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By Thomas Baekdal - February 2023

Can magazines mix advertising and subscription? And what about password sharing?

This is an archived version of a Baekdal Plus newsletter (it's free). It is sent out about once per week and features the latest articles as well as unique insights written specifically for the newsletter. If you want to get the next one, don't hesitate to add your email to the list.

Welcome back to the Baekdal Plus newsletter. Today, we are going to talk about two things (mainly). First, let's talk about how magazines can mix subscriptions and advertising, and then let's talk about password sharing.

Guide to magazines doing advertising behind a paywall

Earlier this month, I was interviewed by the Swedish association of magazine publishers who are looking into the question of how (or if) magazines can mix advertising and hard paywalls.

They asked me a number of questions, and they are going to put out a report later this year (I don't exactly know when), but I wanted to expand on my experience and perspective on this.

So, in my latest Plus report, I have dived into the problems publishers face when trying to do this, how programmatic advertising gets in the way, and how to address that so that you can make it work.

If this is useful to you, take a look at "Guide to magazines doing advertising behind a paywall".

The problems with password sharing

I was listening to an episode of the Media Voices Podcast (always a delight), and they talked about the problems of password sharing. This is, of course, a topic that has gained much awareness lately because of Netflix. After they started experiencing a drop in subscribers, and also realizing that a massive number of their users were sharing their passwords with friends and family, they have been on a quest to try to fix this.

The most interesting part about this is what is called a sub-account where, if Netflix detects that a password is being shared, they give the account owner the chance to buy a lower-price sub account for those they share it with (at about 25%-43% of the normal cost).

As Netflix said:

Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don't live with - each with a profile, personalized recommendations, login and password - for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain.

Now, it's still way too early to tell whether this model will actually work. The initial signs are promising, and I also note that it is very interesting that just asking people to pay is an important part of getting people to do this (something we as publishers have also learned).

But this also leaves the question, what about the rest of us? What about newspapers, magazines, independent publishers, premium newsletters, etc. Don't we have a password sharing problem too, and can we learn from it?

The answer, of course, is that "yes, we do massively have problems with this as well" ... but ... "It's complicated." It's complicated, not just because it's happening, but also because, unlike Netflix, our reader's use is often not defined by a location. This makes it much harder for us to detect and verify when it happens, and more so, how to do something about it.

It's also not limited to size. This is something that dramatically affects all of us, regardless of size. For instance, back in 2014, I was contacted by a publisher of a business magazine and they wanted me to look over their own analysis of how much password sharing happened with their publications.

I can't give the specific details or what the numbers were (this was a client project), but the level of password sharing was so massive that it was one main reason they struggled to grow. The way they measured this was quite interesting. They had set a cookie for each login, which meant that they could see how many individual devices were using the same login (remember, for companies, users often have the same IP, so can't use that to check it).

This was not 100% accurate. In fact, we all have the problem of cookies and sessions being lost all the time, thus forcing people to login again and again. But, in their analysis, you can have a company with maybe 50 login cookies being set within a single day, but all using the same username and password.

Sure, some of this could have been the same person using both their mobile and their laptop, but not 50 separate times all within a short time span.

This was a particular problem for them because they had a subscription model that was divided into "single user" or "corporate" (remember, this was a business magazine). But what they had found was that almost nobody would subscribe to the corporate account, opting only to get the single user account, and then just sharing that password internally.

The amount of revenue they lost because of this was ... a lot!

What's frustrating about this is that this is also the problem smaller publishers face, including independent publishers. I have friends who are running premium newsletters, and while they kind of make it work, they too have run into the wall of password sharing.

And here, on Baekdal Plus, this is one of my biggest problems as well. Password sharing is my biggest obstacle to growth, probably the biggest one of them all.

Now, I have been fortunate (and thank you everyone) to have subscribers from many of the big (mostly western) publishing companies. But usually one account per company, even when I know that multiple people within those companies are regular readers.

In fact, it's so bad that only 14 publishers have arranged to have multiple accounts (and of those, only four have more than two). This massively hurts my revenue potential and growth because it means that instead of defining my market as "media managers / executives / professionals", my actual market is "media companies". And this lowers my market potential to only fractions of my actual readers.

What's more is that I can see this shift whenever we have a financial situation. For instance, right now most of the world is facing financial hardship, and this has particularly impacted publishers. This makes password sharing go up. I can see this on my site as well. Just three months ago, the number of publishers with multiple accounts was 23.

So, just in the past three months, I can directly see how the financial crisis is increasing password sharing and thus impacting the number of subscriptions. And this really hurts. Not just for small publishers like me, but for all publishers.

Mind you, none of this is new. Twenty years ago when I worked at a big fashion company, one year we had a bit of a budget squeeze. Every department was asked to go through their expenses to see what we could do without.

