In this extract from Media Moments 2023, Peter Houston explains that although few publishers expected subscriptions would magically solve their revenue woes, any that did will be increasingly disappointed as acquisition and retention challenges grow in a maturing market.
The rush to reader revenue has proven more successful than some media trends, primarily because it has been founded on the tried-and-tested principles of serving audience needs rather than a shiny new tech trend. Toolkits’ Jack Marshall wrote recently about how publishers with subscription revenue in the mix are doing better than those that rely solely on advertising.
However, the publishing’s industry’s propensity to pivot notwithstanding, there are no silver bullets in modern publishing and the fight for subscriber revenues is getting harder.
Acquisition and churn
News fatigue and cost of living pressures are playing their part in slowing growth in the subscription space. New subscribers are harder to convert and consumers are still cancelling unused or unloved subscriptions. Although research from Toolkits shows that fewer users have cancelled subscriptions this year than in 2022, 56% of survey respondents still reported ending a digital subscription.
There is also increasing competition for subscriber spend, both among publishers and from broader subscription offers, especially in entertainment. Once exclusively a hardware supplier, Apple now has more than 1 billion paying subscribers. The company generated $21 billion in subscriptions or 26% of its total revenue in the 2nd quarter of this year.
From a publisher perspective, the 3% growth in subscription volumes reported by FIPP in its September Global Digital Subscriptions Snapshot could point to a stagnating market. However, as outgoing CEO James Hewes says in the report, in the context of the biggest economic slowdown since the 70s, 3% growth is respectable, especially when compared with some other publisher revenue lines.
The twin challenges of acquisition and churn are focusing attention on Average Revenue Per User (ARPU). Brian Morrissey believes we are ‘at the ARPU stage of the subscriptions business’, when acquisitions are flagging or becoming more expensive and publishers are focusing on ‘squeezing’ as much revenue as they can from existing subscribers.
Morrissey wrote: “Subscriptions are a forever business… after early wins, subscriptions become a grind, with optimisation tactics coming to the forefront…” He spotlights Defector, listing in their third annual report a subscription revenue increase in 2023 of just 4% compared with 20% a year earlier. But, says Morrissey, “The big win was a 90% retention rate when half of Defector’s subscribers came up for renewal.”
Perceived value
Publishers are finding retention solutions in improved onboarding and customer service routines that provide strong customer communication around a limited number of sign-up steps. B2B site The Audiencers looked at the Economist, The Times and The Telegraph to try to find the ‘aha moments’ that separate loyal customers from lost customers.
Newsletter registration is seen as a key channel for communicating subscriber benefits and surfacing relevant content to help cement the perceived value of a subscription. Other indicators include app downloads, frequency of visits to the website, and activation of key ‘subscriber-only’ features.
“Not only is this journey about welcoming your new subscriber and making them feel valued, but about driving customer value, making sure they understand and make use of the potential value offered by your product,” wrote The Audiencers’ Editor in Chief Madeleine White.
A tighter focus on customer value may be paying off for publishers. In a study of 1,000 digital subscribers in the US by Toolkits and NRG, 85% reported being “completely” or “mostly” satisfied with the value for money they receive from their subscriptions, up from 75% in August 2022. The study shows engagement with subscription products is also growing; 68% of respondents reported using their subscriptions daily compared with 58% the previous year.
The improvements could be the result of better communications to encourage engagement and boost satisfaction. It may also be that subscribers have already ditched the subscriptions that they no longer value. “As the market for publishers’ subscription products matures, consumers will increasingly allocate their subscription dollars based on the strength of the underlying content and features on offer,” wrote Toolkits’ Jack Marshall.
Members vs subscribers
In the drive to be seen to be delivering value, publishers are drawing a distinction between subscribers and members. “You have a subscription; you are a member”, said a speaker at the ESCO Connect event and the more participative membership model has been picked up by several smaller publishers in 2023.
Publisher and creative agency Boom Saloon has the stated aim of ‘democratising creativity for good’ and has launched a founding members scheme to help fund its work, but also to bring members directly into the evolution of the business. Membership brings access to a network of creative practitioners, a digital content archive and plus exclusive discounts for products and events and also the opportunity to help shape future projects.
Independent magazine Huck introduced the ‘Club Huck’ membership scheme with a call for help: “The climate for journalism has never been more difficult. As costs rise and revenues sink, it’s harder and harder to keep producing vital and urgent storytelling. That’s where you come in.”
The Bureau of Investigative Journalism has followed a similar approach in launching its Bureau Insider program. Its launch statement laid its cards firmly on the table, saying TBIJ will struggle to keep going in 2024 without new funding. “That’s why we’re launching Bureau Insiders, a membership community that believes investigative journalism is vital to keep democracy alive.”
Media Makers Meet – Mx3 is proud to be the media partner for Media Moments 2023, the report written by Media Voices which analyses and tears down the major media events of the past year. The report is free to download and is available here.
