What you should do is look at selling not ownership, but access, privilege, and passion.Steady is a membership startup, based in Germany. We met Sebastian Esser, one of its co-founders, at the INMA conference in Amsterdam this year and got chatting about the differences between membership and subscription and why engagement, trust and loyalty are inextricably linked to these business models.
This is an edited version of that conversation.
Let’s start with you Sebastian, what’s your background?
I started working as a journalist back in 2006 and I worked for a series of magazines and newspapers – all of which kept being shut down. It was clear that the business side of things just wasn’t working, but no one knew how to fix it. I didn’t believe in the approach of going for reach and publishing garbage in order to do it, so when the last publication I worked for closed down, I started out on my own.
I worked for various startups and founded my own [Spreader, an online shop for journalistic articles, which was subsequently bought by Deutsche Poste]. Around 2013, our Dutch colleagues at De Correspondent showed that the crowdfunding approach was a workable one and people here in Germany kept wondering why no one had tried it here. I assembled a team and Krautreporter was born. We raised a million Euros in four weeks, which was enough to get a budget for a new digital magazine, and we published one article a day, which was produced with intense and direct conversation with our members (and we did call them members, not subscribers, even then).
Sounds like a successful introduction to the world of crowdfunding… did this experience highlight any problems or pain points?
During all this it was evident that while all of it was hard, the tech aspect of this venture was particularly tricky. If you’re by yourself, or you’re in a small team you don’t have access to a tech team or business model consultants. When you take away the publishing houses which provide that infrastructure to support the journalism, people are lost. Steady was conceived to be a little publishing house in your pocket. It’s simple to use: you just set up a Steady page as you would a social media profile, or a crowdfunding site, add information about why people should become members, select a number of plans and that’s it.
It doesn’t cost you anything to install it and you don’t need a developer, and we only take a fee when you start to make money [10 percent]. It’s an attractive proposition for smaller and solo publishers because there’s no risk involved: you can try out various approaches and offers.
So next: a massive question. How do you convince people that buying into news through subscriptions and memberships is something they should do, after years of it appearing to be entirely free?
Yes, that is a big question! Well, first of all you need to start by telling readers why it’s important. Too often there’s no emotional component to news products: you see the title, which country it serves and the news. There’s no emotional component so it’s like having a brand without a slogan motto.
There needs to be a strong reason to connect – which is why The Washington Post’s ‘democracy dies in darkness’ is so effective: people see the purpose.
What you should do is look at selling not ownership, but access, privilege, and passion.
Most newspapers are now in competition with people who are offering something which you can get elsewhere for free. Now if you’re the New York Times your subscription proposition is good because it’s a publisher with a global reach, great articles and lots of articles. But who else can offer this kind of product? There are very few who can, at that scale.
It’s interesting you say that – what we noticed throughout the conference season this year was the sheer number of references to the Times’ model as the gold standard…
I feel like a lot of publishers don’t really understand what’s happening at The New York Times – it’s just so far removed from what they deal with every day, and there’s really very little you can learn from those guys, which you can replicate in your own, smaller, more localized newsrooms.
That said, I’m convinced that you can attain a healthy reader revenue, but you need to understand your readers’ needs and you need to find that emotional promise – whatever that is.
So how does a membership approach differ?
I think the fundamental problem with subscriptions is that it’s seen too often as a substitute for a print model which was based on ownership of a thing. Buying a digital article for 30 cents isn’t a satisfactory substitute for many people and in fact the notion of a digital article doesn’t even exist in the minds of most users.
What you should do is look at selling not ownership, but access, privilege, and passion.
It’s not about little perks – you know often we see publications selling these ‘extras’ as “you’ll get an exclusive email every day”, but I know that personally I don’t want to get any more emails. In fact, I’d happily pay to get fewer! Some might say the perk is access to all the news that’s ever been published on the website, but that’s not great either. Excess isn’t a good product.
The passion part changes the character of the transaction entirely. It’s not so much buying into the right of accessing exclusive content, it’s a form of communication and the feeling that the member is contributing something to a common cause. When you combine these things you get something which feels important. That’s what we mean by membership. It might not work for 95 percent of users, but for those 5 percent, it does.
Is that a typical conversion?
For us, yes, though we’re not necessarily typical of the whole industry, especially the more traditional news outlets and I certainly wouldn’t say that’s universally attainable, but from our experience when there is something in place which resonates emotionally, that figure is a good target for conversion.
To go further, it’s three times five: you might be able to convert 5 percent of users for 5 Euros if you ask them five times.
Compared with the accepted norm for subscriptions, that’s quite healthy. Is there any scope for this to increase?
It all depends on the direction of the business. As soon as publishers decide they’re not interested in selling ads anymore, then the KPI they care about is completely different – you start looking at things through a different value lens.
It’s only the people who trust you who are likely to be converted into members. There needs to be a relationship. When I was talking about privileges and passion we really need to add a third ‘p’: participation.
Are we talking engagement here?
Engagement has become kind of a messed-up term in the media nowadays because too many people take it as meaning how many people ‘like’ something, and any ‘engagement’ is good because it leads to virality.
It’s a nonsense, really, because someone who writes an angry comment is completely different to someone who’s an expert and adds something to the reporting. With that latter group engagement becomes something different, so we think of it as a means of valuing those relationships and showing members that you trust them and welcome their contributions.
That’s a distinction worth making, but it seems that even in spite of research reports saying the same things, the publishing world is a bit slow to adapt here. What needs to change? How can they be persuaded?
Well, with this shift in KPI focus, it’s going to come down to the bottom line, and that’s usually a pretty good incentive. Membership works when there’s a feeling of collaboration.
Publishers need to understand that there needs to be some way of talking to each other and listening to readers – and members – so that they feel they’re communicating on a level playing field. The idea of journalists being the kind of people who only talk to politicians and explain from a God-like perspective to their less-informed readers needs to change. I used to be a journalist and if we’re really honest a version of that dynamic was the norm. It feels like we’re still in this old culture in media where we’re not supposed to talk to each other, or even question yourself – let alone make yourself available for corrections or just questions.
That’s quite the culture change…
In a way, yes. This relationship completely changes when you bring members into the equation because those editors and journalists suddenly become part of your distribution and marketing efforts: they’re kind of producing content marketing for your membership program, which is an interesting way of looking at it, and an interesting shift in dynamic. Sure, editors might not like to think of it in those terms, but that’s what’s happening: the better your content, the more memberships you will sell, so it necessarily brings the interests of journalists, readers, and business in line. If you switch the focus to the reader (or member) your output should become more appealing.
You’ll never have as many members as you have readers, and if you only interact with members, you’re missing the point: to grow your member base you need to give your readers ample opportunity to experience that passion and participation
What about collaboration?
That’s another part of it, yes. If you’re humble enough to agree that probably somewhere among those [hopefully] thousands of members, there’s someone who might know more about a topic than you, and you’re willing to accept that as a starting point, then it should be in your own interests to start talking with them.
You’ll never have as many members as you have readers, and if you only interact with members, you’re missing the point: to grow your member base you need to give your readers ample opportunity to experience that passion and participation – maybe then they’ll see that becoming a member is a worthy proposition.
Find out more about Steady by visiting their website. Our thanks to Sebastian for taking the time to chat to us.