Originally published in What’s New in Publishing in November 2020. While some of the data points have evolved, the analysis and conclusion remain highly relevant.
Prior to the coronavirus outbreak, publishers were already pivoting to subscriptions.
At the start of the year, the Reuters Institute for the Study of Journalism (RISJ), found that 50% of digital leaders identified reader revenue as their major income focus for 2020.
“Reader revenue specifically, has very positive prospects,” Jon Slade, the FT’s Chief Commercial Officer, told RISJ, as part of their annual predictions report. “Advertising revenue remains a major concern,” he noted.
Those concerns have multiplied in a COVID world, where advertising spend has been decimated, making the need to focus on subscriptions and reader revenue more important than ever.
With that in mind, here are seven trends and strategic considerations to keep in mind:
1. Advertising revenues hit by short – and long – term trends
Globally advertising revenue will drop by at least 7.4% in 2020, predicts the research firm Omdia. This “best-case scenario” is based on an assumption that the global advertising market will pick up in the second half of the year.
In the United States, GroupM said it expects advertising to decline by 13% this year (a figure which excludes political advertising for 2020’s presidential and other elections).
The impact of this will be felt across the board. In June, eMarketer reported that:
“For the first time since we began estimating ad revenues at Google, the company’s net US digital ad revenues will decline in absolute terms. Facebook and Amazon will continue to grow but at severely depressed rates compared with earlier expectations.”
Advertising spend is dropping, and has dropped, at a much faster rate for publishers.
In Canada, Postmedia, the country’s largest newspaper chain, has seen print advertising fall by 36.6% ($23.7 million), and digital advertising by 37.7%. The New York Times, reported that overall ad revenue fell in Q1 2020 by more than 15%, with digital ad revenue down 7.9% and print ad revenue down 20.9%.
Many publishers have also been hit by advertisers using “blacklist” technology to ensure that their ads don’t appear on stories mentioning the coronavirus. In the U.K. alone, it’s estimated that this could cost newspapers £50m in lost digital revenues.
Meanwhile, AdAge, citing a report from the cybersecurity company Cheq, reported that “incorrect blocking of safe content on premium news sites” in 2019 resulted in $2.8 billion in lost ad revenue.
2. COVID-19’s subscription surge
At the same time as advertising has been falling through the floor, numerous outlets have reported record traffic during the pandemic, with audiences hungry for news and updates.
In March, around 15% of all web traffic was coronavirus related. Some of this interest has been successfully parlayed into subscriptions:
- The New York Times now has more than 6 million subscribers (print and digital), adding nearly 600,000 digital subscribers in Q1 2020. In March, The Times had 240 million unique visitors and 2.5 billion page views, up from 101 million uniques in January.
- CNBC’s website hit 1 billion page views for the first time in March 2020, more than doubling traffic from February. Subscriptions to CNBC Pro, a premium product costing $29.99 a month or $299.99 a year, were up 189% since January 2020.
- Tribune Publishing experienced a 293% increase in new digital subscriptions between March and February 2020. This included an increased conversion rate, from users hitting the paywall, of 109%.
According to Zuora’s Subscription Impact Report, in comparison with the previous 12 months, subscriptions in Digital News & Media grew by 110% between March to May 2020, although that rate is slowing. This was the second-fastest subscription segment behind OTT Video Streaming.
Who are these new subscribers? Well, that appears to vary by publication. AdWeek states that new subscribers differ from publications’ usual readership, and getting to know them is key; whereas in a report ($) for INMA Grzegorz (Greg) Piechota finds that subscriptions tend to be from existing users, not new COVID readers.
3. Focus on building a long-term relationship
“At the risk of sounding too cynical, the increased digital readership is an opportunity for publishers to tout their vital role in providing news and information to their communities — and to form ties that can last after the crisis subsides.”
Tien Tzuo, CEO and Founder of Zuora, and author of Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It, agrees, arguing, “If the Subscription Economy is about anything, it’s about a fundamental return to relationships.”
The most obvious way that many publishers have sought to cultivate a relationship with audiences has been through dropping their paywalls for COVID-19 related content.
Alongside this, many publications have launched free coronavirus newsletters, with the hope that these – along with partial paywalls – are a means of coaxing audiences into a paid relationship.