(BTW: The whole thing was maddening because, as a company, we were doing very well. But it had been sold to one of those international investment groups, who then immediately put us into debt in order to pay the investors back. So, we made a ton of money, but because of this debt, we had none to spend.)

One of the things we looked at was subscriptions, and accounting ran the numbers, and it turned out that the company as a whole was spending several hundred thousand (Danish krone) in subscriptions per year, much of it to the same publications.

Our CEO decided to minimize that. Instead of each department buying subscriptions separately, all subscriptions were now bought by the accounting department, and a magazine/newspaper rack was placed in the lobby (this was back in the days of print). So, instead of having 10 subscriptions to Vogue, we now only had one.

I can't remember the specific number, but the money saved just doing this was enough to cover the entire salary of an employee (meaning one fewer person had to be downsized).

So, I have been on the other side of this. But, for publishers, this really hurts. For Vogue this means that instead of defining their market across several people within the fashion companies, now their market is only each fashion company as a whole.

That's not fun.

Of course, here we are talking about business publications, but what about other forms of publications? Well, I know that newspapers also have this problem. For instance, several big newspapers here in Denmark have implemented an IP-block system to prevent this. I'm not entirely sure of how this works technically, but from what I can tell, they lock a subscription to only one IP address (possibly also a cookie) at a time.

So, as soon as another person logs in using the same username, the first login/device is deactivated for a period of time. Again, I don't know the details of how this is actually implemented, but the fact that it's there illustrates that this is a concern they have tried to address.

But what about consumer magazines? Well, we rarely hear about this at all, and the reason is that the consumer magazine market is still mostly based on print subscriptions.

However, this is now also changing. One of the most important trends in consumer magazines is how things are turning into services. Like how a fitness magazine is now doing training, how a bicycling magazine has created a streaming platform, or how the New York Times created their Cooking and Crosswords segments.

These are all things that are very susceptible to password sharing. The New York Times certainly knows this. I don't have any numbers to point to specifically, but one of the things they are trying to do is to minimize this level of sharing by being generous. They have created what they call "Bonus subscriptions", where subscribers can grant free access to another person ... but just one!

This doesn't fix the problem, but it does temper it. So, this is not just a Netflix problem.

The question then is, can we learn something from this? Well, it's very interesting to look at what Netflix is trying to do, with their discounted sub-account offerings, or what the New York Times is doing ... and, it will be really interesting to see what the result of this is when they release their next annual report. Does this make a difference?

However, there are also a lot of complications. Take my site. A few years ago when I became particularly frustrated about password sharing, I started to think if I could have a system where companies could "add employees", and for each additional employee who was granted access, they would get 40% off the full price.

It sounded like a good idea but when I started implementing it, I quickly realized it wouldn't work. Not because of the discount, but because of accounting. You see, as soon as we are talking about a business account, you can't have multiple people, from different departments, all paying for subscriptions using one account.

Accounting doesn't like that. In a business, each expense had to be handled separately, with separate invoices, so that each person and each department had their own budget and expense sheets.

So, as a business publication, you can't do what the New York Times or Netflix is doing. It doesn't work in terms of accounting. So, I had to drop my idea, because I just couldn't implement it in a way that made sense.

For the few publishers who do have multiple accounts, they have either signed separately (so the accounts are not connected in any way), or I have done it manually, where I create and send out invoices for each employee, but then send them to their accounting department for central processing.

This is the challenge.

But, as a publishing industry, we do need to focus on this a lot more than we do today. The digital world makes it so easy for people to share their accounts, and I would love to see more publishers experiment with ways to change this.

I don't think blocking it is the solution (nor do I think it can be done accurately from a technical perspective), but we need to do more experiments around pricing, people's perception towards it, and also things like personalization that makes the experience so specific to one person that it becomes less desirable for people to share one account.

Want to know more?

If you want to know more about the future and the challenges we face, don't forget to read the Plus article I mentioned in the beginning of this newsletter about mixing magazines, subscription, and advertising.

If you are more interested in advertising in general, take a look at "Advertising ... 10 years from now"... or if you are more interested in the trend around print, you can read: "What is the role of print in 2023?"

Support this focus

Also, remember that while this newsletter is free for anyone to read, it's paid for by my subscribers to Baekdal Plus. So if you want to support this type of analysis and advice, subscribe to Baekdal Plus, which will also give you access to all my Plus reports (more than 300), and all the new ones (about 25 reports per year).

Oh... and, of course, if you want to upgrade to a corporate account, where you can get a separate invoice for each employee who wants access to Baekdal Plus, contact me at ;)

This is an archived version of a Baekdal Plus newsletter (it's free). It is sent out about once per week and features the latest articles as well as unique insights written specifically for the newsletter. If you want to get the next one, don't hesitate to add your email to the list.


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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


—   newsletter   —


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