Tag Archives: analysis

New York Times, Axel Springer buy into Blendle

Late yesterday evening, it was announced that news business behemoths The New York Times and the investment branch of Axel Springer purchase 23 % of Dutch start-up Blendle for three million Euros (in Dutch). This is not only good news for Alexander Klöpping and Marten Blankensteijn, who founded Blendle – it is also an interesting turn of events for people interested in business models in transition and the sales of online news.

Blendle is a digital “magazine stand” where users can buy individual articles from Dutch newspapers and magazines through a micro-payment program. It’s often referred to as the “iTunes for News” as you pay for what you actually read. The price per article is between 0.10 and 0.80 Euros. Launched in April 2014, Blendle has grown rapidly and currently has approximately 130,000 registered users, 20 percent of whom convert to paying users (you get free access to articles for 2.50 Euros when you sign up).

The blogpost-like announcement on Blendle.nl frames The New York Times and Axel Springer buying their way into Blendle as a way of broadening the start-up’s scope of operation internationally – and today, you can even sign up for news when you can become a customer (“We can notify you when we’re coming to your country”). This dimension is, obviously, a most important part of the story.

But I think there’s more to the acquisition than just that.

Both The New York Times and German publisher Axel Springer have already proved themselves adequate in terms of monetizing their online content. Ken Doctor says The New York Times generated $150 million in revenues from digital subscription in 2013 and it can, according to Ryan Chittum at the Columbia Journalism Review, be expected to make $170 million in 2014, $200 million by 2016. Axel Springer, on the other hand, managed to get more than 150,000 digital subscribers to BILDplus on only half a year, for example.

What neither The New York Times, nor Axel Springer have (to the best of my knowledge) is a micro-payment program. They have things in store for people who wants to subscribe to their journalistic products online – but they don’t have an offer for the occasional reader who is just interested in reading only one or two articles beyond what is allowed in metered models and similar arrangements. Buying parts of Blendle – including its knowledge of what works and their functional systems – might be a step towards expanding the giants’ online operations in that direction and reaching out to this kind of audiences, who are more interested in noncommittal single copy sales than in the binding relationship of subscriptions.

Update October 27, 2014: In the discussion that followed on Twitter after me publishing this post, a number of good points and clarifications emerged:

1) Claes Holtzmann  asked whether The New York Times and Axel Springer’s new-found belief in micro-payment wouldn’t jeopardize their use of the metered model. He is, of course, right. If The New York Times, for example, gets full steam ahead into micro-payments, it will have a hard time maintaining its current (functioning) subscription model. My point, however, is not that it will adopt micro-payment in a larger scale – rather that it might also offer micro-payment options to some extent. For example, the large archive of the 163-years old newspaper probably contains stuff that it will be able to monetize this way. That would be a sort of “long tail” approach. And it’s important to remember, that things don’t have to be old to be part of the long tail; on the contrary, large news organizations can use it as a strategy to get a little (which is better than no) return-of-investment on articles with only a little readership.

2) Mads-Jakob Vad Kristensen correctly pointed out that this was also about The New York Times and Axel Springer buying access to Blendle’s knowledge about consumption patterns of news. He, too, is of course right. I should have mentioned that in my original post – but instead of rewriting it, I’ll just direct everyone to Mads’ own blog-post “Blendle belønner læsere af dårlig journalistik” (it’s in Danish). He writes it better.

3) Søren Pedersen noted that the “Blendle model” cannot possibly generate large revenues to publishers. I think the jury is still out on that one (though there can be no discussion that large audiences are needed), so I’ll just mention that of the revenues generated through Blendle, the original publishers get 70 percent, Blendle 30.

Hard times and a hard paywall in Kerteminde

On Saturday, one more Danish news website went from free to fee and launched digital subscription. The news website in question is that of Kjerteminde Avis, which is a hyperlocal one that serves the public of Kerteminde in the north-eastern corner of the Funen (approximately 24,000 citizens).

The outlook for the subscription model bringing economic salvation to the pressured local could be better, but American research as well as the development i Northern Norway can lead to cautious optimism.

Like other local or regional news websites, Kjerteminde Avis uses the hard paywall. Subscription now costs 20 DKK per month or 50 DKK for three months.

Being founded in 1879, Kjerteminde Avis has a long history. However, the last couple of years have been characterized by a transition to web-only publication, frequent shifts of editors-in-chief, and serious economic challenges; last year, the news website asked its readers for donations in order to make ends meet. The news website carries ads, predominantly from local businesses.

Donations and advertising, however, seem not to have been sufficient, and so the time has come for implementing proper digital subscription. In a situation of intense economic stress, that decision is understandable.

The news website aims at reaching 1,600 digital subscribers. That’s approximately seven percent of the population, and it’s an ambitious goal. Even if the news website succeeds in reaching that goal, however, it will be difficult to make the news production in Kerteminde economically viable. According to an earlier article in Kjerteminde Avis, the costs of producing the news website is a little more than 60,000 DKK per month. 1,600 subscribers and the current level of advertising will find only barely cover that expense. It will be an extremely tight budget where there’s no room for unexpected expenses or editorial development.

