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By Thomas Baekdal - April 2022

What makes news relevant, interesting, and useful?

This is an archived version of a Baekdal Plus newsletter (it's free).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 newsletter. Today I have two things for you. The first article is a deeper dive into a topic I have talked about many times before, which is about how we define, score, and optimize news relevancy.

Then, in the second article, I'm going to talk about bundles, and why so many people think about this the wrong way.


Known to work: What makes news relevant, interesting, and useful?

One of the most profound changes we have seen in the media over the past decade is the shift from an advertising/pageview based focus, to a high-value subscription based focus.

This change in priorities dramatically changes how we do things. In an advertising-based system, you benefit from having a large volume of traffic, and it doesn't really matter what that traffic is. In other words, having one million one-time visitors works just as well for advertising as regular traffic.

For a subscription model, however, this doesn't work at all. Now we need to talk about subscription propensity, renewal rates, loyalty, use per article, and relevance, because these define the potential lifetime value of your paying audience.

And to optimize for this, we need a model, and that model needs to be scorable so that we quantify how well we are doing.

I have been talking about this for many years, and in my latest Plus article, I go through the details of how you could do that. So take a look at: "Known to work: What makes news relevant, interesting, and useful?"


We need way more streaming channels

One of the things you will often hear people say is: "There are too many streaming services and the industry is in dire need of some sort of re-bundling."

In fact, this was said by Scott Nover from Quartz, as part of his article interviewing media people about how we could fix the streaming problem.

However, this isn't actually the problem we have. Instead, the real problem is that we don't have enough streaming channels.

Let me explain, and also why this applies to newspapers as well.

Imagine if supermarkets worked the same way as the streaming channels. Instead of buying the products individually, you had to get a 'supermarket' subscription for each of the supermarkets you wanted to get something from.

At first, this seems great. You get one price per month, and then you can just get whatever food you desire. Right?

Well, yes ... until you realize that each supermarket doesn't quite solve everything. Sure, they have a lot of inventory, but there are always those other things that they don't have ... and that's always the specific items you happen to need.

So, what do you do? Well, you could just subscribe to more than one supermarket. Just get three subscriptions and now you have pretty much everything.

Right?

Well, no, because now you are paying triple the price just to get a few extra things. This is not cost effective. Only the very rich would accept that, but everyone else would start to say:

"There are too many supermarket subscriptions and the industry is in dire need of some sort of re-bundling."

In other words, couldn't we just get one big bundle for all of them, and for a cheaper bundle price, so that we don't have to deal with all of this? Or people start saying: "Why are we paying a subscription when we can't get everything we need anyway? Couldn't we just pay for each thing individually?" (Aka micropayments).

On the other hand, when we look at pretty much every other market, they don't have this problem. You don't see people saying: "There are too many fashion shops, and the industry is in dire need of re-bundling".

The reason is that the choice of fashion items is so wide that people stop thinking about it as a bundle. We shop wherever we like. One day we go to one fashion store to buy a jacket, and then we go to a different store to buy the running shoes we need.

People are not saying: "We wish that the fashion stores could just merge together so that we can get everything from the same place." Instead, we prefer the choice. We like the idea that there are so many different shops, with different focus areas, different needs, and different styles. And depending on what kind of person you like to be, you prefer one store over another.

And this is the dilemma we face in the media.

For streaming channels, we currently have three separate markets (but many in the media only focus on the first one).

We have the 'big' streaming market, with Netflix, Hulu, Amazon Prime TV, Disney+, HBO Max, and Paramount+ (plus some large local ones in individual countries).

These have the 'supermarket' problem I mentioned above. Each of them tries to be the 'one channel' that people have, giving people a wide selection of choices, but also creating the annoyance of having to choose.

We see this clearly today. If you have already subscribed to Netflix, HBO Max, and Disney+, it's a really annoying decision to then also have to subscribe to Paramount+ just because of that one series that you want to watch.

It doesn't feel worth it. You are already paying for three streaming channels, which is already too much. So getting yet another one just for one show, which you have to pay full monthly price for ... I mean... that's annoying.

