that is distinctive and exclusive? Will your package help solve problems or enhance the reader’s interest or job? This may go beyond content and data to include events, training, communities, and other services. Consider how your proposition compares to competitors, and how you will resource it. Might you need more staff, new skills, or specialist freelancers?

5. Test and refine with your audience

Now go back to some of the people you interviewed, and others in your target segments, and test your package. You might realise that some items are more valuable than others and can also refine the scope or depth of certain types of content. Keep it simple to start with – a long laundry list of archive content or items of marginal value can confuse your customer. And explore pricing against this more specific package.

6. Check the business case

To estimate revenue, make an educated guess on the size of your most enthusiastic segments, and then consider what proportion might sign up initially. Subscription and membership programmes are slow burn; it could take three or four years to reach a steady state on numbers, so build this in to your plan. Check again with competitive offerings so you don’t pitch too high (or too low). Allow for some trial or discounted offers in the first year. Be realistic on the additional costs – it is unreasonable to expect the same editorial team to produce twice as much content. And for membership propositions, running member events or an online community can be very time consuming for the team. Don’t forget to allow for your tech costs (see step 7).

7. Plan your tech strategy

If you have never had a registration or paywall before, you will need new technology. There are several off the shelf packages that combine a CMS with paywalls, reg walls and sophisticated analytics. But it is an upheaval for your ed team to change CMS so plan carefully and build in extra time for training. Other paywalls can bolt on to your existing CMS, although you may need tech support to knit them together. If comparing platforms, make sure you have independent advice.

Some publishers have a proprietary CMS and an in-house development team, so might be tempted to build in-house. Before embarking on this, do review what is available from third party vendors. In my experience, original development usually takes far longer than planned and is prone to bugs.

8. Determine your marketing strategy

Connect the benefits of your package to problems and challenges faced by your audience. Where possible, include terminology they used in your original research. Should you have a single simple package or segmented propositions or economy and premium tiers? Your market segmentation and research should steer your decision on how to present your packages to your prospective subscribers – and what is most important to them.

Are you expecting your subscribers to “self-serve” or will you actively market to them via email and phone? If you anticipate self-service, your online proposition must be crystal clear and the journey to subscribe streamlined.

Design your marketing funnel. Should you have a free registered section of your website to draw in potential subscribers? How will you market to event attendees or buyers of one-off training or reports? The principle of subscription marketing is that warm leads are more responsive, so how will you nurture prospects to trust you enough to subscribe (or join as a member?)

9. Create your launch content

Work out your minimum launch package in terms of content, data, events, community. What hot topics must you cover? How comprehensive does a database need to be? How many training modules do you need to be credible? Bring in new staff or freelances to accelerate this process. Even repurposing existing content, turning articles into charts or databases or reports, can be more time consuming than anticipated.

Consider whether you can include advertising or sponsored content in the subscription package. This will enhance your business case, but you must tread carefully not to irritate your new subscribers. Restricting commercial partners to a select few is often a good move.

10. Launch and keep iterating

Depending on your market, you may want to start with a beta group of enthusiasts or advocates and iron out any user experience or navigational issues in the early months. Early adopters might respond to an introductory offer and be willing to provide feedback in return. Accept you won’t get it right first time. People don’t always use the content or services that they told you they wanted. Markets move on, and other sources emerge. Do be prepared to iterate and evolve. Try starting with a single simple proposition, and later add in a premium package for the power users. Most paywall platforms provide detailed analytics on how often people return and what content draws their attention when they do visit. If you have a membership proposition with in-person or virtual events or an online community, you have a ready-made channel for customer feedback.

Keep the faith

Launching a subscription or membership business is not a quick fix. It could take two or three years to build critical mass. But once you have a recurring revenue stream that is less volatile than advertising, your publishing business is in a much stronger and resilient place. So, research thoroughly, invest in content, tech, and marketing, and be prepared to make course corrections as you chart your journey.

This article was first published in InPublishing magazine. If you would like to be added to the free mailing list to receive the magazine, please register here.