Analysis: SCMP goes into full on subscription mode

The ​South China Morning Post (SCMP) will be launching a new subscription service. Beginning in August, it will roll out in phases for over several months across the world​. According to a note sent out by editor-in-chief Tammy Tam, the company has transformed itself, evolving from a local newspaper to a global media company that serves up to 50 million monthly readers worldwide.

Tam added that readers can continue to view several stories for free each month before joining SCMP as a subscriber. The benefits for subscription include unlimited access to news reporting and opinions, along with the in-depth analysis and investigative journalism that lead the global conversation about China. Subscribers will also have access to personalisation features across the platforms that enhance their reading and discovery experience, along with privileged access to SCMP’s virtual and in-person events.  

“That said, comprehensive reporting is costly and the century-old advertising model is no longer enough to sustain high-quality news. SCMP’s commitment to journalism means that this model must evolve and our business must align with our greatest accountability: to serve our readers with uncompromising truth. So, we are asking for your support to help safeguard the journalism that the world deserves and the future of the South China Morning Post,” Tam added. 

This is not SCMP’s first go at a subscription strategy. It last halted plans following Alibaba's purchase of SCMP in 2015, which saw the paywall being removed on April 2016. In a statement to Marketing, a spokesperson from SCMP said that the new subscription service this time around was launched “because comprehensive reporting is costly and advertising alone can no longer sustain high-quality journalism in the digital age”.  As such, SCMP felt the need to evolve its business models and diversify revenue streams to help safeguard the journalism that readers around the world deserve.

She added that reader revenue has always been on SCMP’s roadmap and this has been part of its digital transformation to build a sustainable business model for the future. Following SCMP’s global readership growth, the publication’s next phase was to gradually build revenue models for business sustainability by capitalising on its scale. SCMP believes that a foundation of revenue diversity is key to business sustainability in the digital age.

Advertising alone can no longer sustain high-quality journalism in the digital age, so we must continue to evolve our business and diversify our revenue streams.

According to the publication, what this means for marketers that while it expects a "slight change" in its top-line page view number, it does not expect total readership (Monthly Active User - MAU) to be impacted.  All paid content from advertisers will always be freely accessible and there will be no effect on the distribution, discovery and performance of paid media. It added that loyal readers are highly-valued by advertisers, "a prospect that marketers can look forward because of more robust brand engagement and audience targeting".

SCMP added, “Building a foundation of revenue diversity is key to  news business in the digital age because it ensures independent journalism that is our cornerstone. Introducing digital subscriptions is an important step towards safeguarding the journalism that our readers deserve and SCMP’s future. Enabled by digital innovation and creativity, it will allow us to support our mission while maintaining our growing global readership that bolsters our advertising business.” 

In 2015, Alibaba Group announced that it entered into a definite agreement to acquire the SCMP and other media assets of SCMP Group for US$266 million deal. The agreement was touted to have combined the heritage and editorial excellence of the SCMP with Alibaba’s digital expertise to provide comprehensive and insightful news and analysis of the big stories in Hong Kong and China. Moreover, Jack Ma, in 2016, had said that his vision was to transform SCMP into a global media company with the help of Alibaba's tech capabilities. This would have put SCMP at par with the other tech giants.

Whether or not SCMP able to perform as a tech and media agency remains unclear, said former editor and now founder of PR consultancy Enterprise PR and marketing, Madhavi Tumkur. But the plea for subscription by editor Tammy Tam shows that the publisher is going the same way as other traditional publishers - by asking consumers to pay for good content. “In addition to SCMP's investment in content, what will be put to test is its understanding of its audiences, how it is building a value exchange with them, and how it is rewarding them for loyalties,” said Tumkur.  

She added that the subscription model is the mainstay for all publications - especially post pandemic, and those who have earned their share of trust and accountability in times prior. SCMP, she said, has definitely has earned its share of its reputation for bringing quality journalism to its readers.

Digital advertising was never going to save the day, including for traditional publishers such as SCMP.

“Often procured as bulk purchases, most ads have had a poor return on their CTRs, CPIs and CPAs,” Tumkur  added. Branded content was perhaps the next best option and many publishers including SCMP had invested significantly to build this. Nonetheless, creating original content is expensive and execution of branded content has not met with the desired response for brands which have defaulted to the likes of Google and Facebook, where the content is often video-led and mobile-optimised. As publishers have lost their audiences to the two, Google and Facebook have gained tremendously in data, Tumkur added.

Industry veteran and ex-GCEO of Star Media Group Andreas Vogiatzakis, who currently serves as executive consultant & NLP power coach, said paid content is certainly the way to go as good and responsible content never comes cheap.

“Journalism that is responsible, informative, quality driven, unbiased, true and not fake, is a high order. And consumers know that, as fake news and irresponsible reporting and analysis can be detrimental,” he said. He added that paid content is also not new. New York Times, Wall Street Journal, Guardian and many more have successfully established this model over the years.

“It is unfortunate that some efforts on paid journalism coincided with the pandemic, which has put a severe stress on financials on all fronts, and pushed consumers to be more cautious of where they spend their money. However, no time could be a good time to charge. Thus I think the SCMP is in the right path, and it is the right decision to do so. In time, good, responsible journalism will prevail in paid for over free. There is no either way to keep it going. I endorse it fully,” he said.

Also weighing in on the conversation was industry veteran and former CEO of OMG Singapore and Malaysia, Ranga Somanathan, who said that setting aside the ideology and motivations of SCMP, purely looking at the freemium model from a reader perspective, he believes non-subscribers will still be able to access current affairs and  breaking news and will have to pay for opinion pieces and deep dives.

"Targeted at global audiences, SCMP does provide a counter view to what the ‘global’ titles from the west offer. Interest for the alternate view is high and will only remain so given the geopolitical tensions. For SCMP, to build a sustainable business, once has to balance advertising and subscription revenue. This is assuming that they are not supported by any government initiatives," he said. As such, Somanathan believes this is a good time to pivot from free to a freemium model.

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