Value proposition

As a newshound, I begin my day with a quick scan of local and international newspapers. Inevitably, an article will catch my eye. Something about politics in Europe, or perhaps an essay about the expanding use of mobiles in Africa. I’ll click the mouse to have a read, which will lead me to something else, which leads to something else, and so on. Hours pass before I come up for air. This is the daily ritual of the futurist – endless searching, looking for the seeds of the future in the present. It’s work, but work that I love. Feed me a steady stream of information and I’m as happy as a clam.

One of the first sites I hit, every morning, is The New York Times. Last year, the popular online news source developed a sophisticated ‘paywall’, which allows readers to enjoy 30 articles per month gratis – but demands $15 a month for unlimited access. That’s not a huge ask – the Crikey newsletter costs the same – but even before I could debate the spend, I received an email from The Times. It pronounced me a ‘valued reader’ and gave me free access through the remainder of 2011.

I asked my Times-reading friends if they’d received the same offer. One – a designer – said he hadn’t, and simply paid the Times subscription fee. Another friend – who works in social media – reported that she, too, had been granted free access.

I wondered why The Times might treat us quite differently. We’re all around the same age, roughly the same income, and so forth. The difference, I suspect, is in our reach: my friend who works in social media has tens of thousands of followers on Twitter and is constantly sharing links to interesting things – including plenty from The Times. I do the same thing: every time I come across an interesting article – in The Times, or pretty much anywhere else – I hit the ‘share’ button, and it goes out to the 26,000+ people who follow me on Twitter.

As a digital organization, The Times keeps excellent metrics on each of its readers. The paper knows who’s sharing, whom they’re sharing it with, and the reach of each shared item. Magazines have always known the ‘handoff rate’ of their publications – how many people, on average, read a particular copy of a given issue – using that information to calculate their advertising rates. The Times needs to know who’s reading their stories, and why, so they can target advertising to specific readers, asking higher prices for these highly targeted ads. The Times watches me very carefully, learning what interests me, what I share, and whom they reach through me. I’m reasonably certain all of this factored into The Times’ decision to offer me a free subscription.

On a morning at the end of November, I paid my daily visit to The Times, only to be greeted by a message that told me that my free subscription would soon expire – then offered me a ‘special rate’ for eight weeks’ access. This rate was less than five percent of the standard subscription price – a very good deal. But the maneuver struck me as a bait-and-switch tactic. The Times had lured me into thinking I was a customer worth keeping, then decided to change the rules. That’s its prerogative, obviously, but it got me thinking about the value each of us contributes to our relationship.

The Times provides an almost inexhaustible resource of high-quality content. That’s a very valuable thing, but it’s not unique. High-quality news reporting and analysis is available from hundreds of different sites, all equally accessible with a few clicks. Quality content, while necessary, is insufficient by itself. Content must be married to the audience. That’s where I provide value: The Times can publish a hundred amazing articles, but if they want readers – and revenue – The Times needs people like me to share these articles through their social networks. The Times can publish, but it cannot distribute – it depends on its readers to do that.

Are the readers I bring to The Times equal to the value The Times provides to me? Should The Times compensate me for my social reach? That’s a question every business needs to ask as it confronts well-connected customers. As the established broadcast and print channels slowly fade, replaced by social connections and networks of trust, the smartest businesses take their marketing dollars and invest them into their best-connected customers, those who can take the brand message directly to thousands of others (or even just a well-chosen few).

The value of a customer extends far beyond the revenue they can provide. The most valuable customers bring you more customers. You need to put systems into place that allow you to identify these customers, and then develop programs to reward them. That’s the new value proposition of 21st-century marketing.

Mark Pesce is the co-inventor of the VRML, co-author of The Next Billion Seconds, and founder of Future St, a Sydney media and technology consultancy. He was formerly one of the judges on ABC’s The New Inventors.