Local News Initiative, Spiegel Research Center report offers insights on shift to subscription-based business model
At a time when more than 1,300 American communities have completely lost local news coverage, a sustainable business model for journalism may be less complicated than imagined.
“I think the secret is deceptively simple,” said A.G. Sulzberger, soon after taking over as New York Times publisher two years ago. “Make journalism that’s worth paying for.”
Creating that kind of engaging experience, though, is often a different endeavor for small-, medium- and large-local news markets, according to a new research report from the Medill IMC Spiegel Digital & Database Research Center.
Edward Malthouse, Spiegel’s research director, outlines the challenge based on his team’s data-driven scholarship. “We found that, in smaller markets, reading either local or national stories drives retention,” he said. “But in some of the larger markets, when consumers read news stories that they can find elsewhere, it didn’t help.”
What this means for smaller markets is that well-curated content from a national wire service can be a critical accompaniment to hyper-locals news — stories that other media members are not covering.
“As a rule of thumb, it is local news that drives the frequency of visits to news websites, which drives subscriber retention,” says Malthouse, the Erastus Otis Haven Professor at Northwestern’s Medill School of Journalism, Media, Integrated Marketing Communications.
Although the Northwestern researchers — which included Spiegel Center Executive Director Tom Collinger, postdoctoral fellow Yasaman Kamyab Hessary, and McCormick doctoral candidate Yayu Zhou — found that the frequency of website visits was the biggest predictor of subscriber retention, the team also discovered that differentiated — or original — content and adblocking software also bolstered continued use of local news sites. In a somewhat surprising conclusion, researchers learned that page views and time spent on a newspaper’s website are not accurate predictors of subscriber retention. In some cases, the correlation even has a negative effect, resulting in churn, or a reduction in subscriptions.
“As we consider this pivot from an ad-based to subscription-based business model, it’s important to determine what subscribers value most from these news outlets,” says Collinger, an associate professor at Medill. “To do this, local media executives must gain knowledge on what and when subscribers are reading, viewing, clicking, opening, sharing, and liking.”
The ability of the Spiegel Research Center to analyze subscriber use patterns is predicated on access to more than 13 terabytes of anonymous reader data. The information sharing is part of a unique partnership known as the Medill Local News Initiative (LNI), which launched in April 2018. LNI was conceived to help local journalism overcome the industry’s growing readership crisis. The initiative’s initial research was conducted in partnership with three news organizations — the Chicago Tribune, Indianapolis Star, and San Francisco Chronicle. The news outlets will continue to work with Northwestern this year, and Medill’s Knight Lab will use the research findings to help create new digital tools and products to bolster local news.
The Spiegel Center’s initial analysis also highlighted the benefit of e-newsletters and quality mobile applications in subscription retention.
“One market has a poorly rated app, and in that market those who use the app are more likely to churn, while in another market, there is a highly rated app and those who use it are less likely to churn,” says Malthouse. “When combining these discoveries with what we know about excessive advertisements — users don’t like it — for a newspaper to succeed, the user experience has to be front and center.”