Why NZ ditched digital subs for membership model

Why NZ ditched digital subs for membership modelCampbell Mitchell, Fairfax Media New Zealand's chief marketing officer.

Digital subscriptions may be an attractive proposition for publishers, but New Zealand’s two major players are sticking with their free membership model for now.

Newspaper publishers the world over have been deploying and experimenting with metered and digital subscription models since it was pioneered by The Wall Street Journal back in 1995.

Australian publishers have implemented various forms of paid digital subscriptions across their major mastheads, however the model is markedly absent from New Zealand’s two major players: Fairfax Media NZ and NZME. Both publishers have instead adopted a free membership model online.

“The market dynamics are a little different in NZ,” explains Campbell Mitchell, Fairfax NZ’s chief marketing officer.

“We are a smaller market so it’s harder to go for scale, and scale is an important part of successful (online) paid content model.”

Content on Fairfax NZ’s flagship news site stuff.co.nz, which acts as a portal for its newspapers, can be accessed for free without membership.

However those who become members receive a more tailored news experience in exchange for their data, which is highly valuable from both an editorial and advertising perspective.

“Data enables us to be more relevant, it enables us to be more convenient and more valuable to the consumer. Ultimately, it’s got to have upsides for the consumer or it won’t work,” Mr Mitchell says.

“The point is to make sure the consumer goes in eyes wide open and they know what they’re exchanging.”

Fairfax NZ expects to have more than a million New Zealand members via stuff.co.nz by the end of the financial year and Mr Mitchell says the relationships with consumers built by the membership model may extend beyond the content experience in the future.

NZME’s flagship newspaper the New Zealand Herald also utilises a free membership model which has attracted 390,000 digital registrants since it was announced in August last year.

“We have digital registration now,” explains group revenue director Laura Maxwell “And we are looking to roll that out in a much more extensive way.”

“We’re not going to switch a generic paywall onto the New Zealand Herald. We don’t believe that’s the most effective way of engaging audiences.”

“If we look at what has happened at markets where there is ostensibly a news digital duopoly, there isn’t a successful paywall proposition where only one player has a paywall or a paid digital subscription. So we need to look at not just ourselves … but also what the market environment is and at the moment our major competitor in digital news has signalled that they won’t be switching on a blanket paywall.”

Ms Maxwell said there are, however, online products or content that could potentially be monetised in the future, such as iHeartRadio hosting a pay-per-view live streamed concert, a content vertical specifically developed to be subscriber product or a micropayment-based app.

“If you look at millennials they’re very comfortable downloading an app, perhaps it’s free, but having in-app payments whether it’s for gaming or for different features and functionality.”

“I guess what we’re saying is there’s no silver bullet approach. We think there is going to be a range of tactics that all content providers and generators will employ over time and we’re constantly monitoring those and looking at what is best for us in this market.”

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