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Aug. 28, 2012, 10 a.m.
Business Models
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Rex Sorgatz: What The New York Times should do next: membership

To be sustainable past print’s lifespan, Sorgatz argues, the Times will have to build more meaning and more value into a membership program.

Over three years ago, I wrote a blog post about what I thought The New York Times should do to survive the collapse of advertising. “Micropayment, Reimagined” proposed a series of “passes” that a consumer could purchase to access the Times’ online content at incremental levels. Last year, the Times released a similar system — a metered paywall that was wildly perturbing to the free-wheeling Internet commentariat. Although criticized by every professional media pundit with a Huffpo account, the paywall has been quietly building an audience ever since.

Now, with over 530,000 digital subscribers, it appears to be a “surprise” success. On the last quarterly earnings call, The New York Times Co. announced that subscription revenue now exceeded advertising revenue.1

But let’s be clear — 500,000 is not cool. And neither is a million, because not even that would cover the loss at the conclusion of this epoch, The End Of Print. The New York Times needs at least 2 or 3 million digital subscribers to survive a post-print, post-advertising world. And I have an idea how they can do it:

Memberships.

Using what they have learned from digital subscriptions, The New York Times should create an entirely new product around membership. This new brand would vastly expand the reach of the Times to new products, new platforms, and new revenue opportunities. To succeed, it needs to perfectly executed in two areas: It has to be cool (marketing) and it has to create value (product).

The first step is giving it a good name. “New York Times Digital Edition” just doesn’t cut it. It should be sexy, simple, bold, and memorable. Once you have the name, then create something physical that feels substantial. Make it shiny. (Hey, I made a membership card for you, above.) Put the designers of T on it. Make it cool. And for chrissakes, stop calling it a subscription. It’s a membership.

And then the important part: create value. Right now, a digital subscription gives you access to a stack of print content. Meh, there’s nothing cool about that. Membership to Club NYT (and let’s do better than that name) could be so much more. It should give you access, it should give you a sense of pride, it should give you value. You should tear the zipper off your purse while yanking the card out to show to friends.

So what do you get with this new membership? Here’s a start:

  • Access to standing discounts. How would you like 50 percent off a MoMA membership? The Times has you covered. How about 20 percent of a General Assembly membership or Skillshare classes? You got it. A digital subscription to the Times is expensive (they start at $200/year), so it needs to show value. Partnerships with interesting brands help define the product while creating incentive. The Times should consider buying Founders Card, or at least look at how they’re doing membership — in particular, the audience they are catering to.2
  • Access to Times events. As part of your membership, you get access to upcoming events with Paul Krugman, Yoko Ono, and Nathan Myhrvold. Did you see that David Carr did a live interview with Robert Pattinson and David Cronenberg the other day? Did you know they do these events all the time? Why isn’t this franchise — TimesTalks — as big as TED? NYT has the clout, the curatorial insight, and an awesome physical location, but TimesTalks is treated like a fringe product that isn’t even respected enough to get on the nytimes.com domain. Awareness isn’t even the primary problem — product integration is. It’s so obvious that these events should be bundled with digital memberships to propel overall growth.
  • Access to new digital products. Several years ago, the Times tried a subscription product (TimesSelect) that gave members access to the weekly missives from Maureen Dowd, David Brooks, and other columnists. It was a failure because people don’t want to pay for content that was previously free. But the brainy creators at the Times and NYT Labs have hundreds of product ideas just waiting to be developed. They make products that are digital by their very nature: database-driven applications, interactive video, or mobile apps. These amazing new apps — perhaps developed with your News.me partners at Betaworks — should be bundled into membership.
  • Access to deals. Would you like first access to Azealia Banks playing Bowery Ballroom? All yours. An invite to the new Mario Batali opening? Here ya go! Did you know NYT has a deals site? Don’t worry, you didn’t miss much more than a 20 percent haircut discount. A membership to the Times needs to pay off for consumers, but it also has to be surprising. Discounts to daily rituals are fine for Groupon, but a membership to the Times should do exactly what the paper does: reveal new experiences and ideas. And yet again, these deals need to be bundled with membership!
  • Access to ebooks. I’m sure every Times writer has a Kindle Single in them. Every writer should be given a Google-like 10 percent of their time to write longer pieces to become digital books. NYT has already started down the ebook path, but a much better strategy than nickel-and-diming for a $6 ebook would be to make it free with a digital membership. The revenue math on this is a no-brainer: You have to sell 32 ebooks to equal one digital subscription.
  • Access to other Times content. There is some precedent for the digital membership that I’ve been describing. It’s called Amazon Prime. A membership to Amazon Prime initially gave you free two-day shipping for a year. Do you know what you get now? Completely random stuff! You get free streaming video, you get free one-day shipping on certain products, you get a Kindle “lending library” that contains free ebooks. The Times’ membership program needs to be similarly diverse, creative, and spontaneous.3 The Times should start now, because years down the road they’ll be adding products to the digital membership platform we never even considered today.
  • Access to other web content. Would you like to add Vanity Fair to your digital membership? Do you miss getting news from back home? How about the Minneapolis Star-Tribune for $20? Seeing the success of the Times’ digital memberships, other publications are already instituting their own technological solutions. But every publishing group is now reinventing the wheel. NYT could position itself as the technology and distribution solution for publications — an app store for content memberships. Setting up these partnerships will require shoring up the biz-dev resources, but the outcome is technology holy grail: a platform.

And finally, whatever you do, don’t turn this program into the equivalent of an NPR tote bag. I actually suspect the current NYT digital subscription model is surviving because of an NPR-like sense of liberal goodwill. But it will never sustain itself on charity. It must add value to succeed.

So here’s my advice to the new CEO: transform the digital subscription into a real-world membership; push every new product into a new membership program; incessantly incentivize people to become members; constantly illustrate value so people recommend membership to their friends; make it a platform; and bundle, bundle, bundle.

And please give me a shiny card.

Rex Sorgatz is only kinda sorta a professional media pundit. He can be found on Twitter: @fimoculous.

Notes
  1. Many people don’t seem to realize the significance of this — for not only publishing companies but also apps. Or rather, especially apps, which will soon realize that advertising won’t solve their revenue woes. Therefore, a prediction: Some of your favorite web applications will start to experiment with freemium subscription models.
  2. I’m very hesitant to issue the utterance “buy this company” as a solution to any problems. Mathew Ingram — whose analysis I enjoy very much — once said that NYT should “buy something like Flipboard,” which is just about the most apocalyptically bad idea imaginable. Please, please, whatever you do, don’t get envious of over-capitalized apps!
  3. The most important lesson that the Times could take from Amazon is recognizing how loss leaders can spur growth. Just as Amazon breaks even on ebooks to sell Kindles, the Times could be revenue-neutral on products and deals that spur memberships.
POSTED     Aug. 28, 2012, 10 a.m.
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