“Publishers will continue to see growth in 2023 despite economic headwinds.”
Publishers across the world are growing subscriptions despite economic challenges. New report from FIPP highlights how various companies are faring and the opportunities ahead.
Although “the combination of a looming recession and inflation are casting a shadow over revenue streams that had looked to be in healthy post-Covid recovery,” writes FIPP President and CEO, James Hewes, in the Global Digital Subscription Snapshot – Q4 2022.
“We see evidence of growth everywhere, and no sign that publishers are yet being affected by any sort of slowdown.”James Hewes, President and CEO, FIPP
The report covers 140 individual titles with a global reach of 42.1M digital-only subscriptions.
“Record number of starts”
The New York Times leads with strong growth in Q3 of 2022. It ended Q4 with 8.59M digital-only subscribers and 10.02M digital subscriptions. The publisher attributes its success to a continued focus on selling digital subscription bundles. It sees content diversification and bundled subscription sales as key to reaching 15M subscribers (across all print and digital products) by 2027.
“The biggest story of our third quarter was continued progress on the bundle, with mounting evidence that our strategy is working,” said Meredith Kopit Levien, President and CEO of the Times. “It was our best quarter yet for bundle net additions, with a record number of starts and a record percentage of our total starts taking the bundle.”
The Economist generated substantial revenues as well, largely due to growth in digital subscriptions which made up 66% of all new subscriptions. It has stopped selling print-only subscriptions – readers who still want to receive a printed copy of the publication will have to take out a print and digital subscription bundle. The publisher said in its annual report for 2022 that digital subscribers have better retention, lower cost of service and support its carbon reduction goals.
The Harvard Business Revenue which celebrated its 100th anniversary in October, recently announced that it had reached 116,000 digital subscribers. HBR launched its subscription offering in 2019, and digital subscriptions now account for more than a third of its 328,000 total subscribers. It has seen a 25% increase in revenue after diversifying its content channels to attract new readers and introducing a paywall.
“Publishers are getting better at converting subscribers”
Local news media also defied the digital subscription downturn in 2022. Subscriptions to local news remained strong despite early signs that readership might be falling off, according to research from Northwestern University Medill Local News Initiative. Data from the Medill Subscriber Engagement Index shows that subscriptions continued to rise across large, medium, and small newspapers even as the pandemic eased.
The Inquirer, which has 61,000 print subscribers, will reach 70,000 digital subscriptions in the near future. “The same trend is apparent at the Boston Globe, the Los Angeles Times and the Minneapolis Star-Tribune,” according to the report. The Boston Globe reached 240,000 digital subscriptions. The parent of the Dallas Morning News reported a nearly 40% jump in digital-only subscription revenue in the third quarter of 2022.
We are seeing that pageviews have gone down but publishers are getting better at converting subscribers, so they are maintaining their numbers of new subscriptions. There’s been a learning curve and now the big thing is retention and monetization, how to raise the average price that people pay.Matt Lindsay, President, Mather Economics
Prediction: digital subscription revenue will be up 47%
INMA launched a new subscription benchmark service for publishers using historical data from more than 160 news brands in 33 countries. It predicts that by Q3 2023, digital subscription volume will be up 52% in comparison to Q1 2021, and digital subscription revenue will be up 47% over the same period.
The company acknowledges that a recession may drive customers to reduce the number of subscriptions they pay for, but streaming platforms such as Netflix and Spotify might be more vulnerable to cancellations. That’s because “digital news subscriptions enjoy much lower market penetration than streaming in most markets,” suggests Greg Piechota, Researcher-in-Residence, INMA, “compare 7% adults paying for news in the UK vs. 65% paying for Netflix or similar in 2022.”
He adds that a “high proportion of customers are fans and heavy users of news who treat them as essentials or justifiable indulgences.”
News subscribers tend to be wealthier than the general population and are likely less affected by the rising costs of living and simply carry on as usual.Greg Piechota, Researcher-in-Residence, INMA
“Lot of headroom for growth”
Ken Herts, COO of Lenfest Institute for Journalism, is optimistic that news publishers will be able to retain their new subscribers, as well as add new ones. “Penetration of potential subscribers is still very low and there’s a lot of headroom for growth,” he explains. “A Reuters study found that about 20% of people are willing to pay for news but you have subscriptions in the half to one percent range at many publications. With good marketing, publishers should be able to get up to 2% subscribing and then they will have a very good business.”
“If publishers can retain the people who wanted health news about the pandemic, those are folks who you can build a strong foundation with,” say Tim Franklin, Senior Associate Dean, and John M. Mutz, Chair in Local News at Medill. “That’s hugely important for the industry as it continues to pivot to a reader-revenue business model from an advertising-revenue model.”
Industry experts see digital marketing as a key to acquiring new subscribers. “You do have to invest in digital marketing but it’s not just marketing by itself,” suggest Herts.
“It’s finding the readers where they are and engaging them with differentiated content so they become regular readers and then creating a newsletter strategy to keep people coming back.”Ken Herts, COO, Lenfest Institute for Journalism
The full report can be downloaded from FIPP:
Global Digital Subscription Snapshot – Q4 2022