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“Cautious optimism is peeking through”: Many publishers not looking at using discounts despite recession fears

A series of surveys conducted by Digiday, of which What’s New in Publishing was a participant, reveal that a significant chunk of publishers are not looking at using discounting as a strategy to spur subscription/ad growth whether it’s the holiday season or the impending recession.

Almost two-thirds of publishers get at least some of their revenue from subscriptions, according to a recent Digiday survey. 34% of the 73 publishers surveyed said they get a large portion of their revenue from subscriptions and for 32% it accounts for a small share. 34% don’t derive any revenue from subscriptions. 

32% of the publishers relying on subscriptions never offer discounts

Nearly a third (32%) of the publishers generating subscription income never offer discounts. And most publishers who offer discounted subscriptions do so throughout the year (62%) rather than to take advantage of say, the holiday season or to tide over economically challenging times. 

“Subscription discounts are most decidedly not tied to the holiday season,” says Julia Tabisz, Deputy Managing Editor, Digiday. “Only 2% of publishers told Digiday that they only discount subscriptions during the holidays.”

Looking ahead, another Digiday survey of publisher professionals conducted last fall found 87% believe we’re entering into a recession. However, 63% expect a shallow recession compared to 37% who expect a deep one. Additionally, 51% of respondents believe the recession will last long, compared with 49% who believe it will be short-lived. 

While publishers are pessimistic in that they agree a recession is going to happen, they are fairly optimistic that it won’t be a bad one.

Julia Tabisz, Deputy Managing Editor, Digiday

44% of the survey respondents think that subscription revenue will suffer this year due to the economic downturn. However, 36% are unsure about it. 35% are not looking at discounting subscription prices more aggressively compared to 17% who are, and 48% are not sure whether the state of the economy in 2023 will drive them to offer discounts.

“It is possible that even despite the economic downturn, a good number of publishers won’t relent on subscription discounts,” suggests Tabisz.

“Net growth globally this year”

Publishers appear cautious yet optimistic, and that could be due to positive data from Europe and the US in recent weeks indicating that the world’s economy will avoid a recession this year. Goldman Sachs has scaled back its dark forecasts about the European economy and “fully withdrawn its recession call for the euro area,” reports Quartz’s Nate DiCamillo. 

“Economic downturn in advanced economies no longer appears as bad as feared,” notes a Financial Times report.

Bullishness about the global economy has been in short supply among business leaders in recent months with fears of recession clouding the outlook and restraining investment. Now, cautious optimism is peeking through.

Julia Horowitz, CNN

Douglas Peterson, CEO, S&P Global, expects a shallow recession in Europe, the United Kingdom, and the United States this year. He anticipates “net growth globally this year.”

“We have come through a period with a war, a pandemic, and the biggest normalization of monetary policy in history,” says Daniel Pinto, Head of JPMorgan’s investment bank. “Considering all the things that have happened, the world is a lot better than you would have expected.”

“Planning to take a wait-and-see approach”

Publishers’ reluctance to use discounting strategy also finds its way into ad sales. 96% of publishers surveyed said they earn at least some of their revenue from ad sales (it makes a large portion for 87%). 85% of these agreed either somewhat or strongly that ad sales will be affected by the recession this year.

However, this is not driving them towards offering discounts. 44% said they will not be discounting ad prices more aggressively in the face of the economic downturn. Further, 38% are not certain about how the economy will affect ad prices and discounts. 

“It’s possible that publishers are looking for quality ad sales over quantity in choosing to potentially not offer steeper discounts in the face of a possible recession,” writes Tabisz. 

It looks like the largest percentage of publishers are planning to take a wait-and-see approach when it comes to their subscription discount strategies.

Julia Tabisz, Deputy Managing Editor, Digiday

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