Harnessing the Power of the Subscription Economy: Lessons from Digital Media's Leading Innovators

#CDSGlobalSummit

@CDSGlobalHarnessing the Power of the

Subscription Economy Tony Silber

VP/Content, Folio:/min, @tonysilber

Beth Roy

CCO, CDS Global, @BethAnnRoy

#CDSGlobalSummit

@CDSGlobal

Pivot to Success

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• The digital revolution, the

increase of free content

available and the proliferation

of mobile/tablet devices.

• These forces of economic

disruption have required

the print-magazine industry

to adapt, on the fly, amid

predictions of imminent decline.

Pivot to Success

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• Suddenly, the world is zeroing in on subscriptions, a

model that media companies have used forever.

Pivot to Success

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In “Building a Strategy for the Subscription Economy,” Gartner

analyst Chris Fletcher defined it as a market reaction to a

growing range of technology products that can be delivered

digitally to devices ranging from tablets to smartphones and

mobile devices.”

Pivot to Success

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And a model that never had much relevance outside the print-

media industry is finding favor as a smarter way to sell a whole

range of products, including movies, music, books, software and

even clothing and food.

Pivot to Success

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By 2015, Gartner predicts, more than a third of Global 2000

companies selling non-media digital products will be generating

incremental revenue through subscription-based services and

revenue models, on the order of 5 to 10 percent.

Pivot to Success

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• For publishers, a retooling opportunity is at hand.

• Today, a subscription must be about more than dutifully

delivering an issue.

• And because publishers (and all businesses) often struggle with

how to think differently, we’ve compiled four case studies that

represent the state of the art in magazine-company creativity

in the subscription economy.

CDS Global Positioned to Pivot

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CDS Global’s eHub solution named an Emerging and Niche Player

in the December, 2012 Forrester Research Inc., report: “Market

Overview: Subscription And Recurring Billing Solutions 2012” by

Peter Sheldon, Senior Analyst

CDS Global Success Stories

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Success Story 1 - MeredithMeredith Converts a Thousand Points of Data Into a

Subscription Powerhouse

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“Instead of presenting product offers based on historic

models and views of customers, we’re now integrating

active behaviors and actions that are being taken in real

time on our sites.”

—Janet Donnelly, Meredith



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• Real-time data allows them to be more dynamic and

responsive, giving them the added flexibility in bundling

and pricing.

• The company is paying close attention to what channels

subscribers use to engage with online products and tailoring

content to the channel.

• Data, more of it and better crunched, lies at the heart of the

Meredith effort.



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Traditional model of customer retention: Flood a

subscriber with one-size-fits-all offers to renew.

New model:

“If we know that someone signed up for a food

newsletter, we know they have a food affinity, and

if they’re on our website through a mobile

browser, we know they have a digital propensity.

So we think maybe we should present an Every

Day With Rachel Ray digital edition.”



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• Meredith analysts comb through

real-time information generated

from watching how the audience

engages with the brand digitally.

• Information gleaned from 800

distinct data points–up from 400

five years ago–is dissected to help

stitch together highly targeted

and personalized offers.

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• The result can mean building out

a title to reflect what subscribers

value. Allrecipes.com, long a

digital-only title, now has a print

version.

• Launched last year with a 500,000

ratebase, it is expected to hit 1.1

million with the February 2015

issue.

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Success Story 2 - ESPNESPN Leverages “TV Everywhere” Model With Mobile

Subscription Offering

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“The subscription model is building more and more steam in the

television/media industry, from both a financial and critical point of

view.”

“Look at the lightning success of streaming services from Netflix,

Hulu Plus, and others to see that companies are eyeing this model,

which is impervious to the cycles of the advertising market.”

—Robbie Caploe, Editorial Director of Cynopsis Media



• Introduced WatchESPN in 2011.

• Targets the growing ranks of those who want to access

programming via mobile devices.

• Available to credentialed subscribers to cable systems that

carry ESPN.

