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May 1, 2017, 12:28 p.m.
Business Models

Here’s how this Norwegian publisher built a successful digital subscription model for local news

“When we started out, I’m sure a lot of people were worried about cannibalization, and people moving from print to digital, but that hasn’t really happened at all.”

Three years ago, the Norwegian publisher Amedia, which owns 62 local and regional outlets across the country, introduced a digital subscription strategy, starting with a universal login system across all its newspapers’ platforms it called aID.

And it’s found remarkable success: Since launching in April 2014, the company has signed up about 130,000 digital subscribers — more than any American newspaper aside from The New York Times, The Wall Street Journal, and The Washington Post. That’s in Norway, a country with a population of about 5 million people. (By way of comparison, Gannett — which includes over 100 daily newspapers and operates in the much larger U.S. and U.K. — just announced it had crossed 250,000 paying digital-only subscribers last week.)

Amedia attributes the growth to a three-pronged strategy addressing three groups of customers: existing print subscribers, those who are registered online users, and those who are use the company’s sites without registering and logging in. In each case, the effort is to move people up the value chain: to get the unregistered to register, to convince the registered to subscribe, and to move print subscribers into digital registration and, eventually, to upsell them into premium products.

Amedia now has about 530,000 total paying users (both digital-only and print-plus-digital) registered in the aID system — about 10 percent of Norway’s entire population. And 800,000 Norwegians are registered on its sites.

Amedia expects the growth to plateau in 15 to 18 months, Pål Nedregotten, the company’s EVP in charge of business development, data/insight and innovation, told me last week at WAN-IFRA’s Digital Media Europe conference in Copenhagen, Denmark. As the company prepares for growth to slow, it’s looking to find new ways to engage its existing audience more deeply. For instance, Amedia bought the rights to lower-level Norwegian soccer leagues and broadcast 347 matches last year.

Amedia made NOK 123 million ($14.3 million U.S.) in profit before taxes last year, a decrease from NOK 267 million ($31.2 million) in 2015. Advertising revenue fell by 16 percent in 2016, and for the first time last year, the company’s subscription revenue surpassed advertising.

Nedregotten gave a presentation about the company’s strategy at the conference. He and I spoke prior to his presentation about Amedia’s use of data, the importance of strong journalism, and what’s next for the company. Here’s a lightly edited and condensed transcript of our conversation.

Joseph Lichterman: I’m interested in your plan to get readers to register, subscribe, and then get them to higher-paid categories. How do you move them up that scale?

Pål Nedregotten: The phase we’re at at the moment is to try and convert scale into depth. We had a huge reach before we started this process, and we have started capitalizing on that reach. It’s like having a big reservoir that we’re building into a hydro dam that we’re funneling into electricity.

The key to utilize it further is to have a lot of data, so that we’re able to find the right segments to attack with different value propositions. We’re looking at how many visits it takes to register, how few visits it takes before you actually stop subscribing. We’re able to see patterns into which kinds of customers are likely to go to another level. We’re using this kind of insight both from the open-traffic, cookie-based, browser-based customers, all the way up the funnel to our logged-in really valuable customers, looking at what they’re willing to pay more for.

Because we’re a local media company — we have 62 titles scattered all across Norway — we have tested willingness to pay for more than one title, offering access in a region for all the newspapers we have in a region.

Lichterman: I’d imagine along with that data, though, you need to have the coverage that appeals to people.

Nedregotten: One of the most gratifying things, as an old editor and an old journalist, is that the stuff we thought was important actually turned out to be important. That’s what’s driving this growth: the quality of the journalism, the quality of the content we’re actually producing. We’re seeing that clickbait headlines don’t sell, don’t drive engagement, don’t drive reading time, don’t drive the financial situation of our company. What does is the exact opposite: good strong creative headlines, good strong creative journalism, and covering the topics that people in our local communities actually care about.

Lichterman: Does that also include content types like football rights, that aren’t traditional news but that readers are interested in and might be willing to pay for?

Nedregotten: Yes, but that is supplementary. It’s part of the remit of a local news brand that has been ever since we started in this business 150 years ago. It’s extending it. But if we were only to turn into a local football coverage site, it wouldn’t work. It’s a package.

Lichterman: In the U.S., it’s a big challenge for local publishers to get enough readers to be able to make either subscriptions or advertising revenue worthwhile. It seems like an advantage to have a large network of local papers across the country.

