In an effort to cast light on the success media are enjoying in the digital subscription arena, FIPP has created the first Global Digital Subscription Snapshot. Covering nearly 10 million digital subscriptions by title, the report finds that paid content success requires investment, intelligent application of analytics, an understanding of the local market and leveraging the emotional connection to a brand.
Deloitte estimates that by the end of 2018 news and magazine media will have more than 20 million digital-only subscribers. More important perhaps is their prediction that by the end of 2020, the proportion of subscription to advertising revenue for publishers will be 50:50 in digital. As recently as 2012, this split was 10:90.
This is reassuring news for any publisher reconsidering the value of their content offering and the potential revenues to be had by pursuing a digital subscription model. Interestingly, there is also increasing evidence that scale is not the only way to achieve success, and that an increasing number of publishers are carving out successful premium offerings as well.
Although it is often assumed that publications who publish in world languages like English have an advantage in attracting global audiences, Scandinavian and continental European countries are illustrating the value and benefits of news offered in a local vernacular and an intense focus on understanding consumer behaviour and needs in the local market.
Sweden, Finland and Norway are a particularly interesting example. Although these countries have much smaller populations, publishers in this region are enjoying tremendous success in convincing large portions of the population to pay for news. It does need to be noted though that in many Scandinavian countries, publishers have worked together and collectively implemented paywalls. In Sweden for example, it is estimated that 60% of publishers have paywalls in place.
Despite these examples of success, a comprehensive overview of how the market is evolving and a clear understanding of the sheer diversity and determination involved in driving paid subscription models remains hard to come by.
To this end, FIPP joined forces with paywall firm CeleraOne to create the 2018 Global Digital Subscription Snapshot. Drawing on both FIPP survey data, data from pv digest and publicly available information, we believe this report and its references serve as one of the most comprehensive documents yet to highlight the complex and diverse approaches publishers are taking to drive digital subscription growth.
“Publishers probably need 4 or 5 revenue streams to finance digital journalism. This snapshot shows that paid content is one of them and for an increasing number of publishers even the most important one” says Moritz Hilger, CEO of CeleraOne.
KEY INSIGHTS FOR PUBLISHERS
Publishers are increasing investment in paid content
The deluge of fake news and data privacy breaches in recent years seems to be leading to a renewed consumer interest in trusted news sources and quality content. This, coupled with the apparent success that publishers are enjoying with paid subscription models, is driving renewed confidence amongst publishers and as a result, we see an increase in their investment in teams, technology and content.
Paywall models are becoming more dynamic and sophisticated
In addition to developing the capabilities above, evidence suggests that success is strongly associated with placing more content, not less, behind paywalls and using data to improve audience understanding. In particular, to understand what is likely to trigger conversion is becoming increasingly integral to developing paywalls.
As an example, the Wall Street Journal has developed a propensity score to assess a non-subscriber’s likeliness to be converted based on more than 60 signals which adjust the paywall to the individual user. We also see flexibility in how paywalls are employed based on the news of the day. On a big news day, restrictions on metered content may relax to draw users in but tighten up again after the event.
Local markets are crucial to success
Success with paid content strategy is very much dependent on the market publishers are operating in. Broadly speaking we have observed three categories of markets:
1. Well-developed subscription markets
In these markets, paid content is most developed, and consumers already show a willingness to pay for content. This includes the US, UK, Scandinavian markets as well as France.
“The success of digital subscription services such as Spotify, Netflix, Hulu, and Amazon Prime have ‘normalised’ digital subscriptions in consumers’ minds. This, in turn, has made it possible for news publishers to make real progress in this area,” said James Hewes, President and CEO of FIPP.
2. Emerging subscription markets
European markets such as Germany, The Netherlands, Switzerland and Italy fall into this category. Although the concept of paying for digital subscriptions is not yet fully entrenched in these markets, there are interesting examples of successful approaches. Germany is evolving rapidly with BILD, Welt, Zeit, Suddeutsche, FAZ, Handelsblatt and also local newspapers like NOZ showing robust growth, especially in the e-paper market.
3. Fledgling markets
In these markets, a culture for pay for news is very poorly entrenched, but there are a small number of players moving into the field. This includes Russia, Poland, Spain and Austria, Argentina and Brazil, amongst many others. It is, of course, challenging for individual publishers to establish payment models where it is not yet culturally entrenched, but these markets are to be watched with interest as they develop.
4. Importance of the community and supporting a cause
In the US newspapers such as the NYT and Washington Post have enjoyed the so-called Trump Bump – a surge in digital subscriptions after the election of Donald Trump. His controversial actions have delivered a spate of big news days, and the successful deployment of dynamic paywalls have seen newspapers successfully convert readers drawn in on such days.
It is important to note however that there appears to be a general trend which is seeing readers rally behind publications and the cause or mission they represent. This could be party attributed to the impact of fake news and data privacy concerns which seems to be sparking a renewed interest in quality news sources which act as a champion for the reader’s own viewpoints.
The Guardian has not implemented a paywall, but they have very successfully leveraged their reader loyalty by creating a membership scheme. The scheme relies on readers to voluntarily sign up to keep The Guardian online assets free to read (their digital app does require a subscription). In 2016 they had 50,000 members contributing a minimum of £5 ($6.70) per month, by the end of 2017 this number had grown to 300,000. In the last year, they also had an additional 300,000 readers make a one-off contribution to The Guardian.
“Quality journalism is more important than ever. We clearly see that some readers want to support the newspaper and their mission. These emotional benefits are a relevant factor to convince people to subscribe,” says James Hewes from FIPP.
Of course, it’s not only English language news outlets that are enjoying success on rallying their reader community behind them and their editorial cause. We see evidence of this with a number of quality publications such as Mediapart in France, De Correspondent in the Netherlands, Republik.ru in Russia, Die Republik in Switzerland and Gazetta Wyborcza in Poland.
Reproduced with kind permission of FIPP, the network for global media.
Our thanks also to CeleraOne who provide cutting-edge technologies for paid content, identity management and user segmentation. Their clients include Axel Springer, Neue Zürcher Zeitung, Süddeutsche Zeitung, Zeit Online and more than 20 other publishers.