Reader Revenue Top Stories
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Publishers rediscover their oldest revenue line in subscriptions, memberships and donations

As dreams of Facebook-fuelled riches turned to nightmares, the publishing industry went back to its roots this year, asking digital audiences to pay for the content they’ve become used to getting for free

2018 finally saw publishers accept the painful fact that third-party platforms were never going to fix their bottom lines. Although the realisation that distributed content wasn’t delivering game-changing revenues had been dawning slowly, Facebook’s January demotion of newspaper and magazine content was the final wake up call.

After a brief panic at the prospect of a total traffic collapse, the ever-resilient publishing crowd switched gears and moved reader revenues centre stage. Premium publishers in particular identified the looming traffic crisis as the perfect opportunity to rediscover direct audience relationships.

The stark change in focus highlights a range of digital-subscription success stories that have been developing for years, particularly at leading global newspaper publishers. And, as the year has brought regular news of major wins, more and more publishers have found the courage to start charging their readers for content that they had previously been distributing for free.

Unlike so many other publishing pivots, the focus on reader revenue is likely to continue as, rather than being a tech-driven fad, it plays to publishing fundamentals: quality content and audience satisfaction.

Few publishers will abandon social reach or scale-dependent advertising income completely, but 2018 cemented publishers’ respect for a stronger commercial mix, with reader revenues set to play an increasingly important part.

What happened in 2018

2018 was the year that publishing began to believe that reader revenues could work. The biggest stories of the year came around some of the big reader revenue numbers reported. Way out in front was the New York Times. Legacy media’s paywall poster child reported 2017 subscription revenues of $1 billion early in the year, with digital subscriptions posting annual average growth of almost 50% since the paywall was introduced in 2011. Subscription revenue growth for 2018 is estimated at 20%.

The Financial Times, while not achieving the scale of its New York cousin, is closing in on 1 million subscribers, almost 80% of them digital. The FT has been playing the paywall game even longer than the NYT, introducing digital subscriptions in 2002, but growth, starting in 2015 with the introduction of a low-cost trial designed to get readers hooked with a month’s access for £1, picked up in 2018. Forecasts of 1 million paid subscribers are in place for next year.

Other leading UK newspapers had a good reader-revenue year too. The Times and Sunday Times scored big with their combined subscriber base reaching 500,000 for the first time. Recording their best year since moving behind a paywall in 2010, the News UK titles saw digital subscriptions grow 20% to surpass print subscriptions for the first time in July.

Without a paywall, The Guardian managed to convince 570,000 members to make regular financial contributions and a further 375,000 supporters to make a one-off contribution. Sticking firmly to its open journalism principles, the paper tells readers that ‘while you’re here’ they should put some money in the pot to keep the paper going.

Inspired, and possibly a little threatened by the progress of newsbrands, a raft of magazine titles chose 2018 to introduce their own paywalls. At Condé Nast, Wired gated its content in January, with editor Nicholas Thomson describing it simply as building a more “stable financial future” around content that people will pay for. Vanity Fair followed suit in April.

In the UK, the New Statesman joined the Spectator, enjoying the biggest year in its 190-year history, behind its own paywall. The Economist leads the news weeklies with 1.4 million subscribers globally, with paid subscriptions up 14% year on year, maintaining reader revenues as the brand’s biggest income line.

Most of the publishing brands early into the reader revenue space have a long track record in developing digital subscriptions or a very clear market position. But mass market media brands aren’t shying away from entering the field. The Independent announced its ‘Independent Minds’ paid section in September. The Telegraph-style premium-content scheme will offer subscribers an ad-free experience, editorial exclusives, ebooks, tickets to events and “closer interaction” with journalists for £55 a year.

A similar scheme dubbed The Beast Inside from the Daily Beast in the US goes further and could become the template for brands overlaying a value-added membership scheme on top of a commodity news product. The $100 annual fee gets members exclusive content, but also a new daily newsletter to give analysis and a deep dive into the day’s biggest story; a new podcast called Omnishambles; a reported crime series called The Beast Files; early Friday-access to the biggest story of the weekend; and the ability to post comments, which non-members can’t do.

Where are we now?

Charging people to read what you’ve written is the industry’s original business model. But securing revenue from readers isn’t easy – a simple paywall proposition won’t cut it in an online world where alternative information sources are readily available.

The turmoil in world politics led in 2016 and 2017 to a wave of spending on reliable information from trusted newspaper and magazine brands. But in 2018, the Trump Bump and The Brexit Bounce have settled and publishers are having to work out their strategies for retaining paying readers.

There has been a trend for tightening paywalls, giving readers less content for free — the New York Times cut their free allowance from 10 to 5 a month. Conversion and retention marketing efforts have also become more sophisticated, leveraging audience behaviour data to target marketing messages according to geography, content interests and even inferred demographics.

With churn rates for consumer publishers averaging 30% in 2017, retaining subscribers, rather than capturing new converts, has been identified as a priority at many reading publishers. Research from the FT showed that it is four to five times cheaper to retain existing users than acquire new ones.

Audience engagement has been identified as the key to success in retention. The Times and Sunday Times have seen the benefit of restructuring their news coverage into three daily editions to increase engagement. Both the Guardian and the Economist redesigned their core apps this year to boost usage, with the Economist re-designing its digital app to make it easier for readers to explore the full breadth of content subscribers have access to.

What can we expect in the future?

Find out what we can expect the future of reader revenues to look like by reading the full chapter on key moments in subscriptions, memberships and donations this year in our report, Media Moments 2018. Download it here.