Many traditional news media companies are focusing on digital subscriptions as a source of revenue. I don’t have strong opinions on whether that is a good strategy or not, so if you are looking for that type of analysis you are reading the wrong blog. What I care about is the “how”. Given that media companies want to increase their digital subscription revenue, how do they do it?
When media companies started exploring digital subscriptions, the plan was rather simple: Write some content, put it behind a paywall, and maybe send out some emails asking people to subscribe. When these companies wanted growth, the strategy mostly consisted of writing better (or more) content and sending more emails. However, as these businesses have matured they have increasingly been looking for other sources of growth, and that has resulted in a heightened interest in data and technology. That isn’t exactly surprising; this is a digital product, after all, and there is so much that data and tech can do to drive sales and improve retention.
However, despite the increased attention on data and tech, and all of the money spent, the results are unimpressive. The media industry is a cesspit of bad tech ideas and abuse of data. It is easy to attribute that to a lack of competence, experience, and leadership, but I think the problem is more fundamental. In my opinion, most (if not all) media companies have an organizational structure that does not align with the technical architecture they need. That mismatch produces a conflict that makes it difficult to develop the necessary technical capabilities to deliver actual results. Unfortunately, I do not think this is an easy problem to solve.
Missing Technical Capabilities
The premise of this post is that media companies lack the technical capabilities they need to really deliver for a digital subscription business. So what capabilities are these companies lacking?
It is important to make it clear that I am not saying that media companies’ tech results in a bad user experience. Plenty of media companies have figured out how to make login and payment fairly painless. In addition, media companies have contributed in a major way to technology for digital storytelling. The New York Times, for example, is very impressive in that regard. This tech contributes to digital subscription sales I am sure, and without it more people would be unsubscribing.
However, when an executive asks, “How can tech and data help us to drive digital subscriptions and improve retention,” they aren’t asking about digital storytelling. They are asking about funneling more users into the payment process, managing customer engagement, and the like. They are talking about digital marketing in one form or another. That is where media companies’ tech really fails. Most media companies have inadequate control over the data that is generated on their sites, and the companies that do have that control lack the technical capabilities needed to act on that data.
For example, take media companies that have a mix of free and premium (subscription) content. The “game” for these companies is to funnel free users into paid subscriptions while minimizing the effect on free site traffic. I went to the sites of multiple companies that fit this description, created an account, accepted all marketing permissions, and started a purchase. I did not complete the purchase, as I wanted to see how these media companies would subsequently attempt to target me. “Abandoned cart” users are the easiest to identify group of users with an above-average propensity to subscribe, maybe next to former subscribers, so if these companies are doing any special targeting I would expect to see it.
One company sent out an email after a day or so, but it is hard to tell whether that was responding to my “abandoned cart” or just the fact that I created an account. What is striking (although not unexpected) is that none of the sites I visited seemed to change the experience for my user in any way. When I returned to these sites, the experience was identical to that of a normal, anonymous user. The front page was the same. The articles were the same. The popups were the same. The paywalls I hit were the same. It was as if these sites had no idea that I was on the verge of completing a purchase.
In fact, the only clear case of on-site retargeting that I found came via the ads on the page. That is, one site showed me ads for their subscription content as a result of my abandoned cart. However, the rest of the page looked the same. That is fairly damning. If we rank the ways in which we can target users to buy a subscription in terms of effectiveness, display ads rank at the very bottom. The use of display ads in this context reveals that ads are the only dynamic element on the page; display ads might be a bad option, but they are also the only option.
This is entirely consistent with what I know about this industry. Look at industry publications, consulting pitches, and third party offerings, or attend any media industry conference (via Zoom), and the message about the state of the technology is clear: Media companies lack the technical capabilities needed to provide different experiences to different groups of users based on their data. No one says that, of course, but that is the logical conclusion from what they do say.
That is a serious shortcoming if you are trying to utilize first party data and tech to increase digital subscription revenue.
Organizational Structure
It is easy to read the above section and blame the developers, or at least blame the tech leadership at these companies. However, I feel that is the wrong conclusion. I believe that many developers at media companies would agree with what I wrote above, and if given the opportunity would be more than capable of developing the “right” technology. The problem isn’t the developers.
Instead, the problem is that media companies have an organizational structure that is at odds with the type of technology that they need. I am not going to claim to know the exact details of how all of these companies are structured, but generally the technology that delivers the front page and article pages has been developed according to the needs of the editors and journalists. The person responsible for the digital subscription business, i.e. for selling subscriptions and retaining subscribers, is someone else. Someone with their own team, likely with developers (whether centralized or not) that work on digital subscriptions specifically. And there are more groups, too; there is another “someone else” that is responsible for ad revenue, for example.
As media companies grapple with these competing objectives, they have almost universally taken the easy way out by simply carving the site up and allowing each team to operate independently within the provided boundaries. The shape of the technology built at media companies is a consequence of that approach (see Conway’s law). Most media companies have multiple tracking scripts running on their pages, each collecting virtually identical data for different purposes. These companies have an abundance of third party tools, each chosen in isolation to deliver on a given business objective.
The problem is that what each business unit desperately needs is the ability to operate across boundaries, and that is the capability they do not have. When I am on the verge of subscribing, why am I still being shown a display ad for new snow boots? Why is there still so much free site content on the page, almost encouraging me to not subscribe? Why is nothing different? The answer is that this part of the site isn’t owned by the digital subscription people, and even if they could come to an agreement with the ad folks or the editors, the tech isn’t built to support that because that just isn’t the reality of the way the company works.
The Tech Will Follow
I wouldn’t be writing this post if the only issue was that the tech at media companies is bad. After all, plenty of sites have terrible tech. HBO Nordic seems incapable of saving which episode of a show I am on, but I don’t write long blog posts railing about it. If media companies consciously decided to forgo the benefits of having technology that can cross boundaries so as to optimize the overall product, that would be a mistake, but I wouldn’t write a post about it. But media companies want these technical capabilities, and they are simply clueless as to why they don’t have them.
My message is that the problem is not the tech at all, but rather the structure of the business. Build an organization that believes in optimizing the product as a whole, rather than subdividing responsibility for each business unit, and the tech will follow. That isn’t easy, and I can’t say that I have a clear vision for how to do that. But that is the problem that needs to be addressed.