By Lee Kah Whye
Part of Axel Springer, Bild is the largest newspaper in Europe and Germany’s biggest news website, with a reach of 24 million monthly users. Since 2013, Daniel Mussinghoff has been building the paid content business of Axel Springer’s BILDplus, which now has more than 489,000 digital subscribers. BILDplus has a freemium model with free content next to paid content. They have significant advertising revenue based on their millions of unique users.
“So far we have reached nearly 500,000 subscribers,” Mussinghoff said. “We have been growing since we started seven years ago. We have grown every month. There hasn’t been a month we haven’t grown.”
Despite reaching their subscription targets, he feels there is still huge potential for subscriptions within their brand and products.
Two products, two price points
Mussinghoff explained that BILDplus has two products and two price points.
BILDplus Digital is their best-selling product for which 94 percent of its users pay. It offers subscribers access to all their paid content, including articles, videos and apps. Initially, BILDplus Digital was priced at 99 cents for the first month, then increased to 4.99 euros per month thereafter.
The second product is BILDplus Premium, which costs 9.99 euros a month. It has the e-paper version of the printed newspaper bolted onto the basic digital bundle.
In an attempt to generate more revenue, BILDplus experimented with various pricing strategies.
The first to undergo a price change was BILDplus Premium. This affected both new and existing customers. They attempted to change the base price to 12.99 euros a month but kept the 99 cents price for the first month.
They did not initially change the price for Apple app store customers as the Apple notification system makes it too easy for customers to opt out of the new pricing.
The price increase exercise started with an email campaign notifying existing customers of the price increase three months in advance. At the same time, they were given free access to the “Fussball Bild” e-paper, a soccer publication.
“We just lost 100 existing customers. We had 30,000 customers. Most of the customers didn’t care that we charged 3 euros more. We had less than 500 calls with questions,” Mussinghoff said. “That went well.”
In the next project, they tried dynamic pricing with their apps.
Their apps are fully paid products, not freemium. Usually there is a free trial of 7 days, after which users will be asked to subscribe. They are shown an annual price and a monthly price.
If a user ignores the message, after a while, a 10 euro reduction in the annual fee will be offered.
If the user still does not subscribe after a period of time or a number of page impressions, he or she will be prompted with a reduction in monthly fees from 4.99 euros to 2.49 euros.
Their pricing system is also able to detect the model of the phone being used and able to adapt the price suggested to the reader according to perceived affordability.
As a result of this exercise, revenue from iOS app users went up 30 percent and Android rose 40 percent.
Mussinghoff and his team next turned to working on their main product, BILDplus Digital.
Data showed that, under the original subscription plan, there was an attrition rate of 40 percent after the first month. After 13 months, which was the first opportunity for subscribers to terminate their plan, only 25 percent of paid users remained.
In the first experiment, they increased the first-month promotion to four months. The result was that, after one month, the churn rate was 3 percent but at the end of 13 months, it was not any better.
“With a permanent discount, of course, you get a high number of users who are sticking to the product even after 13 months. But again, high discount, bad for revenues,” Mussinghoff said, explaining why it was not in their interest to offer a perpetually low price.
Later, they tried to offer a 50 percent discount in the first year with the normal price following that. The result was that, after the first month, there was a churn of 7 percent but surprisingly, 62 percent of paid users remained after the 13th month.
With the results of this experiment, they went about changing the base price of their main product from 4.99 to 7.99 euros. The first month special price of 99 cents was replaced by a 50 percent discount in the first year of 3.99 euros.
Boosting renewal rates
Organisationally, to facilitate decision making, a lot of data analysis took place, and they did A/B testing with 50 percent of their traffic. They also decided to keep communication of the changes to customers low key.
Their target daily churn rate was 16 percent. This means if they had 1,000 new subscribers on a particular day, 160 would cancel.
In the first week, the churn rate was 20 percent. In the first month, it was 30 percent, but this figure fell back to 15 percent in the second month.
The renewal rates improved after implementing the new pricing. With the old pricing, it was 62 percent after the first month. With the new scheme, it was 72 percent. In an analysis of a 14-month period, the renewal rate for the new pricing was higher every month compared with the old one.
As a result, BILDplus achieved 15 percent higher renewals and 26 percent more customers, and revenues have increased 21 percent and are still growing.
The BILDplus product team continues to test various pricing strategies to determine better ways to retain customers and increase revenue.
Mussinghoff ended his presentation with this advice: “Don’t depend on your legacy systems. Work cross functionally. Be transparent with the numbers. Test a lot. Put the customer and what he needs first. Emphasise content. Content is the thing that is selling. Be brave. Try something; test something. You can nearly always win because you are probably the first one that does it. As you can see from our numbers, there is high potential in the market to build up a good subscription business.”
About the author: Lee Kah Whye is Director at Project Mercury, a media business consultancy. Before this, he spent nearly 20 years at Reuters and was head of the news agency business for Asia.
Edited by Bill Poorman