It’s not a strategy everyone agrees with.
“The newspaper industry seems to think that public service can’t coexist with revenue,” argues Howard Saltz, Knight Innovator-in-Residence at Florida International University’s School of Journalism and Mass Communication. Saltz, who until recently served as the Publisher and Editor-in-Chief of the Sun Sentinel Media Group in Fort Lauderdale says:
“That’s a mistake — at a time when the beleaguered industry can’t afford to make one…”
”We hope the community will develop a journalism habit that’ll continue when we start charging for access again, but we may be instead reinforcing the habit that news should be free.”
4. Make the case for subscriptions
To counteract this risk, a number of publishers have emphasised why news and other media content needs to be paid for. As part of this, publishers are stressing the value of their work (and the cost of creating it) in their own marketing.
The Trusting News project showcases a number of these approaches, highlighting how outlets – ranging from the Guardian to the Coloradoan (Fort Collins, Colorado) and the Fort Worth Star-Telegram – have made the case for taking out a subscription. These efforts are not just being made on their own properties, but offsite on Facebook and YouTube too.
Interestingly, the Star-Telegram, like some other providers, began by making all coronavirus content free. But, in April, they started to take a different approach. As their executive editor Steve Coffman explained:
“We will continue to make stories critical to your health and safety available to everyone. But some of our coronavirus work will begin to migrate behind the meter, or paywall. Some examples are longer-form accountability and feature reporting, as well as tangential stories about the effects of the coronavirus on our economy.”
“This is a matter of survival for the Star-Telegram and other local newspapers,” he added.
5. Build on wider subscription habits
In asking consumers to pay for content, it helps that subscription habits are already becoming more commonplace.
According to Deloitte’s latest Digital Media trends survey, “U.S. consumers had an average of 12 paid media and entertainment subscriptions pre-COVID-19.” That figure was even higher for some audiences, with millennials averaging 17 subscriptions.
And although many people have less money in their pockets, Deloitte’s data shows that consumers are busy adding new subscriptions (often taking advantage of trial pricing and ad-supported services), canceling old ones, and also trying out new services.
These wider subscription behaviors represent an opportunity, and a threat, that media organisations must be cognizant of.
6. Don’t overlook the need to convert non-subscribers
Alongside this, companies also need to look at the reasons why the majority of their consumers do not subscribe and double down on efforts to convert that audience.
The market research company Resonate identified four potential target groups for publishers:
- Those who do not have a digital subscription because they feel there is already plenty of free content.
- Those who do not have a digital subscription because they are not interested
- Those who don’t have a digital subscription because it is too expensive.
- Those who are engaged with newspapers online.
Understanding the information needs and consumption habits of these audiences is vital, as is creating compelling offers to reach out and convert them into subscribers.
There’s no agreement about what constitutes best practice. Tactics such as the deployment of special sign-up offers, whether you do / do not provide COVID-19 content for free, subscription costs, and deviating from a “one-size-fits-all” subscription model, will vary from publisher to publisher.
That said, especially for news publishers, the pandemic has arguably created an environment where consumers may be more receptive to subscribing, and where the reason for doing so can be more readily understood. It’s an opportunity that publishers need to capitalise on.
7. Become an audience first organisation
“Digital and print media companies wondering how best to keep new subscribers who signed up during the pandemic will need to prove to readers that their publication is invaluable after the crisis,” writes AdWeek’s Sara Jerde.
“Businesses that focus on the audience first and advertising second will be better equipped to handle the consequences of the pandemic,” argues Curtis Huber, Senior Director of Circulation and Audience Revenue at the Seattle Times.
For companies who have seen a bump in subscribers as a result of the coronavirus, retention will be key.
That may mean deploying dynamic pricing, bundling and other techniques, such as highlighting none COVID-19 related content, which may appeal to a subscriber’s wider interests.
Reducing churn, developing strategies for building loyalty, and generating recurring income from subscribers, is essential if an “audience first” approach is your new revenue model.
This is especially important given that advertising revenues are not expected to return to previously project levels for some time. As a result, subscriptions and reader revenue are only going to become more important to publishers as we all adapt to this “new normal.”
This article is adapted from our free to download report, The Publisher’s Guide to Navigating COVID-19.