• Key is real-time authentication

• Delivers streaming on-demand video of live

programming and events that air on more than

a dozen channels on the ESPN broadcast platform.

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The app model could help stem the flow of subscribers

from the network and pay-TV providers. According to

Nielsen, between September 2011 and September 2013,

ESPN shed some 1.5 million subscribers who either

cancelled pay-TV or switched to packages that didn’t

carry the network. That’s noteworthy, but still only a

fraction of the 98-million homes that have access to

ESPN.



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• The WatchESPN initiative could be

interpreted as a desire to on the part

of ESPN to position itself for a future

that will have a very different content

distribution model.

• For now, though, the network insists

it’s about broadening viewer access

to ESPN content through existing

distribution channels.

Success Story 3 - HearstSuccessfully Increasing a Subscription Price

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“We think this will provide a good example of how you take a

highly engaged audience and serve them on a dimension that

goes beyond just the magazine, and in a way that’s economically

beneficial.”

—John Loughlin, Hearst EVP


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• O, the Oprah Magazine, has a fiercely

loyal community of 2.4 million.

• So how do you leverage that community

beyond a standard subscription, and

deliver enhanced value too?

• Hearst’s solution: “O’s Circle of Friends,”

a three-tiered service offering a much

more complete experience with the

brand.


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Hearst sees the program attracting 100,000 people over the course of

three years. As of early August, some 1,000 had signed up within the

first 10 days, and most were at the premier level.


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• Tier 1: Basic tier add-ons span full digital edition access, a gift

subscription, advance notice of O special events, an e-newsletter

and easy sweepstakes entry.

• Tier 2: adds in a second gift subscription and a keepsake box of

luxury beauty items.

• Tier 3: The $199 level adds in a personalized birthday card from

Oprah, a surprise gift from the O List, and “test-and-keep”

opportunities.

Success Story 4 – August Home PublishingOne Company’s Strategy to Boost Subscriptions: Raise the Price

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“We had projected about 32 percent of a group in our early

renewal file would go for this, and we got about 64 percent. The

response was far better than we ever expected.”

–Don Peschke, CEO


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• Less-than-projected direct mail performance

combined with the need to increase revenue-

per-subscription in January led August Home

Publishing to place a counterintuitive bet: that a

price increase would fix the problem.

• The company decided the two titles’

subscription revenue stream couldn’t be shored

up by lowering the price and waiting for the

numbers to improve.


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• The lure for getting Cuisine and Garden Gate

subscribers to pay $29—up from $24 and the

only choice?

• A special edition available only to

renewing subscribers.

• A bi-monthly magazine with heavier paper

stock

• Perfect-binding instead of saddle stitching

• 16-page insert with special editorial content


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• The results? Two-year renewals surged well beyond normal,

accounting for 80 percent of the new subscriptions sold in the

first round of renewal offers.

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Takeaways and Action Items For the

Subscription Economy

Takeaways and Action Items for the


1. Think more like a brand.

� Publishers should build out an array of assets that can be offered as

part of a total brand experience.

� Merchandise offers, tickets to events, value-added content packages

and other perks can be added to subscriptions to enhance their value

to the subscriber.

2. Gather more and better data.

� Data is becoming the backbone of better efforts to slice and dice

subscribers and understand their behaviors.

� The tools to understand exactly how individual subscribers are

consuming content and engaging with the brand are now available.

� And it’s essential to crafting targeted renewal and subscription

enhancement offers.

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Takeaways and Action Items for the


3. Single View of Customer

� Allowing consumers an easy-to-access single view of all of their

purchases is critical.

4. Be more proactive.

� By increasing the frequency and quality of communications with

subscribers, publishers can position themselves to keep customers in

the fold and broadening their engagement with the brand.

5. Transition from paper billing to plastic with recurring billing.

� This is critical for your success.

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Harnessing the Power of the Subscription Economy: Lessons from Digital Media's Leading Innovators