How to convert newsletter readers into paying subscribers
Jacob Donnely explains how to leverage a freemium model to lure in potential subscribers.
It’s been nearly a decade since The New York Times launched its metered paywall, and its success has spurred just about every digital publisher to test out some form of reader revenue strategy. Many have followed in the Times’s footsteps and debuted metered paywalls. Others have rolled out various membership options, offering everything from behind-the-scenes footage to exclusive commenting features in order to convince readers to open their wallets.
But which tactics actually work? And how should publishers determine what to charge? To answer these questions, I spoke to Jacob Donnely. Donnely is the managing director of audience and growth at Coindesk, one of the leading cryptocurrency publishers, and runs his own paid newsletter about the publishing industry. We talked about how to design the perfect subscription offering and debated whether subscription fatigue is actually real.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find some transcribed highlights from the interview.
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This transcript has been edited for clarity.
Why Jacob decided to launch his paid newsletter on Substack
Like many independent content creators, Jacob was wary of building an audience on someone else’s platform, but he decided to make an exception for the newsletter platform Substack. “The team over at Copyblogger started really popularizing a phrase called ‘digital sharecropping,’ the idea being that if you build on somebody else's platform, you're really just renting their space, and at some point it's going to crash and burn on you,” he explained. “Substack was the first time that I built on a platform where I felt relatively comfortable with it. I certainly have my issues with Substack, but I liked the fact that, when push came to shove, the email list was mine. If I needed to leave for whatever reason, I wasn't going to have to start over. Whereas if I was publishing these on Medium and then Medium changed the game on me, I would get screwed.”
How to price your subscription offering
Jacob writes his newsletter for a B2B audience of media practitioners, so when contemplating a price for a paid newsletter, he had to calculate the amount of value his readers would receive. “ I think it's Jessica [Lessen] over at The Information who says, ‘if you're going to launch a subscription, your content needs to be 10 times better than anybody else's, otherwise there’s no reason to pay for it.’ I write a blend of strategic and tactical pieces. On one day I’ll write at a very high level and then the next talk very nitty gritty about two pages that I think every publisher should have on their website. I decided I’m going to charge $200 for access to these essays, because I believe if an operator gets one good piece of information that is worth more than $200 that’s either applicable to their business or validates something they're already thinking about, then it would be worth it to them to subscriber. And based on the replies that I've been getting to the newsletter over the previous months before launching the paid version, that was happening.”
Another consideration is the potential audience size itself. A B2C publication that focuses on politics, for instance, will have a much wider universe of potential subscribers, but B2B publishers must charge more because their scalability is more limited. “With these niche products, you have to consider how many people really exist out there who’d potentially subscribe? With a media newsletter, how many of them are out there? There are just not that many. So as long as I'm providing really, really good information that either validates their opinions or gives them a way of thinking about something through a different light, that alone is worth the money. And that's why I was originally going to charge $100, but then I thought, ‘you know what? The difference between $100 and $200 is not that big from a decision making perspective and the approval perspective. I'm going to charge $200.’”
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Will subscriptions be the great savior of media?
Though Jacob went the subscription route with his newsletter, he’s skeptical of the great migration to subscriptions and thinks the media is too reactive to industry trends. “The media loves to pivot to new ideas. A few years ago it was video and then it was podcasts and now it's subscriptions. But it’s a constant that the media businesses that are most successful are the ones that stick to what they do best. There’s this company Dotdash for instance; it’s a spinoff of About.com. It’s an old school, SEO driven business. It’s service journalism that does a great job for its community, and they’re super profitable. Why? They just focus on what they do best. They build communities around these niche publications, and they've just perfected their model. Whereas a lot of these other media businesses, they kept pivoting, and now they’ve pivoted to subscriptions, and while they might get some initial subscribers to sign up on a trial basis, they’re creating bad content and those users are not going to resubscribe.”
Is subscription fatigue a real thing?
With so many publishers pivoting to subscriptions, some have wondered whether consumers will succumb to subscription fatigue. According to this theory, there’s a maximum number of people who will even pay to subscribe to content, and the number of publications they’re willing to subscribe to is limited. “If there are only so many subscriptions that somebody is willing to pay for, then you have to decide as a consumer, are you going to go with the New York Times or are you going to go with this small publication? The New York Times now has such scale that I'm going to go with the New York Times because they've got 1,500 journalists who are reporting on literally everything, and for most generalist publications that have tried to get into subscriptions, they just can't match that.”
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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.
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