Is WaPo’s Headspace Partnership a Good Strategy?

If the news has you stressed out, why not take a deep breath and meditate? That’s the subtle pitch The Washington Post is making with its recently announced partnership with Headspace. 

According to a press release announcing the deal:

The Washington Post, an award-winning news leader with the mission to inform and empower readers, and Headspace, a global leader in mindfulness and meditation, today announced a partnership to make its deep library of content available to all new Washington Post subscribers in a first-of-its-kind bundle subscription.

New subscribers will have access to The Washington Post’s world-class reporting and put their wellness goals into practice with Headspace’s science-backed mindfulness and meditation content that offers a range of tools for managing stress, increasing positivity and compassion, improving sleep, finding focus and so much more.

The deal is targeted toward new subscribers. For $70, new users will get access to a full-year of The Washington Post and Headspace. At the end of the year, that annual subscription will increase to $120 and $69.99 respectively. While we don’t know the breakdown of revenue, it’s clear that both companies are taking big hits to their first-year revenue. 

Both brands are trying to get prospective subscribers off zero. By getting people to convert on an offer like this, it can increase the number of subscribers. But it can’t look at these conversions and get comfortable. Once a user does convert, the hard work starts because The Washington Post needs to immediately focus on getting the user to renew in a year. 

With a discount like this, The Washington Post is banking on users getting addicted to the content. That’s why the offer is a full year of both products for the price of just Headspace. It wants to have time on its side. By making the offer unusually compelling for the first-year, it has 365 days to retain them.

Habit is the most important metric to track when running a subscription business. If users are coming back once or twice in their subscription duration, it’s highly likely that they are going to churn. Why wouldn’t they? It’s obvious that they are not deriving much value from the subscription. If, however, The Washington Post can encourage users to come back repeatedly, it believes the renewal will be greater. 

However, this can also be risky. Discounting subscriptions has always been a common practice. But if you discount too low, when it comes time for renewal, the user might not value the brand enough to pay full price. If it costs $70 to get two products, why would you suddenly pay $210 ($120 for WaPo and $69.99 for Headspace) a year later? You won’t.

But maybe WaPo doesn’t care. If we look at The New York Times, it has been incrementally increasing its ARPU over the past few quarters. For example, in Q2 2022, it was $8.83. In Q3, it was $8.87. And in Q4, it was $8.93. This isn’t a monumental shift in ARPU, but it does demonstrate that users are stomaching incremental increases to the subscription.

In WaPo’s case, it might be banking on only getting $70 next year, even though it’s advertising the full price at $120. The goal is to incrementally increase revenue from the user. This year it’s getting a cut of $70. Next year, when the user threatens to churn, the company might offer a WaPo-only subscription for $70. This ties into WaPo’s strategy over the past six months to increase ARPU. Back in October, it announced that the price was increasing for all subscribers to $120. Many people were able to keep their $40/year subscription, though, if they threatened to cancel.

This is normal, though, because the cost of serving an additional digital subscriber is effectively zero. And so, some of its subscribers will be comfortable paying more while others won’t. This slow growth in price will increase ARPU, which WaPo desperately needs. It has seen its subscription business shrink over the past year; this deal could help that turn around.

What I like about this is that it is a strategy that can be repeated across other verticals and media companies. In the case of WaPo, it chose Headspace because it is leaning into more wellness content. According to the press release:

“Since the pandemic, our readers have been seeking out more advice and tools on how to live a more balanced life. We can’t think of a brand that aligns more with our commitment to wellness and wellbeing than Headspace. It is a partnership that marries what these two powerhouse brands do at their very best,” said Michael Ribero, chief subscriptions officer at The Washington Post.

So, how can others do the same thing?

TechCrunch used to offer an incredible bundle for people who signed up for ExtraCrunch. If you went annual, you’d get Amazon Web Services credit, perks from a variety of SaaS products, and discounted tickets to events. But this made sense because a large number of its readers were startup founders. If I were starting a company from scratch, any savings for the company is worth it.

Then there’s Outside. On top of all the content a subscriber gets, they’d also get Trailforks Pro App, which has biking maps, and Gaia GPS Premium, which offers a different subset of maps. For the Outside audience, these products might make the subscription more compelling to the most diehard of readers.

Each publication is going to have its own offers and I would encourage you to get creative.

Another strategy to experiment with could be making it an advertising opportunity. Each month, you could have a subscription sponsor. So, in March, you have Headspace as the sponsor, which means that they pay to be promoted to every new subscriber. This will solve two things simultaneously. First, it makes the subscription potentially more compelling and second, it increases monetization on an already highly-monetized page.

But the important thing to understand is that no gimmick can overcome a bad subscription. And I think this is where so many of these offers fail. The bundled offers expire at some point, which means the only way you keep a subscriber paying for your content is if they have developed that deep habit.

I think this is an interesting strategy for The Washington Post. Whether it works for them remains to be seen. My suspicion is they will need to expand their editorial coverage to get people in, much like the Times has. But with its current ownership and senior management, I don’t see that happening. Time will tell, though.

Thanks for reading. If you have thoughts, hit reply or join the AMO Slack. Have a great weekend!