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.
The question 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 revenue growth?
A new generation of consumers demands a new approach
For many, 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.
More specifically:
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.
These investments in digital audio and video content are being shaped by two core priorities. First, to engage a broader demographic of subscribers, with a particularly 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 world of publishing. 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.
And 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 attracting new subscribers. Challenges include:
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:
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."
[1] https://reutersinstitute.politics.ox.ac.uk/sites/default/files/2022-01/Newman%20-%20Trends%20and%20Predictions%202022%20FINAL.pdf
[2] https://www.duoplus.nz/online-video-consumption-is-booming-statistics-infographic/
[3] https://www.wordstream.com/blog/ws/2017/03/08/video-marketing-statistics
[4] https://digiday.com/future-of-tv/axel-springers-bild-uses-video-drive-subscriptions/
[5] https://reutersinstitute.politics.ox.ac.uk/sites/default/files/2022-01/Newman%20-%20Trends%20and%20Predictions%202022%20FINAL.pdf
