The Dynamics of Online Publisher Subscriptions

Recent reports from British media indicate a potential decline in digital publisher subscriptions revenue in the coming year, with the possibility of more than a third of news subscribers discontinuing their subscriptions to favoured publications. This development raises uncertainties about the future revenue of publishers.

Publisher subscriptions graphics

Background on Publisher Subscription Adoption

Publisher subscriptions became a favoured strategy for publishers amidst challenging advertising conditions. While the common justification for readers paying for news suggests support for journalism, it is important to note that journalists do not receive commissions from subscriptions. Nevertheless, the accumulation of revenue enables publishers to compensate employees and potentially hire additional journalists.

Another factor driving the adoption of subscriptions is the increasing use of ad blockers. With ad blocker installations reaching historic highs over the past decade, subscription news sites offer a straightforward method for publishers to counter ad-blocking strategies and replace blocked ad revenue with recurring or annual purchases.

Subscription Uptake

Online publishers embraced subscriptions after witnessing early adopters’ success, positioning subscriptions as a solution to revenue challenges. The Telegraph Media Group, for instance, achieved approximately 700 million digital subscribers in 2023, supporting the notion that subscriptions can serve as an alternative revenue stream. This trend has led many publishers to shift away from traditional ad revenue in favour of subscriptions.

However, as of the beginning of 2024, UK publishers expressed concerns about the potential impact of rising living costs, with forecasts suggesting a high rate of subscriber churn. This underscores the dependence of digital subscription uptake on the economic conditions of a country.

Challenges with Publisher Subscriptions

High Costs:

Subscriptions are resource-intensive, demanding value for money from subscribers. Publishers often need to hire professionals experienced in managing such products, potentially leading to increased expenses. Meeting subscriber expectations may also require higher payments to current writers or the hiring of additional staff—a challenging prospect in an economic climate where publishers are reducing staff.

Pricing:

High costs associated with subscriptions translate into high prices, with some reaching the upper end of £300 annually. The limited market for high-end publisher subscriptions, primarily among professionals, further narrows the potential customer base.

Publishers also face the challenge of rising subscription prices due to cost-push inflation, exacerbating the affordability gap as wages fail to keep pace with increasing costs. The population are focused on buying necessities in the current economic climate, with news likely being at the bottom of their list.

Rising inflation for publisher subscriptions

Alternatives to Subscriptions:

In 2024, numerous news sources are available, including platforms like TikTok that appeal to younger generations. Not only do other platforms cater to the attention behaviours of the younger audience, but the content is also free, fresh and provides multiple perspectives on the topic at hand. This shift poses questions about the long-term viability of subscription-based news platforms, especially given the diverse alternatives in the market.

Convenience:

Readers are unlikely to subscribe if they encounter a potentially useful article during their initial visit to a site. To address high bounce rates, some publishers limit the number of free articles before requiring a subscription.

Optimising Subscriptions

Diversification:

Innovations that support both subscriptions and other revenue sources, such as original ad revenue, can be beneficial. While suggestions to move away from ad revenue exist, recognizing the fragility of consumer spending for subscriptions is crucial. Publishers are adopting anti-ad blocker systems, ad optimization technology, and diversifying revenue streams through subscriptions, following the principle of not putting all their eggs in one basket in 2024.