Only close watchers of paid digital content (paywalls) will have heard of Piano Media, a little three-year old Eastern European start-up that has steadily been adding clients. Today, Piano leaps to the front of the paywall vendor line, announcing its acquisition of Press+, the dominant provider in the United States.
That same little company also hired Kelly Leach, publisher of the Wall Street Journal’s European edition, as its new CEO, and plans aggressive expansion into Latin American and Asian markets where digital pay is just beginning to get serious attention from publishers.
If the transaction, being described as a merger, sounds like a minnow swallowing a whale, it is. Press+, which Poynter uses to solicit donations, is 8.8 times as big in revenues, Piano communications director David Brauchli said in an e-mail exchange. The transaction is being financed by 3TS Capital Partners, a Central European venture capital firm.
Press+ founders Gordon Crovitz and Steven Brill sold their company to RR Donnelley in March 2011, but stayed on as co-CEOs. With this sale they will step back from any operating role and act as advisers, Crovitz told me in a phone interview
“Growing the market outside the U.S.” is the next logical step for the business, he said, and it made more sense to seek a partner with international experience than to try to build that capacity on their own.
Press+ will continue to operate under its own name with the metered system for digital subscriptions and supporting software and analytics its main offering. Piano began with what it has called a cable TV-like model in which Slovakia’s leading media outlets (and later Slovenia’s) combined for a single digital subscription offering that gave access to all the publications.
Piano adapted its product line to individual publications in Germany and earlier this year Newsweek with “Piano Solo.” The original whole country model, “Piano National” could have appeal in Latin American, Asian or even African markets
I spoke to Leach by phone from London and asked why she would leave a high-profile Dow Jones executive position for Piano. “I really believe in the paid digital model, and I did when not very many others did…It’s an area I’m passionate about. We have seen this wave working its way around the world and at the same time we are realizing that digital ads alone won’t carry the day.”
Leach worked with Crovitz in the early 2000s, when he was Wall Street Journal publisher, and the Journal was among the first to introduce digital subscriptions. (Closing the Dow-Jones loop, she was recruited for the job by David Brauchli’s brother, Marcus, a former editor of the Journal and later the Washington Post).
Tomas Bella, founder and current CEO, will remain an investor but step aside from an operating position, the company said.
Besides having complementary strengths, both Press+ and Piano charge clients a percentage of digital subscription revenue. Some competing vendors like Syncronex. Media Pass and Tiny Pass instead offer a fixed licensing fee with add-on features.
Both Leach and Crovitz said their strongest selling point is that their 600-plus clients provides the broadest experience base and best analytics, allowing companies to grow revenues to a much higher level than they would with a less expensive system.
I also spoke with Matt Lindsay, president of Mather Economics, which advises publishers on digital and other pricing issues. He had not heard of the pending transaction but said it made sense.
“There’s still some growth left” in basic paywall adoption in the U.S. and Europe, Lindsay said, “but we are starting to reach the saturation point.” However there is a next generation of paywall issues including new product development, refining trial offers and linking digital and print subscription plans.
Crovitz said that the combined Piano/Press+ company will be positioned for that business and may have offerings for “the dozen or so big companies (including the New York Times) who cobbled together their own system” without a vendor template.
But the bigger and immediate opportunity will probably be the rest of the world, following the U.S. and Canada and now Europe in pursuing revenue from digital users.
“Asia is really ripe for this,” Leach said, “and they may not have made the same mistakes. For instance, in Japan, only a small fraction of content even appears online….So they haven’t trained the customer (as most U.S. publishers did) that online content is free and ad-supported.”
Piano Media and its venture capital backers are both based in Vienna. Leach said she expects to divide her time between there, New York, London, and Bratslava when not courting new clients.
The news marks the very fast development of digital paywalls from untested theory to standard strategy. It is only five years since Brill and Crovitz launched Press+ and three-and-a-half years since the New York Times and other U.S. publishers began charging for full digital access. At the time, the consensus view was that publications would be placing their digital audience numbers and digital ad revenue at risk if access was no longer free.
Now roughly 600 U.S. and Canadian papers have such systems. Holdouts like Digital First, Advance, and Deseret are at least considering some variation. In our interview, Crovitz said that one of his company’s biggest achievements has been showing that paid digital can work for newspaper organizations of all sizes, not just the big guys like the Times, Journal and Financial Times
Brill and Crovitz, the New York Times and Piano also figured out early that there was lots more to successful execution than simply deciding whether to charge or not. Some flexibility in pricing and trial offers was essential, they could see, and digital pay could be closely tied both to management of print circulation and a next generation of specialty products.
The name Piano, according to a 2011 Nieman Lab piece by analyst Ken Doctor, was an allusion to integrating all these complexities — using ten fingers and both hands to produce a harmonious result.
In my view, legacy newspapers and magazines remained siloed by traditional print functions and provincial thinking until very recently. Now the notion has finally taken root that business model problems arrived earlier here than in other countries but that the search for potential solutions and associated business opportunities is global.
And if you accept that the industry has entered this new phase, little Piano swallowing U.S. leader Press+ is not as odd as it first sounds.