However, Kjerteminde Avis can find support in an experimental study from 2012. Here, Cook and Attari compared news users’ attitudes to the launch of digital subscription when told, respectively, that the subscription was justified in terms of building profits or of securing the survival of the news website in question. The results of the study suggest that users are more likely to accept digital subscription when the news medium communicates that it’s caused by questions of survival.

In its campaign leading up to the launch, Kjerteminde Avis has mentioned its dire economical situation repeatedly.

Furthermore, the small Funen news website can find comfort by looking north. In the Northern parts of Norway, hyperlocal thrive to such an extent that you can speak of a divided media marked.

On the one hand, there are the large newspapers published by national and transnational corporations. And on the other hand, there are small, hyperlocal newspapers that are only published to a very geographically limited audiences and that are owned locally. In their constellation, size, and target groups, these newspapers are very much like Kjerteminde Avis. In a study of this divided media market, Holand argues that the success of the hyperlocal newspapers is caused by support from the local community as well as public subsidies.

And that leads me to the reason why there could be hope for Kjerteminde Avis. The two sources for revenues used by the Norwegian newspapers are namely also the ones that it pursues: the support from local citizens (in terms of subscription) and local advertisers, and support through public subsidies. Later this Spring, the Danish Agency for Culture will announce who gets these subsidies in 2014, and Kjerteminde Avis has applied.

A few years ago, I interview the then editor-in-chief of Kjerteminde Avis for my PhD dissertation. He compared Kjerteminde Avis to the small village in the Asterix cartoons – the village that kept on fighting despite bad odds and a changing world order. The odds have not improved since then, and the hyperlocal news website might not get any more second chances it the economy does not get better (or at least stabilized) now. But as the research shows, that might not be impossible.

This post was written before the launch of the digital subscription on Saturday. However, Saturday afternoon, Kjerteminde Avis announced that it had reached 150 paying subscribers.

A Danish-language and slightly edited version of this post was published on MediaWatch today.

Politiken adjust subscription model, two reasons why

Today, in an article in MediaWatch, Politiken announced that it’s going to adjust its digital subscription. Politiken currently has a metered model with free access to 25 articles per month and two types of subscription: one that costs 44 DKK monthly, and one that costs 66 DKK and also includes membership of the Politiken Plus shopping program.

With the adjustment announced today, the 44 DKK option is closed so that all subscribers must pay 66 DKK per month. Furthermore, the number of free articles will be reduced (even though it remains unclear just how big that reduction will be). The MediaWatch article does not specify when the adjustment will take place.

It’s hardly surprising that Politiken adjusts their digital subscription model this way. There are two reasons for this.

First, the difference between what Politiken and Berlingske, their most comparable competitor online, offer has been quite large. They both use the metered model, but while Politiken would monthly give away 25 article before charging 44 DKK, Berlingske only give free access to 10 articles before charging 79 DKK. The fact that there has been almost as many digital subscribers to Berlingske (who charges more for quantitatively less) indicates that Politiken could actually tweak their subscription model to the organization’s own benefit.

Second, The New York Times did the same. According to people within the organization, Politiken largely based their digital subscription strategy on that of the NYT, and almost exactly one year after the NYT launched their paywall (on April 12, 2012 – it was launched in March, 2011), they downsized the number of free articles from 20 to ten. In short, the strategy was to initially test the market and make the customers used to paying for online news – and then adjust the subscription model to one that would be commercially viable for the news organization. This modus operandi has now been reenacted by Politiken, the difference being that the Danish news organization conducted the adjust only eight months after the initial implementation.

Softening a hard paywall

Today, Århus Stiftstidende announced that they had softened their hard paywall and switched their digital subscription to the metered model. In the future, users will have access to 10 articles free of charge each month before they are charged 79 DKK. This concrete subscription model is similar to the one used by Berlingske, the main news website of Berlingske Media that also owns Århus Stiftstidende.

That change was already announced last September and is not surprising as the news website has suffered severe traffic losses from the implementation of digital subscription back in November, 2012. Compared to October, 2012, the latest statistics from Danske Medier Research/Gemius (December, 2013) shows

  • a 62.7 percent drop in users (from 78,104 to 29,157),
  • a 71.1 percent drop in visits (from 575,402 to 166,153), and
  • a 72.4 percent drop in page views (from 2,754,062 to 760,804).

With such numbers, it’s hardly surprising that the hard paywall is now softened and replaced by the metered model. The question remains how free access - though limited – to content on the news website will affect traffic statistics.

It’s certainly a question I’ll return to later here on the blog; from a research perspective, Århus Stiftstidende now constitutes a most interesting opportunity for following and measuring in real-time the consequences of adjusting digital subscription.