What do Spotify and Netflix have that newspapers don’t have? Exponential growth of (digital) subscribers for one. Digital publishing has been looking at those two streaming superstars for inspiration for a while now. Let’s take a look at if and what can publishers really learn from the streaming business.
Obviously music and video streaming is principally different from publishing journalistic content - both by business model and its social role. It’s socially vital that we have accessible, reliable and objective press. It’s not that vital if and how we can access the latest hits or binge on the recent hit show.
As it comes to the business model, it’s not directly adaptable to publishing. Netflix’s has become the synonym to binge watching and its success is based on four factors: creating original content, offering external high quality content, affordable pricing and accessibility anywhere from any device.
In February 2019 Spotify announced acquiring two podcasting companies. Other than that, they don’t create their own content. Spotify gets content from major record labels as well as independent artists, and pays copyright holders royalties for streamed music. Their business model is based on freemiums and subscriptions are their main revenue source. They encourage people to pay for music, as subscriptions remove advertisements and limits.
Obviously offering external content can’t work for a single publication and a cross publishers platform would threaten the publishers’ revenue even more. Apple’s plan to release a subscription news service caused an uproar with asking the publishers to give the company 50 percent of any revenues that they generate. It raised questions about big tech getting too powerful and the future of free press altogether.
Of course there are parts of their success that the publishing industry can and should replicate. Here are five points to consider from Spotify and Netflix’s success.
1. Solve your readers’ problems, not your own.
Big part of Netflix’s success is linked to their willingness to cannibalize their own business model. Its founders have had the ability to look as an outsider at their business model and see where the market is heading in the next decade. Netflix is constantly looking for ways to solve problems for many customers.
Constantly changing and evolving your business model is definitely not comfortable but in the case of Netflix, it’s been incredibly rewarding. Game changing times need bold and courageous decisions. Publishing should also analyze their value propositions and really think about the readers’ wants and needs. How can your content, form or payment model serve the reader better.
2. Really get to know your user (reader).
Both Spotify and Netflix have powerful algorithms that help them gain an insight into their customers’ preferences. They know exactly what customers want, when they want it and on what device. Netflix also creates their shows based on the analysis of their own customer data.
Yet again, it’s not that black and white in case of journalism, since at least some part of it shouldn’t be too personalized. Exposure to different opinions is necessary for the functioning of society. But research on the echo chambers and filter bubbles has revealed that people actually read lots of media - they consume five different sources on average and encounter diverse opinions there. In that light serving interesting and relevant content to your specific reader doesn’t necessarily mean coddling them with one-sided views of the world.
Also the content that people are willing to pay for, isn’t necessarily the same content that drives huge traffic. Wired’s experience with setting up a paywall shows that relatively small traffic can bring impressive amounts of subscribers, if the topic is relevant enough. This might work for publications with a really high brand value and a core group of loyal readers.
3. Make personalized package offers (or better yet, let the reader combine their own package).
Industry experts bring out that different media companies both in journalism and across different formats should consider cooperation between themselves. Consumers don’t want to limit themselves with just one media brand. The answer might be combining different competing media publications into one fixed price package. Bigger media groups can offer combined packages of their own different publications - or even let the client mix and match their own. For example someone might want to read one daily paper, 3 articles from a household magazine and get access to the cycling section of a sports magazine. The reader probably wouldn’t pay for the whole subscription to access only small pieces, but they would be willing to pay extra for content that’s really relevant to them.
Niche offers and channels are popping up left and right in the streaming business - you have dedicated channels for anime, e-sports or even classic British TV. Smaller streaming services see it as the opportunity to cater for very specific audiences who are also likely more committed and stickier.
4. Focus on high quality content.
Netflix spends more on original content than rivals and keeps beating them in customer satisfaction surveys. It shows that investing in high quality original content pays off.
Publishing experts note that just broadcasting news doesn’t cut it any more. The readers don’t want mere info and you can mostly cash in on added value, which can be found in investigative journalism. It is especially important to keep a constant level of quality because if a customer is disappointed once, the next time they’re not willing to pay for content.
5. New business models might take time to become profitable.
Spotify finally become profitable just this year. That’s right, it took them 13 years and 96 million paid subscribers to finally start making money. Reinventing the publishing business might also take some time and the transfer from profitable print journalism to profitable digital journalism will probably cause some growth pains, but other segments have had them, too. You should look at those struggles for inspiration and hope.
The future of publishing asks courageous decisions from today’s industry. They need to be willing to challenge the status quo and test anything from business models to prices to payment methods. Thankfully, if your current approach isn't working, trying a new approach can't make things any worse.