Last week, I made an appearance on The Claman Countdown and spoke about the streaming wars, the future of publishing, and the importance of putting the right bundle, the right offer, in front of the right subscriber, at the right time.

For this week’s Subscribed Weekly, I thought I’d expand on some of those topics.  To help me, I also reached out to one of the foremost experts in this area, James Henderson, CEO of Zephr, a dynamic paywall technology company working with the likes of News Corp, McClatchy, and Bauer (full disclosure, Zuora is in the process of acquiring Zephr). Not only is he a multiple-time founder, James has deep experience in the media space, having worked on the infrastructure at the Telegraph, and in his current role at Zephr handling over 8 billion requests every month on the behalf of dozens of paywalls around the world. 

Let’s start with the big picture: the media industry is clearly entering a new phase. 10+ years ago, the transition to digital was in full swing, and this first phase was all about subscriber acquisition. For years and years, Netflix had essentially only one offering, take it or leave it, and they rode that offering to an impressive 200+ million subscriber base. But all industries eventually mature and competition comes in. In this last quarter, Disney announced that they have overtaken Netflix in total subscriber count, essentially doing in two years what took Netflix ten. So what we’re seeing is the media industry entering a new phase, where competition is more intense, success is harder to come by, and new techniques and strategies are required to retain and build growth. 

So what’s a streaming or digital publisher to do in this new era? According to James, it’s a simple four step process.

Establishing Relationships With The Right Subscribers

Establishing the right relationships with the right subscribers is the first step. Henderson told me, “too many businesses start at the solution and work the wrong way around. But one thing I would say for any business, particularly in the media industry, is they need to be able to get to know their audience. Until they do, they will not have the prerequisite power to then monetize that in an optimum way.” 

Of course, knowing your customer requires you to first establish a digital relationship with that subscriber. That’s why we’re also seeing many news sites being creative on how to bring traffic to their sites and apps, and then convert anonymous viewers into known subscribers.

For example, New York Times Company CEO Meredith Kopit Levien recently told Ben Thompson of Stratechery that “at the peak of COVID, one in two adult Americans were coming to The New York Times for information.”  That’s 150 million people, a mind boggling number. And when you see those numbers, you start to understand why they bought Wordle, and why they’ve been able to consistently exceed their subscriber acquisition targets over the last 10 years, with an impressive 10 million (and counting) paying subscribers today.

Design Great And Intelligent Bundles

Intelligent rebundling is the concept of packaging subscriptions that go together based on themes or context, which helps you draw out more value from the offered service. 

So what does Henderson say? “Don’t just unbundle, but rebundle selectively. Understand who your audience is, deliver consistent value to that audience, they in turn will respond by staying as your customer. That connection allows you to further your data flywheel, and from that gained experience, you can personalize the product and the bundle.”

You can see this when you compare Disney and Netflix. If Netflix is a one-product-fits-all strategy, Disney is the opposite. Interested in TV shows? They have Hulu. Sports? Go with ESPN+. Family-friendly fare? Disney+ with Marvel, Pixar, and the Disney library is for you. Not only that, they may roll out paid specials, like they did with Mulan when it was still in theaters. 

You can even sense a possible future upgrade of Disney+ that gets you access to theme parks, discounts at Disney stores, and more. By the way, I was speaking with Kevin Mayer years ago when he outlined this vision, so it’s been a long time in the making. Netflix is now forced to catch up. A good first step may be the cheaper bundle with ads, but you can see they now have a long way to go.

Know Your Customers So As You Build, You Build Better

You can strategize all day, but until you have customer insight that can help you make meaningful decisions, then you can’t make any inferences for future products or services. 

If there’s one lesson to learn, it’s that intaking data you’ve acquired about your customers through subscriptions is just one step. The power of that direct relationship comes from understanding what your customer wants out of your subscription. It’s about building a customer connection.

Henderson’s advice here is clear: “If a company can build connectivity within the relationship, they can build the flywheel. If they build that flywheel, they’ll then start to build more trust. On top of that trust, they’ll build more interactions which will drive the flywheel. That creates the opportunity to deliver some form of dynamic, personalized monetization strategy. That is where you get power from. The most powerful companies in the world all have direct relationships with you. All of them.”

So far, no one in digital news media has had a better understanding of these concepts than the President of The New York Times, Meredith Kopit, whom recently summed up their vision: “To be the essential subscription for every curious person in the English-speaking world who wants to understand and engage with the world.” That’s a strong and fascinating statement. 

For digital and print news publishers like The New York Times, becoming the first great subscription bundler involved some serious work. They built on their lead in news coverage by having strong relationships with their journalists, purchased the Wirecutter and became an industry leader in product reviews. Then, they helped people connect with their passions and content by transforming it into digital offerings, and kept them coming back for more everyday. 

It’s more than just a subscription: it’s a lifestyle for an informed citizen of the world, who also has cooking recipes and crossword puzzles at the ready. That’s all thanks to a competitively bundled experience. So, scale matters, but, unless you’re a “general” brand or a news conglomerate like The New York Times or Time magazine, then there isn’t much room in the pond for you to swim. So owning a niche is also important, especially since there’s a lot of competition right now. Remember, HBOMax just overtook Netflix for a streaming series premiere. Better content and drumming up subscribers’ excitement always wins. 

Connect The Right Bundle To The Right Subscriber 

So, you build a digital relationship with your subscribers, you use data to find the right content to deliver to that subscriber, you’ve created your bundles, and you’re using the data flywheel to dynamically control these bundles. So, who do you target and when do you target them?

This is a complex decision and this needs at imperceptible speeds. Here, James has a favorite example: “I love how the NY Post, with their depth of understanding for their subscribers, can alter a reader’s experience using a variety of different data points and toolsets. Your own preferences, geolocation, and other variables can result in an entirely different reader experience, in the blink of an eye. 

And, don’t forget, it’s not just about the bundle itself, it’s about the overall experience. In our conversation, I asked Henderson about good examples of digital media businesses staying flexible with their subscribers. He said, “We’ve seen businesses like The Telegraph, allowing their subscribers to offer downgrades and cancellations with their own accounts. At The Guardian, you can opt to take a break and pause for five or six weeks, but you can resume the subscription when you want. Building a better, stronger relationship with the consumer is not about maximizing and holding onto every piece of revenue. It’s about giving them the best value, and that best value necessitates longer term thinking.”

In summary, right now, we’re in the golden age of news and entertainment content. More competition is good, keeps prices down for the consumer, and ensures that anyone pushing subscriptions stays competitive, with strategies such as bundling. After all, having choices ensures you can always have the best seat in the house. 

As James put it, “I firmly believe that a media organization’s strategic differentiation is based upon the strength and its relationship with its audience.”