Friday, November 9, 2018

Goosing the Sacred Cash Cow -- Foreplay Begun, When Do We Get to First Base?

Digiday reports "To goose subscriber growth, The New York Times plans to try a flexible meter."

A quick note to suggest how much farther they should be going in making flexible offers...

The Times is trying to get smart about enticing a few more potential subscribers in to their paywall. The problem is that after the introduction ends, they then hammer them with the standard full price deal that makes no sense for many of them. It is time they begin to get flexible in lifetime pricing that maps to lifetime value to the customer.

The Times now sees that one size introductory offers do not fit all. When will they see that one size ongoing offers do not fit all? When will they mass-customize prices to match the widely differing value that different readers get from the Times?

The article quotes Ken Doctor: “In almost a decade of paywalls, the nuance that can be brought to digital subscriptions is far greater than most people have used. The idea is, you’re not dealing with one size fits all. You have ways to test their propensity to subscribe based on price, what kind of content they read, how much. You can try all kinds of marketing offers.”

And quoting Tony Halle: “The crucial challenge is how to maximize subs at the right paywall level without sacrificing your future audience development.”

Doctor reported a year ago that Halle's data showed that "about 1.8% of their audience are digital-only subscribers." Since even fewer are print subscribers (4 million total, 3 million digital-only), it is clear that among the 97% or so of non-payers in their audience, a very significant number could be convinced to pay at a profitable level -- if the price was right.

Why shouldn't the Times easily reach their 10 million subscriber goal (and more), if they were able to mass customize their pricing effectively? Even at lower average prices, they might double or triple their profit.

Mass-customizing price over subscriber lifetime

OK, how can they do that?

  • The short answer is to use an adaptive, value-based model for subscription pricing.

The set-price subscription seems to be a sacred cash cow. It is understandable that any business would fear messing with that. It is much less threatening to mess with introductory discounts and meters. But where is the lifetime value? ...in a lifetime of subscriptions!

When will publishers like the Times get beyond the foreplay, and get serious about designing the right value proposition for each of their customers -- and potential customers -- in a more extended interplay?  We have progressed from a blunt "wham, bam, thank you ma'am" to a few months of more responsive foreplay that abruptly cuts back to the standard "wham, bam, thank you ma'am." When do we move on to continually seeking affirmatively mutual value?

------------------------
More about FairPay

For a full introduction to FairPay see the Overview and the sidebar on How FairPay Works (just to the right, if reading this at FairPayZone.com). There is also a guide to More Details (including links to a video). 

My article in the Journal of Revenue and Pricing Management, "A Novel Architecture to Monetize Digital Offerings" also provides an overview of FairPay (summarized more briefly in the ESADE Knowledge article "Three building blocks to monetize a digital business," and previously in Harvard Business Review, "When Selling Digital Content, Let the Customer Set the Price.").

Even better, read my highly praised book: FairPay: Adaptively Win-Win Customer Relationships.


(FairPay is an open architecture, in the public domain. My work on FairPay is pro-bono. I offer free consultation to those interested in applying FairPay, and welcome questions.)

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