The NYT’s ARPU strategy
Plus, Motherboard alums to launch a tech site
Hi there,
Last week, we examined digital subscription trends from Q2 earnings reports, noting that companies are aiming to grow Average Revenue per User (ARPU) as subscriber growth slows.
Today, we’ll look at the two high-level tactics anchoring the Times’ ARPU playbook, which centers around driving subscribers to its bundle (which includes News, Games, Cooking, Wirecutter, and The Athletic):
1. Pushing new subscribers to the bundle
Growth to the Times' bundle is currently driven more by new subscribers than existing subscribers who upgrade. In Q4 of last year, more than 30% of new subscribers chose the bundle, representing a 6-fold increase from the prior year. Wherever a user hits a paywall in the NYT universe, the company is able to promote the bundle, as noted by Kopit Levien: “Anywhere we would otherwise sell [the] News subscription, and in a number of other places like Games, we are intervening and saying, ‘do you want to buy the bundle instead?’... Many of the people who are buying the bundle are people who would have otherwise bought News in a previous era.”
2. Raising prices of single-product subscriptions
This year the NYT plans to notify at least 1.5 million single-product subscribers of price increases, and the company is also raising prices when customers hit the end of their promotional introductory periods. This increases ARPU directly for single-product subscribers, and it also increases ARPU indirectly by “driving even more people to the bundle as its relative price becomes more attractive,” according to Kopit Levien.
These tactics are leading to steady increases in bundle subscribers, alongside decreases in news-only subscribers (who have a lower ARPU):
Since bundle subscribers engage and retain at a high level, the Times is putting itself in position to step up pricing in the years ahead, although it’s a bit early to know the full potential, as noted in the Q1 earnings call:
“On the ability to take [the bundle] to higher prices, it's yet to be seen… We fully believe in the value that the bundle will deliver. All of our early signs on all of those metrics are positive… We only really leaned into the bundle beginning last year, so we're only now beginning to see the initial surge of new bundle subscribers hitting the end of their promotional period. So far, so good.”
To go deeper, see here for the NYT’s latest earnings release.
And here’s the latest news in digital media:
Journalists from Vice Media’s Motherboard are launching their own tech site, called 404 Media. They’re fully embracing the trend to start lean, as explained in an NYT write-up: “So far, the investment is minimal, as it has been at many of the other new journalist-owned publications: just $1,000 each, to cover initial costs. Little more is needed than a web hosting company, a content management system and a way to accept payments. The founders will all work from home, eliminating the cost of renting and maintaining an office.”
A new research institute formed to explore global Internet issues, including the health of the news industry. The team includes some big wigs: Marty Baron, Maria Ressa, and former McClatchy president Craig Forman are on the board; and advisers include The Globe and Mail EIC David Walmsley, as well former ProPublica president Richard Tofel.
More on publishers:
Jezebel’s EIC Laura Bassett quit, as the EIC exodus at G/O Media continues.
Time announced leadership changes at Time Studios, which is now looking for a new CEO.
IBM will sell Weather.com.
The Globe and Mail sold its internal tool for personalizing content.
Fox Corporation CEO Lachlan Murdoch paid $1.3m in legal costs to Crikey after his unsuccessful defamation suit.
Tucker Carlson plans to stream an interview with Donald Trump on X during the GOP debate.
More on platforms:
Amazon’s Fire TV channels will now include content from publishers including Variety, Rolling Stone, The Hollywood Reporter, and Billboard – in addition to news publishers previously announced.
Apple Podcasts launched a subscription analytics tool.
X plans to remove headline previews from links.
YouTube and Universal Music Group are partnering to explore how artists should be paid when their work is used by AI tools.
Interesting reads:
Atlantic feature in which former Wirecutter staffers say the site’s quality has decreased.
Hollywood Reporter roundup of what top podcasters think about the industry. (They’re optimistic.)
Press Gazette piece on why the New Statesman moved to Substack.
Axios roundup of how some publishers are approaching generative AI.
Verge interview with the CEO of Fandom.
Ronan Farrow feature on Elon Musk.
Thanks for being a part of Business Side’s public beta. Have a great day!
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