Digital Publishing Reader Revenue Top Stories
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Publishers are joining the race for reader revenues, but there’s no silver bullet

Publishers large and small are joining earlier adopters with their own reader revenues plays. But with subscription fatigue threatening, quality content and smart reader retention strategies will be necessary for success, says Peter Houston in this chapter of our Media Moments 2019 report.

“The pivot is real,” said Chartbeat CEO John Saroff in Nieman Lab’s Predictions for Journalism 2019.

From global news brands to individuals harnessing crowdfunding platforms, more publishers are taking cash straight from their readers online than ever before. And, in a media market predicted to grow to $1 trillion over the next few years, user-based income is expected to grow to account for the largest percentage of total revenue.

The push into reader revenues has been driven by a desire for stability in a volatile digital ad market and as a counter to platforms taking ownership of reader relationships and data. The quality of content, technology and robust retention strategies are developing into strong differentiators. 

Success in reader revenues is not, however, a shoo-in. As more and more publishers close off open access to content, subscription fatigue looms large and publishers can expect to have to work ever harder to remain one of the tiny number of publications people are prepared to pay for.

Where are we now

Looking back, 2019 may come to be seen as the year paywalls hit the mainstream with many major publishers joining earlier adopters in their paywall plays. Conde Nast, leveraging learnings from its experience with The New Yorker, and reporting on the success of Wired’s 2018 paywall, promised that all its other US magazine sites would follow suit by the end of this year.

The Atlantic, finally put its paywall up in September, delaying the launch by 18 months until it got its technology just right. The waiting period was used to increase staffing and upgrade its technology platform to make sure the offer was of sufficient quality to attract, and keep, paying audiences.

The investment may have worked – US web traffic to the Atlantic’s site rose 35% during the first half of 2019 and digital advertising revenue increased 10%. With the paywall now in place, however, the long-term sustainability of the strategy will depend on converting audiences used to open access.

For many publishers that had already made the paywall switch, revenue growth was strong. The New York Times – still a shining beacon of reader-revenue success – reported its highest ever subscriber total in August; 4.7 million paid subscriptions across digital and print.

Almost 3.8 million people pay for the NYT’s online products, including news, crossword and cooking apps with the publisher adding almost 200,000 new digital subscribers in the 2nd Quarter of 2019. CEO Mark Thomson commented, “We’re making steady progress toward our goal of reaching 10 million total subscriptions by 2025.”

The one dark cloud for the NYT was a drop of around 5% in operating profits, but Thompson said this was  largely a result of continued investment in growing the paper’s subscription business.

In contrast, The Economist reported a gross margin twice what it was five years ago alongside a 50% increase in its reader revenues. Leveraging a strong product development strategy across platforms, The Economist has also taken an aggressive  approach to pricing. Subscribers pay the same for a print or digital subscription, with a print/digital bundle costing an extra 25%. This approach optimises profitability, but also underlines product value.

Following surveys to determine if reader expectations were being met, subscribers said they thought The Economist was charging too little. This has led to a strategy of infrequent but substantial price increases – In March, the publisher increased its subscription rates by 20%, the first time in three years.

Quality content is increasingly seen as a key differentiator in the race for reader revenues.

In April, the Financial Times announced 1 million paying readers, one year ahead of schedule according to Lionel Barber. The outgoing editor says ‘deep and original reporting’ and the paper’s ‘gold standard journalism’ have attracted paying readers, in-step with FT CEO John Ridding who has said quality journalism is a growth business.

Acknowledging a 12-year investment in the paper’s digital publishing infrastructure, Ridding puts ‘belief in the enduring value of independent, authoritative and reliable reporting in an era of fake news’ at the heart of the paper’s subscription success.

And following decades of losses, the Guardian made its 2019 break even target, reporting an operating profit of £800,000 in May off the back of its three-year turnaround plan. With a model unique among news publishers, it keeps its content outside a paywall and, rather than force payment when metered access runs out, asks readers to contribute.

The Guardian’s turnaround relied to a large part on financial support from 655,000 regular monthly supporters across both print and digital and a further 300,000 people one-off contributions in 2018 – 2019. The Guardian’s contributor strategy has relied heavily on an appeal to Guardian readers’ instincts to support ‘open, independent journalism’. Announcing the news, Editor Kath Viner wrote: “In times of extraordinary political and economic upheaval the need for quality, independent reporting and commentary has never been greater.” 

Possibly inspired by the Guardian’s increasing success in attracting donors, the Anti-Brexit New European abandoned its micropayments model and headed off down the contributor route. Leveraging its clearly identifiable political position, the paper asks for monthly donations between £5 and £50 or an annual donation up to £250.

Metered access is widely used as a way of hooking regular readers without caning traffic and publishers have generally been reducing the free allowance that they are giving readers to drive subscriptions. But moves to tighten access may be undercut by Google closing an Incognito loophole that will stop publishers identifying readers accessing their content in privacy mode.

The move may have implications for a third of publishers who use cookies to measure content access and it is likely to prompt more publishers to follow the lead of the NYT and put all content behind a registration to allow them to meter usage against individual accounts.

To read the final part of the chapter on what to expect in 2020, plus case studies, download the full Media Moments 2019 report.