Having determined that reader regularity is the most important factor in getting people to pay for news, Medill Spiegel Research Center Director Edward Malthouse sees trouble on the local-journalism horizon based on newly collected data.
Since 2020, the Subscriber Engagement Index (SEI), a tool built by the Spiegel Research Center at the Medill School of Journalism, Media and Integrated Marketing Communications, has measured the health of newspapers by tracking how regularly newspaper subscribers consume news and how their retention rates change over time. Currently, 107 U.S. newspapers across various-sized markets provide data that goes into SEI.
“When we started vetting models related to SEI, the prevailing wisdom was that looking at page views was a key metric in assessing the health of a newspaper,” says Malthouse, also a Medill professor. “But we found that reader regularity — which is the number of sessions or days someone reads something in a paper — was a much better metric for assessing health since it is a stronger predictor of subscriber retention than page views.”
That health is in question after Malthouse’s most recent findings around reader regularity and the probability of churn, which occurs when readers cancel their subscriptions or memberships. Both metrics are heading in the wrong direction.
As his chart below shows, from the middle of 2022 onward, there has been a steady increase in churn probability. Malthouse calculates the probability of churn by dividing the number of customer churns per month by the number of active customers.
“The low tide for churn was in the middle of 2021, when the churn rate was about 3%,” Malthouse says. “That translates into a reader retention rate of 97%. The churn rate has gone up to about 5.5%, which cuts the reader retention rate to 94.5%. And that increase isn’t slowing.”
According to Malthouse’s formulas, a 90% reader retention rate translates into a Customer Lifetime Value (CLV) of 10 months, while a 95% retention rate doubles the CLV to 20 months.
“The problem is that the opposite happens when the churn rate goes up,” Malthouse says. “The increase in churn we’re seeing results in a 2.5% drop in reader retention since the middle of 2021, which has a huge negative impact on the CLV for those newspapers.”
The churn probability appears to vary with the type and size of newspaper. The next chart separates the churn probabilities by market size, with Tier 1 representing large city newspapers, Tier 2 mid-sized city newspapers and Tier 3 small market papers. Although churn is a growing problem at all newspapers, large-circulation papers show a less dramatic increase in that area.
Such a variation in churn rates at different-sized organizations also is reflected in data compiled by Mather Economics, an Atlanta-based global consulting firm focused on subscription management and customer data analytics.
“While we definitely see an increase in churn across all markets, we saw noticeably higher churn in smaller organizations with circulations of between 2,500 and 5,000,” says Dustin Tetley, a Mather operations vice president. “At larger organizations, there was churn, but it was flatter.”
Reader regularity also declining
The other metric that Malthouse tracks closely is reader regularity, which he considers a kind of canary in the coal mine regarding future trends. His chart reflecting aggregate reader regularity across all of the SEI newspapers shows a troubling decline.
“Unfortunately, when I look at regularity, it tells me that things are going to get even worse,” Malthouse says. “This isn’t the low watermark; the tide is still going out.”
What’s driving churn?
There doesn’t seem to be an obvious, single cause for the increased churn and decreased regularity. A combination of factors may be in play.
“It’s not surprising to me that churn is up, and retention is down,” says Liz Worthington, Director of Product Strategy at the American Press Institute. “Many factors can contribute to this. Any time we’re in a slower economy, people rethink their subscriptions. Increased news avoidance is a factor as well.”
Tetley has observed a trend in print churn that also may be contributing.
“We’re seeing more churn among partial-week subscribers compared to single-day subscribers and full subscribers,” he says. “There seems to be greater price sensitivity among those partial-week subscribers, so that may be a segment to focus on.”
How to respond
When it comes to what to do about increased churn, Malthouse offers what he calls his “greatest hits” of best practices:
Deliver unique, differentiated content
Malthouse says readers are reluctant to pay for commoditized content that they can access in other media. What they value is unique content reflecting local interests and concerns.
“I grew up in the Quad Cities area in Illinois, and like others there I was a big Cubs fan,” Malthouse says. “But when we looked at the news-reading habits of people in the Quad Cities, we found that commoditized sports coverage about the Cubs didn’t contribute to regular reading habits the way locally focused content did.”
Offer a quality user experience
Newspapers’ traditional reliance on ad dollars often has contributed to a poor user experience for today’s digital news audience. People who pay for digital subscriptions expect that ads will not disrupt the reading experience
“We did some research about five years ago that found users who didn’t use an ad blocker had a higher likelihood of churn,” Malthouse says. “News outlets were degrading the user experience, which doesn’t make sense because programmatic ads do not generate much revenue for newspapers.”
Implement news personalization
Another retention misstep is not providing curated, personalized content to readers. Malthouse considers this omission particularly inexcusable in an era when newspapers have so much customer data.
“The New York Times has really good coverage of local news stories,” Malthouse says. “But I can’t tell you how many times I’ve missed a good local news story only to have a friend who’s also a Times subscriber forward it to me after he read it. They should have me profiled as an avid local news reader. A good news recommender program would be able to identify that and help the paper provide me with more of that content.”
Initiate community listening sessions
Worthington is a strong believer in community listening as a way to increase engagement, particularly in areas where churn is rising.
“We hear from a lot of newsroom partners about the value of community listening,” she says. “These sessions not only generate story ideas; they also contribute to a better understanding about where you may be able to add value to your community.”
Stronger focus on metrics and analytics
In addition, Worthington recommends developing a deeper facility with data and metrics to help newspapers pinpoint where they can build engagement. She says analytical tools, such as API’s Metrics for News, can assist in that effort.
Mather Economics President Matt Lindsay says a focus on digital subscriber retention numbers can pay dividends.
“We recently completed some work on retention and found that digital subscribers behave similarly to print customers: the longer their tenure, the less likely they are to churn,” he says. “So focusing on strategies to extend digital subscriber tenure would make sense.”
All of these strategies offer potential ways to address churn. Such efforts are needed immediately, Malthouse says, because the situation has become urgent.
“These trends are so important now because local news organizations have become increasingly reliant on reader revenue for their sustainability,” says Tim Franklin, director of the Medill Local News Initiative and the John M. Mutz Chair in Local News. “Given the steep declines in advertising revenue in recent years, local news outlets need to be retaining and growing digital subscribers and members for their long-term health. The stakes in reversing these trends are high.
“But with aggressive audience engagement strategies and what promises to be a busy news year with the elections, local news organizations have an opportunity to not only stop the bleeding but see an upturn in 2024.”
Article image by Dea Andreea used under Unsplash license (Unsplash)