A couple of weeks ago, Joe Berger, Samir Husni, Sherin Pierce, Bo Sacks, and I met with the Mather Economics Group – CEO Matt Lindsay, Advisory Board Member Malcolm Netburn, and Head of Data Science, Luke Magerko—to talk about data.
Mather Economics is a twenty-year-old consulting firm based in Atlanta, Georgia. With a focus on subscription economics, Mather has worked primarily with newspaper publishers; however, they are finding that the data and analytics they offer are increasingly relevant to magazine publishers.
Joe: Tell us about some of the issues you see as important today.
Malcolm: First, we've seen, as an issue of urgency, that many publishers have grown to rely on the third parties that distribute their content—Facebook, Google, and Apple. It's clear how the situation has developed, but this industry will wither if it thinks it can eat the crumbs of the large platforms. We need to build our channels and monetize them.
Second, stop bashing print! Yes, publishers are in digital disruption, raising many questions, but publishers need to keep the discussion internal. Please don't talk about it to the outside world and your customers! For example, car companies Ford and Volkswagen are moving to electric—do you think they are denigrating their current offerings, and telling their customers not to buy?
Third, positioning a magazine as premium is a terrible idea. I don't have a thing that's premium; I don't buy premium. It's like saying this product is for those who want to go fancy; otherwise, you don't need it. This doesn't mean you don't increase prices. If your product has value, sell at the price it deserves. Just don't call it premium.
Joe: And yet, you could argue about the word "value." In the consumer world, something labeled "value" can mean "k-mart discount;" if something is labeled "premium," you'll pay the extra and want it.
Samir: We are talking about two things—where you are positioning your magazine and how you are selling it. Look at the newsstand. It should be a premium product if people pay $15 for a magazine. From the same company, you'll see an offer for People for $3 for six months. This should be a crime, and you should go to jail for this.
Malcolm: Identifying something as premium makes it feel easy not to purchase it. It puts it in the optional category, limiting its opportunity to sell. Sell your publication at a high price, but don't call it premium.
Sherin: As Samir mentioned, positioning a product as premium and using that term to sell the magazine are two different things. Most of that language came from the subscription industry.
Matt: Price point is a signal to the reader of what you're offering. That confuses people if there's a disconnect between what you're calling it and what you're charging. In other words, you can't call it premium and charge a low price.
Linda: But simultaneously, you can charge a higher price and let the "premium" be implied.
Matt: For years, newspapers and magazines have been underpriced to attract audiences for print advertising. Today newspapers are bringing in increased subscription revenue at a fraction of the circulation because of their higher prices. We believe this is a vital lesson for the magazine industry and strategic subscription pricing is a significant opportunity.
Sherin: It's essential not to up-price just because everyone else is doing it. It would be best if you created value for your readers to keep them coming back year after year.
Joe: From my observation, most small and medium-sized publishers aren't offering low-priced subscriptions. It's the big guys that are doing it. Most of my publishers charge enough to cover costs. That pricing isn't so much a problem for vertical publishers. Their audience will pay for it. They want and need the content; it's worth it to them.
Malcolm: They don't position it as premium—they cover a need.
Sherin: Each issue of every publication has to give readers exactly what they want and more than they expect.
Malcolm: Some other points: Data is the new oxygen. You'll have a short runway if you don't understand data gathering and use. Also, industry collaboration is underestimated as a value proposition. There are more silos than ever before.
Here is your Roundtable; you share knowledge, experience, and ideas, but many publishers don't do the same. It's insane that if you think how small the industry is, we should be able to figure out how to collaborate honestly. The pandemic has isolated us, but it's time to reverse that—all boats rise in a rising tide.
Bo: There is no publishing industry. There are fiefdoms. We have never worked together, and while I like your optimism, I don't see it happening.
Malcolm: There is nothing like walking to the gallows to sharpen the mind. We're at that inflection point. There's a necessity to change the equation in a significant way.
Bo: I hope you're right.
Malcolm: Collaboration is essential from publisher to publisher and within each publisher's supply chain. Every publisher, however small, has a set of partners. But unfortunately, they view them in isolation as a reservoir of unoptimized talent and expertise. Bring them together, and you'll create a powerful problem-solving dynamic.
Sherin: I agree. If you bring together your printers, paper suppliers, and fulfillment houses—they can become the way you grow.
Malcolm: How many of you have ever had a conference call where your four or five suppliers talk about a common issue? The ecosystem is more extensive than you think. Yet, you keep them as islands to themselves. To survive and thrive, open the neural network you build with these suppliers.
Joe: Internally as well. Just now, I'm trying to set up a call with a company's various departments where we missed an opportunity to count copies because of a lack of intra-company communication.
Samir: How do you treat your readers when they learn that the price offered, for example, to a loyal subscriber, may be different from, and worse than, the price offered to a new customer?
Matt: Mather has developed a process to manage subscription revenue similar to yield management strategies used in other industries, such as hotel and transportation. We measure price elasticity by subscriber and suggest targeted renewal offers instead of giving everyone the same price, and we can measure success using A/B testing.
We've done this for newspapers and can also apply it to magazines. For Magazines, price elasticity is often a function of the reader's passion for the product. With newspapers, we've found that price elasticity is a function of age, income, and the length of time the reader subscribes. With magazines, it's based on a reader's passion for the topic or hobby, which of course, is harder to measure. But, again, we can look at digital engagement to gain insight.
Bo: You test the price points by cohort?
Matt: Yes, we use A/B testing, and we have demonstrated that this pricing mechanism generates much more revenue per issue than across-the-board pricing.
Joe: How do you measure digital engagement?
Matt: Usually, we use the frequency of visits to the site. There are several metrics for engagement.
Sherin: Time on the site is critical.
Matt: Our cost-effective tools can give publishers insights on engagement and price elasticity. We often act as an extension of the publisher's analytics team. We have considerable industry data to share benchmarks and recommend strategies to publishers to optimize their consumer revenue. That's part of our client relationship; we try to be a partner that works with a magazine for a long time to support the implementation of recommended actions and measure progress with testing. For example, we use one approach to put a first-party pixel on a page that matches the online activity to a known reader.
Bo: You cover a lot of industries, a broad range of products and services. Will your formula work for cars as well as newspapers, for example? Is there a commonality across sectors?
Matt: Our most significant client base is media, but some former clients have moved to other industries and continue to use what we offer. And beyond media, many enterprises are becoming increasingly subscription-oriented—you see it with clothing, food, wine, and jewelry.
Malcolm: However you slice it, it's all about how you monetize and bring value to the consumer. The days of big ad-driven magazines are over, and digital has not yet demonstrated the same power to generate revenue; so how do we assign value to consumers across a wide variety of categories?
Luke: We know we will learn from other industries that have gone before using these existing data.
Malcolm: We're going to try to make that happen.
Joe: So as we're walking to the gallows, there's a chance we can make a break for it.
Samir: Everyone talks about the importance of data. We had data before there was even digital. So it isn't just a digital thing.
Matt: Excellent point. The pace of digital deliveries is faster. A digital relationship adds to the frequency of interaction with customers. Start with the end in mind, how you will use the data, and work back from there.
Sherin: And don't bother looking at data if you aren't going to accept what it tells you and if you aren't willing to make the changes.
Malcolm: Speed matters, flexibility matters, but the industry will be all right.