This article is a bit of an oddity – the Wall Street Journal reporting on the Wall Street Journal – but the news itself is important: Google is relaxing the policy that currently penalizes sites like the Journal which no longer allow Google searchers to view an article linked from search results for free. Since the Journal instituted that change, it’s seen traffic from Google (which in turn is likely a big chunk of total traffic) drop enormously, because sites that don’t participate in Google’s “first click free” program are penalized in search results. This is yet another sign of a softening at Google towards news organizations, which have been increasingly critical of its (and Facebook’s) power over them, though Google still seems to be months if not a year behind Facebook in coming around and making serious concessions.
Google is Working on Subscription Tools for News Publishers (Aug 18, 2017)
Time Warner’s Turner unit, which acquired English-language US rights to the European club soccer tournaments from UEFA earlier this year, has announced that it will be launching a new steaming service next year to carry the games. A subset of the games will also be broadcast through its linear channels, but it sounds like this service will be the only way to get the full set. This is a great example of the kind of approach big TV companies should be taking with online streaming services, where we’ve seen two broad strategies be successful: recreating a linear / pay TV offering in the digital world, or creating something entirely new (Turner here is doing the latter). This should provide a very direct way to recoup the $180 million Turner is allegedly spending on three year’s rights for the soccer tournaments, while also allowing it to experiment with streaming models for sports. It sounds like it’s interested in adding other sports over time, though not the basketball content that’s already a big deal on its linear networks, and I worry that could be a distraction or dilution for what will otherwise be a very clear value proposition.
NBCU to Shut Down Seeso Comedy Subscription Service (Aug 9, 2017)
Microsoft has today announced a leasing and upgrade program for its Surface line, offering a 24-month payment plan for the devices, and an option to trade in for a new device after 18 months rather than paying it off over the full 24 months. The program is called Surface Plus and there’s also a version for business customers, though it seems like a missed opportunity not to call it Surface as a Service… We’ve obviously seen the installment and leasing models become the default for smartphones on US carriers over the past few years, and there are already examples of hardware vendors getting into the game directly, notably Apple’s iPhone Upgrade Program. So this is both a familiar model and a smart move for Microsoft, which recently began to offer bundled Windows and Office subscriptions to business customers and can now offer a single bundle of Surface hardware and those two software packages for businesses. But it’s also a great way to lower the barriers to entry for what are fairly pricey machines for the most part, as Microsoft has stayed firmly above the fray with its Surface line, in contrast to the much lower overall average selling prices of Windows PCs. The Surface Pro starts at $799 (or $33.29 per month over 24 months), while most of the models are over $1000. Reducing that to $40-60 per month for many models should make it much more affordable and predictable as a cost for both individuals and businesses. We’re going to see lots more of this, with hardware vendors packaging up access to one or more devices on a subscription basis with additional subscriptions to software, content, or other services layered on top.
Pandora’s Premium Subscription Growth Slows in Q2 (Jul 31, 2017)
Spotify Has 60 Million Paid Subscribers (Jul 31, 2017)
The Financial Times reports that Spotify has hit the 60 million paid subscriber milestone, a fact that has now been confirmed by the company’s press site, where it also says it has 140 million active users in total, suggesting 80 million free users. It had previously reported 50 million paid users in early March of this year, suggesting it took just under 5 months to add a million subscribers, while Apple Music added around half that over the same period. It’s been fascinating to watch Spotify’s growth accelerate in the aftermath of Apple’s launch of its competing service, as streaming takes off as the dominant form of music consumption and paid subscriptions generate the vast majority of streaming revenue. That’s indicative of Spotify’s success in both establishing itself as the de facto standard in the market and creating social features that help win new subscribers, and also at signing partnerships with wireless carriers and others who help promote discounted subscriptions. As Spotify’s financial results for last year show, its average revenue per paid subscriber has been dropping rapidly, something I suspect has continued this year. But it’s the paid business that’s profitable on a segment basis, while free streaming loses money, which is why I suggested in a piece for Variety last week that it ditch the free tier. I’m only partially serious about that – the free tier remains by far Spotify’s best marketing tool, but it also remains a point of contention with the music labels, among which Warner is the remaining holdout in signing a new long-term deal.