Nedregotten: Our journey isn’t necessarily a blueprint for others, but I do think some of our experiences are replicable. The key thing we rediscovered is the value of actually delivering something that a local reader values. Are we able to produce journalism? Are we able to deliver content every single day that people find relevant and that impacts them in some significant way, either as a standalone or as a process going over weeks and weeks? Delivering that kind of value is vital.

[Having 62 sites across the country] certainly made it easier for us, because we had done a lot of investments that we didn’t really have to think about; we had building blocks to stand on when we started out. But it was also understanding the advantages we had in the marketplace and the role we used to play in people’s lives. We wouldn’t have been able to execute if we didn’t have that kind of understanding.

It was starting out with: Okay, we have these 480,000 paying print subscribers. What are we going to do with them — are we just going to allow them to disappear one by one, or are we going to try and make them into digital users? That was the starting point that was rooted in a value that we had and a recognition of that value.

Now we’ve passed 130,000 paying digital subscribers; three years ago, we had zero. In a country with 4.1 million people above the age of 15, these numbers are significant.

Lichterman: How does print fit into the strategy?

Nedregotten: Print is vital for us. It will continue to be vital for us for years and years. An interesting side effect of what we’ve been doing in digital is that we’ve been able to increase the quality of our journalism, period. I would argue, and I think a lot of our readers would agree, that our printed newspapers are better for the digital transformation that we had.

When we started out, I’m sure a lot of people were worried about cannibalization, and people moving from print to digital, but that hasn’t really happened at all. We have good numbers to show that people who cancel their print subscription would cancel anyway, and we’re actually now getting them as a win back into the digital subscriptions. We’re putting up a value proposition: If you want the news delivered to your door every single morning, you can get it. If you don’t want that, you don’t have to. Every single print subscriber is also a digital subscriber, so they are getting the digital value and access to all the digital channels that we use, because we radically simplified our product pricing points and the products we offer.

One of the things holding us back in digital was production processes. All of our journalists were producing for templates in a print geometry. They were writing stories to fit the print geometry — because someone said many years ago that you should have four pages of culture, not withstanding the fact that you probably didn’t have four culture stories to print that day. When you just put those things online, no wonder nobody clicked on it or read it — it wasn’t that interesting. When we changed our production flow and our journalists started actually writing for our digital platforms and the digital tool first, that improved massively the quality of journalism that we were publishing in the print papers as well.

Lichterman: Has it been a challenge to get journalists across the company to change their processes?

Nedregotten: You don’t change these things overnight. We’ve been at this now for three and a half years, and the bell curve still applies. You do have a bunch of people who are really far ahead of the pack, and you have some who probably wish that digital never happened at all, but most of the journalists are in the middle. I think the important thing is that we’re shifting the bell curve to the right. There’s a lot of optimism these days, which is very intriguing to see.

Lichterman: How have things on the business side changed as the company has switched its focus from advertising to subscribers?

Nedregotten: We used to have pretty much 100 percent ad focus. The funny thing is that the ad business is coming up stronger as a result of the subscription business as well. We stopped going for scale for scale’s sake. We stopped chasing eyeballs, which meant that pageviews went down. But we were able to categorize the different kinds of readers that we had, and we could categorize the fly-by category. We saw that a lot of the less valuable traffic we had — less valuable even in advertising terms — came from those fly-bys.

We started going for the more engaged readers, the people who actually had a relationship with the communities where we published. That, after an initial settling-in phase, translated into higher pageviews.

There were a whole host of legal issues that we had to learn how to deal with. It’s also been a journey not just for the journalists, but for our sales guys, the administrative staff, the top management, pretty much for the entire organization.

Lichterman: You have 800,000 registered users, even though they aren’t all paying. How do you hope to grow that, or deepen that engagement?

Nedregotten: Deepening the engagement is really important. This doesn’t grow into the skies: There are only 4.1 million Norwegians above the age of 15. I would guess that we cover somewhere in the region of 2.5 million Norwegians, but not all of these people are willing to be subscribers. I would guess that we will start plateauing in 15 to 18 months. At that point, everything has to go into engaging.

Engaged readers are far better customers. They remain subscribers. It’s all about working smarter and being able to offer a better value for our subscribers. That’s probably never going to stop.

Lichterman: What does that added value look like? Is it additional things like the football, or other types of content?

Nedregotten: It’s certainly those things, but it’s actually far simpler and far more difficult than that. Quite simply, it’s better journalism. As hard and as easy as that.

2011 photo of Nedregotten at another journalism conference by NMD Spesial used under a Creative Commons license.

POSTED     May 1, 2017, 12:28 p.m.
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