The second type of streaming channels are the niche streaming networks. Here we find networks like Curiosity stream, 21 Draw and many others that don't have the wide inventory, but are instead much more focused around an interest or a topic.

In other words, a much smaller selection of shows, but much better focused.

Now, it's much like the fashion shops. You are not annoyed that each of these channels is a separate thing. Their focus and their niche makes them worth picking (if you have that interest).

People would never say: "Oh, I wish all these niche channels would just become part of the Netflix bundle." People know that this would not benefit those channels or that focus.

And finally, we have 'creator channels'. These are all the YouTubers, Twitch'ers, Yoga teachers, Newsletter creators, and Podcasters etc. Now it makes no sense to bundle them because, if we did that, none of them would really be able to make any money.

Imagine if instead of a subscription to each individual Substack newsletter, they instead created a Substack model where you could pay one simple price and read every newsletter from anyone.

I'm sure some would love that idea, but it would completely destroy the model. You don't try to turn what is a highly niche market into just another Netflix.

So why is this important? Well, it's important because it's the same problem we are faced with in the newspaper industry. Today, people say the same things.

Every week we hear people complaining that they can't afford to buy every newspaper, and the reason they say that is because they are thinking about news the same way that they think about Netflix and HBO. As big mass-market generalized packages of random news, where only a tiny bit of it is different from each paper.

And people are right. That is how the national newspaper market is today. Here in my country, for instance, we have three major morning newspapers, and they are all basically covering the same stories. It would never make any sense to subscribe to all of them. (In fact, about 75% of the public don't think it's worth subscribing to any of them).

We can't fix this by creating a bundle, just as it makes no sense for Netflix to bundle with HBO and Paramount+. Instead, this market is all about being the biggest one.

For niche newspapers, well, here we have maintained the niche. That's what creates our value and our focus, and if we stop being a niche and instead just become part of some mass-market bundle, we lose the public interest in picking us.

In other words, never try to be a generalized supermarket if you are a specialty store.


But... wait... you mentioned micro-payments? Would that work?

I really don't want to talk about this but I just know that I have to add a note, otherwise I will get a ton of emails about it.

Yes, normal supermarkets are essentially micropayment based. You go in, look around, and you pay for each item you want. However, this is not the same as in the media.

Imagine for a second that someone came along and said: "You know, instead of a subscription to Netflix, why can't we just pay $1 per TV show episode?" That would end up being roughly the same amount of money as a subscription is today.

But, it doesn't work that way. The last thing you want to do is to force people to sit in front of their TVs every night, and make a purchasing decision before they can watch each show.

That would be a seriously annoying way to watch TV, it would decrease the use of TV, and, as soon as any other streaming channel came along to offer people a way where they didn't have to do that, people would switch to that.

It's not about the money or the technology. Even if you tried to automate it, it's still a purchasing decision. And we know this. We saw it with the music industry. In the past, you had to buy each song from iTunes. But where is that now?

It works with supermarkets because here you are choosing to go to the supermarket, where you spend 15 minutes picking up all the items that you need for the next week ... and then you pay for that all in one go.

It would not work for news where your reading is spread out across the day.

But there is another reason that is just as important. The only time where a single payment works is when the product is made for it. Meaning that the thing you buy must have value as an isolated product. News doesn't work like this. In fact, almost no publishing works like this.

The articles we write are not designed as an individual purchasing decision. And we know this. Imagine if people had to choose to pay for each newsletter you sent them, every time you sent it.

It's a distraction.

The point is that whenever we see people complaining about the choice they have to make, we have to think about what type of publisher we are. If you are a big mass-market publisher, it's part of being big. And if you are niche publishers, the problem is really that you haven't made that choice specific enough.

Again, nobody has ever said: "I wish all the fashion companies would just merge together into a single brand". This is how we need to think about the press.


Want to know more?

Don't forget to check out the other articles in the 'known to work' series, where we explore strategies that we know work for publishers:


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).

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

 

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