Membership May Be the Next Best News Media Revenue Model

Advertising and subscriptions aren’t the only revenue strategy options publishers should be weighing. According to Robbie Kellman Baxter, president of Peninsula Strategies and author of The Membership Economy, there’s a third option: membership.

Baxter knows a thing or two about what makes a good membership program work. She’s consulted for Netflix — a company that has mastered the membership model — and has worked with companies like Yahoo!, Electronic Arts and Survey Monkey, all of which thrive by getting users to commit to long-term relationships. Membership, Baxter explained, is a “forever transaction.”

How can news publishers create the same kind of relationship with their audiences and build membership programs of their own?

“Membership is not one-size-fits-all,” Baxter said. “What’s important about a membership mindset is that you’re picking a customer need and focusing on serving that well, and at the same time saying, ‘There are other things we’re not doing very well and we’re going to move away from that.’”

While choosing to not do something may seem counterintuitive at first, Baxter explains that narrowing your focus and accepting that you can’t do everything and please every reader makes it easier for your publication to make decisions about what it will do going forward. It also makes it easier for your customers to self-select, because there is now a clear reason for them to be part of your audience.

What makes the membership model work is the commitment to delivering something unique to users — something that users feel is impossible to get elsewhere and that they are willing to pay a premium for.

“A lot of times companies think of membership as a marketing package, or as just another word for subscription, but it’s important to remember that membership is about the customer,” Baxter said.

What does that mean for news publishers? For some, it could mean choosing to give up breaking news and focusing instead on depth and expertise — something Baxter admits could be difficult for publishers to accept. “People will look at breaking news, but they will not subscribe for breaking news,” she explained. “In many markets, there will always be a free source for breaking news.”

If people aren’t connecting with your news membership product, there are two potential problems: 1) a marketing problem – people don’t know what it is you’re really offering and how good it is; 2) a product problem – when people know what’s behind your paywall, but they feel that there are free or cheap substitutes that scratch that itch for them, so they don’t feel the need to pay for your content.

How do you convince your readers that your membership is worth paying for? There are two options: the free trial and the “freemium” model.

Baxter describes the free trial as a small taste of filet mignon, while freemium lets you eat a lot of hamburger forever. When you’re launching a new membership program, it may seem like the best approach is a freemium model — one that lets readers experience as much of your content as possible before asking them to commit. But according to Baxter, freemium has the opposite effect.

Freemium, Baxter explained, is a lot like the metered paywall. If you’re giving readers too many free samples — like the old standard of 10 free articles per month — there’s a good chance they’re getting enough from you before ever reaching their limit, especially if they can also get free articles from other outlets with a similar meter or freemium model. “It’s not a conscious gaming of the system,” Baxter said. “It’s just a lack of seeing a need to pay.”

“You want to be careful not to be too generous,” Baxter further explained. “When you set the expectation that something’s free, it almost doesn’t matter what it is or how crazy generous it is, people will start to expect it to be free.”

For the membership model to really work, Baxter said, “you need to be willing to love your customers more than your product.” That means being willing to change not only your membership program to better suit your customers, but your entire product as well.

To figure out the best product and membership program for your publication, Baxter suggests wiping the slate clean. “If you were starting today with the same mission, what would you build?” she asks. “The mission of public libraries is to make information available in the easiest way possible for free, and that’s also Google’s mission. So if the people who started libraries had access to the tech that Google has, would they have done books and buildings or would they have done search and storage?”

Figure out what you do well and stick to it, Baxter advises. “Netflix would get inquiries about partnering with video game companies or magazine publishers, but they would say no,” Baxter said. “It’s very tempting to expand, especially when you’re a big company that’s been around for a long time, but then you risk responding to the loudest customers and not the ones who you can serve best.”

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