No more subscriptions, please

In 2019, subscriptions are everywhere. If you want to read the news, you may subscribe to a couple of outlets, like The New York Times and The New Yorker. If you are watching a show, you’ll get one or two streaming platforms like Netflix and Hulu. And if you listen to music, you’ll probably have Spotify. Suddenly you’ll already hold five active subscriptions and pay around $50 a month. The problem is—you’ll probably get more. One for deliveries (Amazon Prime), another for produce (maybe the vegetable and fruit online shop Misfits Market) and, if you are a serial fashionista, you may even get a subscription to rent clothes from Rent the Runway. That’s eight subscriptions and a couple of hundred dollars more per month.

It’s not surprising that, with the overabundance of subscription options, consumers are displaying ‘subscription fatigue’—they are tired of being asked to pay for multiple online services. News organizations have to compete with a hundred other products with a similar revenue model, and they are likely to lose.

Although subscription models have become the holy grail for news organizations, they may not work for many. According to the Reuters Institute Digital News Report published last week, there has only been a slight increase in the number of people paying for news worldwide. For example, in Spain, only 7% made an ongoing news payment last year—either subscriptions or cable/broadband;—13% in the United States. Even with these low penetrations, the report acknowledges that we might have hit the upper limit. It also says that the average news subscription per person never exceeds one.

For over two decades, traditional outlets have tried to figure out how to get paid for their digital content. Advertising was the logical step, but if the audience was not broad enough, ads didn’t suffice. Plus, information was given away for free for many years. Then came paywalls, with mixed success. For example, the first NYT’s paywall, Times Select, made you pay only to access OpEds and columns. The rest was free. The strategy didn’t work. But when the Times implemented a metered paywall instead, the number of digital subscribers skyrocketed. Other newspapers followed the Times’ lead.

However, if the average news subscription per person (among those who already subscribe) is one, there’s a ‘winner-takes-all’ scenario. Giants like the New York Times and the Washington Post with enough money to produce quality content thrive in the United States. However, local outlets and medium-sized newspapers are dying. In Spain, most of the information is free, and the number of people that pay for news has barely increased in the last four years. By the end of 2019, the leading Spanish newspaper El País will implement a metered paywall. If it can provide quality content, different from the information available in other outlets for free, it could start to build up a subscriber base and, if it succeeds, other outlets may follow suit. Still, if these two conditions are met (quality and differentiated content, and consumers willing to pay), the result could be somewhat similar to the US’—two or three outlets will rule, while the small and mid-sized newspapers die off.

We have argued on multiple occasions that subscriptions work—read The NYT proves that media can live off digital revenues—and they still do, but with nuances. Subscriptions work for outlets with the capacity to produce quality content; they work for the largest, the most international, the most influential outlets; for those that have the money to invest in its newsroom. For the rest, subscriptions may become a small source of funding, but not the fundamental one. Small papers cannot trust their livelihood only on subscriptions; they need to get smarter. By establishing a subscription paywall, online newspapers make a big business model commitment: their traffic will certainly drop and any advertising revenue they get with open content will certainly drop. Subscriptions better compensate it.

‘Subscription fatigue’ makes it more urgent to find other revenue sources. In the same report, the Reuters Institute asked people to choose just one online media subscription for the next year. Only 12% of them picked news, whereas 28% wanted video streaming platforms. The conclusion of the survey is devastating: “[…] hypothetically, over three-quarters (76%) of people that currently pay for online news would stop paying if they would only have one online media subscription for the next year.”

With the overabundance of subscriptions and the ‘winner-takes-all’ scenario, news organizations need to put forth multi-revenue models. Besides subscriptions, which won’t go away, especially for large news outlets, newspapers should receive their income from ads, events, merchandising, e-commerce, and donations. Local outlets might have a harder time getting some of those revenue sources, but they should also consider multi-revenue strategies combining grants, sales, and partnerships with other products.

For the last fifteen years, we have had to figure out how to make subscriptions work. Now that we have, it’s time to slowly move ahead as most newsrooms won’t live uniquely off them. They’ll need a variety of revenue sources to sustain a healthy newsroom.

 

In this video, the Reuters Institute summarizes the Digital News Reports’ findings:

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