Spotify and The New York Times have something in common: Both companies are retaining and gaining subscribers by adding new kinds of content.
They’re in different businesses, but the questions are the same: “What will people pay for?” “What will keep them coming back for more?” “What can we do to keep cancellations to a minimum?” “What new features or services will attract new subscribers?” “How can we compete for the public’s attention?”
I kept noticing similarities between the announcements from both companies on Wednesday. The NYT wowed the news industry by reporting a new paid subscriber number, 4.3 million, and by publicly setting a goal that’s been discussed internally for a while: 10 million subscribers by 2025.
Some of the NYT’s growth comes from offshoots of the core paper like the Cooking and Crossword apps. “The company also said that it generated more than $709 million in digital revenue, a number that positions it to meet another goal — $800 million in digital revenue by the end of 2020,” Tom Kludt wrote.
Spotify bolsters podcasting effort with deals for Gimlet, Anchor
Just how big can the NYT get?
“There’s reason to believe the ultimate number of subscribers could be far larger” than 10 million, Mark Thompson told investors on Wednesday, but said he believes the goal is “realistic…”
Spotify’s $500 million bet on podcasting
While most media companies are focusing on video, Spotify wants to be all about audio. Gone are the days when the company dabbled in TV-style series. Daniel Ek is investing heavily in podcast production and making a play for radio listening while invoking concerns about excessive “screen time.” Wednesday’s two acquisitions, Gimlet and Anchor, are just the start: Spotify plans to spend $400 million to $500 million on the “emerging podcast marketplace” this year, according to the company’s guidance to investors. The idea is to expand Spotify’s current offerings – betting that this will help retain existing subscribers and spur new subscribers to sign up…
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I thought this was the most interesting part of Ek’s letter announcing the podcast pivot: “With the world focused on trying to reduce screen time, it opens up a massive audio opportunity.”
Ek, portraying video as a trillion dollar market and audio as a $100 billion market, said “I always come back to the same question: Are our eyes really worth 10 times more than our ears? I firmly believe this is not the case.”
Spotify has been leaning in this podcast direction for the past two years. Now, Ek told CNBC’s Jim Cramer and David Faber, “we want to grow the number of shows that we have.” More shows, happier subscribers, fewer cancellations, etcetera.
The Times newsroom is bigger than ever
What can you do once digital subscriptions are firing on all cylinders? You can hire more people.
NiemanLab’s Joshua Benton wrote Wednesday: “A common goal in newspaper circles a few years ago was to someday be able to make enough money in digital to cover the cost of the newsroom. Well, at this point, the Times could pay for the newsroom two times over with just digital money. Which is probably why that newsroom keeps growing — the Times reported it now employs 1,600 journalists, an all-time high.”
But here’s a reality check.
Getting people to pay for something? It’s hard. Getting people to pay for news? It’s even harder. The media world’s current push toward paywalls is underestimating just how hard it is, IMHO.
Think about it. What are you willing to pay for? I pay for services that make my life better (ad-free Hulu), easier (Amazon Prime), smarter (Washington Post), safer (Nest). That’s a useful test to apply when asking whether a proposed subscription platform will work…
BTIG’s Rich Greenfield tweeted: “Legacy media companies who are looking at the daunting task of entering the direct-to-consumer world should listen” to Spotify and the NYT’s earnings calls – “customer acquisition, cohort analysis tied to promos, churn, lifetime value [are] not terms most legacy media folks really comprehend…”
