Previously published in America’s Newspapers
Recent research from the Reuters Institute brings into clear focus the challenges facing publishers seeking to grow subscription revenues during an economic downturn.
In sharp contrast with the heady days of growth during the COVID-19 pandemic, more than half of publishers are now experiencing stalled subscription growth coupled with static or falling page views. In that context, it is no great surprise to see the vast majority (79%) pointing to subscription growth as the number one priority in 2022.
The question now is, how? In a highly competitive market in which the impact of a cost-of-living crisis is increasing consumer cost-cutting, how can publishers drive subscription growth?
A new generation of consumers demands a new approach
For many publishers, the answer lies in product innovation – particularly in content formats proven to entice a younger, but far less loyal demographic. In fact, two-thirds of publishers are planning to iterate and improve existing products, while a third (32%) see launching new products as a priority.
- 80% are planning to extend into podcasts and other digital audio
- 70% want to revamp and improve newsletters
- 63% are actively developing new digital video formats. 1
The rush to new digital formats like audio and video is particularly interesting. Video is, after all, rapidly becoming the dominant format for content consumption online.
- Today, people watch an average of 16 hours of online video per week – a 52% increase in the last two years. With 5G connectivity increasingly available, that trend is likely to accelerate over time.
- Video-sharing behavior online makes the format ideal as a means of attracting new subscribers – people are twice as likely to share video content over any other content format. 2
- Marketers who use video in their campaigns generate a 34% higher conversion rate than those who don’t. 3
These investments in digital audio and video content are driven by two core priorities. First, to engage a broader demographic of subscribers, with a particular focus on younger, Gen-Z audiences, and, second, to drive greater product relevance and engagement.
We can already see the success of this strategy in the wild. For instance, Norwegian tabloid, Verdens Gang, identified video as a way to entice a younger audience – and added 20,000 subscribers in a year by buying documentaries and putting them behind its paywall. 4
Product diversification: Winners and losers
However, the problem with the publishing industry zeroing in on a near-universal growth strategy is obvious. There will inevitably be winners and losers.
While the business case for video and other formats is compelling, publishers must overcome real barriers if diversification into video and audio is to be a commercial success – and some are better placed to do so than others.
For some, those barriers are simply too high. The impact of COVID, cost of living crises and inflation are throttling the ability to commit to the necessary investments.
In the 2022 Reuters Institute survey cited above, around half of respondents stated they simply cannot afford to invest in technologies that will raise operating costs and technology debt, while a similar cohort says it is struggling to hire or keep enough technical, design or data staff to deliver and manage new services like video. On top of that, around 40% struggle to create the alignment between different departments that is necessary to deliver successful innovation. 5
Technology as the problem…
At the heart of the issue for many publishers is a continued reliance on monolithic legacy systems designed for the old world of print and advertising — often with lightweight digital subscription management systems “bolted on” to establish a basic paywall for digital content.
For many, the temptation is to follow this route for video and bolt on a video-specific subscription management solution. However, as with paywalls, insufficient consideration as to how these systems stitch together creates problems down the line.
These legacy systems present a very real barrier for publishers that both elevates costs and makes it harder to execute innovative ways to attract new subscribers.
- Lack of flexibility: The legacy systems that most publishers still rely on prevent them from delivering new features at pace and often require months of bespoke development work for even basic innovations like new vouchers.
- Disconnected systems: Disconnected systems force publishers to manage print, digital and video subscriptions separately, which means a poor experience for subscribers and missed opportunities and duplicated costs for publishers.
- Siloed data: Siloed systems also mean siloed data which leaves publishers reliant on spreadsheets and costly manual processes to collate and share data on everything from customer behavior to product performance.
- Complexity and cost: Adding basic subscription management technology to legacy systems adds complexity and cost — not least the licensing and support costs that flow from running separate systems for print, digital and video subscriptions.
There are good reasons for why these technology barriers are now boardroom issues for many publishers. They strike at the heart of commercial performance, driving OPEX up while throttling the ability to achieve sustainable revenue growth – particularly through a multi-format model in which flexibility, insight and efficiency are crucial.
…and the solution
Publishers are increasingly aware that subscription management technology can either be the barrier or the key to their ability to adopt a multi-format model and drive subscriber growth.
World-class subscription management platforms can be critical engines for growth — cutting costs while improving everything from the business model to how content is packaged and sold, to subscriber acquisition and retention, customer experience, and revenue optimization and diversification.
By reducing complexity, facilitating innovation and slashing technology debt, these solutions can:
- Unify print, digital, video and audio in a single solution: A single platform for every format enables publishers to realize significant technology cost and OPEX savings, make more efficient use of people resources and gain the flexibility required to offer blended subscriptions.
- Automate manual tasks: Drive agility and efficiency by removing the need for team members to spend time on routine tasks, freeing them to focus on higher value activities.
- Deliver powerful insights: Surface near real time insights across the entire subscriber base to enable granular, rapid performance reporting and access to the rich subscriber data required to make informed strategic decisions.
- Put customers first: Make it easy to launch customer self-care portals or expand payment options according to subscriber preferences.
- Provide powerful revenue expansion tools: Support rapid innovation and reduce OPEX by enabling publishers to configure rather than build new offers, entitlements, promotions and products, as well as offering sophisticated anti-churn features.
- Reduce complexity: Support the creation of “nested” granular entitlements (sports, politics, culture) based on a single instance of the publisher’s core content to enable revenue expansion without the management complexity that comes with product diversification.
In short, a world-class subscription management solution can support today’s strategic objectives — from cost-cutting to content format diversification — with the capacity to adapt to future priorities.
To find out more about this topic, including real-world success stories from across the publishing industry, read our new eBook, “Rethinking reader revenues: exploring alternative revenue streams for publishers.“