via Financial Times
Facebook Confirms News Subscriptions Coming in October (Jul 19, 2017)
Campbell Brown, the former news anchor Facebook appointed as head of News Partnerships in January, has finally confirmed what’s been rumored for some time now, namely that Facebook is readying a subscription product for newspapers. It sounds like it will adopt the familiar though not universal approach of allowing readers to access ten articles before having to pay for a subscription to a given publication, though it’s not clear that the ten articles will include those readers read separately in their browsers, so that will be a key point for papers to nail down before signing up. Another will be payments and how those will work, since Facebook still doesn’t have credit card details from the vast majority of its users. Since some publications don’t allow any free articles before the paywall kicks in, this won’t be a perfect or universal solution, but on paper should neutralize one of the big criticisms of Facebook’s gobbling up of news consumption. However, given that this has been in the works for some time, and the largest publications will be aware of that, the recent PR push by the News Media Alliance against both Facebook and Google suggests that it certainly won’t assuage all their concerns. Update: also today, Facebook announced analytics for Instant Articles with support from Nielsen, to allow publishers to compare results from their IA and web-based versions. The lack of comparable analytics has been another bugbear for the news organizations using IA, so this should check another box in resolving those concerns, at least on paper.
Netflix Squeezes Fox Out of Top 4 Must-Keep Viewing Options (Jul 12, 2017)
New research Consumer Intelligence Research Partners (CIRP) suggests that Amazon has 85 million Prime subscribers in the US, based on a recent survey. That number feels quite a bit too high to me – my analysis of Amazon’s year-end 2016 financials suggested a number closer to 70 million globally, which of course includes at least a few million subscribers in other countries. A survey I did a year ago suggested that a majority (over 60%) of households in the US didn’t have Prime, so it would be a massive turnaround in just a year for a similar percentage to have a Prime subscription. So I take the overall number with a pinch of salt while acknowledging that the directional stuff is correct. One interesting secondary data point is that 28% of Prime households are using the newer monthly subscription option rather than the annual option – that also feels a little high, but it’s indicative that people are drawn to the benefits of that option, including the smaller one-time outlay, the flexibility of a month-to-month subscription, and the familiarity of that model.
BuzzAngle, a company which tracks the North American music industry, has released a first-half 2017 report, with lots of numbers on music consumption patterns in the US over the past six months, and Variety here has a summary of some of the key findings. One of the most striking numbers to me is that subscription streams accounted for nearly 80% of total streaming audio plays in the first half, with ad-based streaming only driving 21% of listens. That was slightly surprising to me, because the number of ad-based streaming music users is much higher than the number of paid subscribers, so I went back and checked some earlier data from BuzzAngle in this year-end 2016 report. It appears that this balance began to shift dramatically starting in the middle of 2015, which is not coincidentally when Apple Music launched. Importantly, BuzzAngle treats streaming video plays of music (e.g. music videos on YouTube) as a separate category, so the split mentioned above only accounts for pure audio streaming such as Spotify’s free and paid tiers and their equivalents. But it’s still striking that the balance has gone from roughly 50/50 between subscription and free audio streaming at the beginning of 2015 to 80/20 in Q2 of this year. And in Q2, subscription audio streaming actually eclipsed combined ad-based audio and video streams for the first time, so it’s now the largest category even when video plays are included. It’s worth remembering that this is US data, and the US has shifted dramatically from being a streaming laggard to being a leader over the last few years, so this certainly isn’t reflective of global behavior. But it is worth noting that subscription music streaming not only provides the vast majority of revenue and profits in the US, but now also a majority of actual plays as well.