In the Pugpig weekly media bulletin, Pugpig’s consulting services director Kevin Anderson and digital growth consultant James Kember distill some of the best strategies and tactics that are driving growth in audiences, revenue and innovation at media businesses around the world.
If we were pressed to point to the biggest publishing trends this year, we’d go with the shift in focus to subscriber retention and artificial intelligence. While AI tools have been part of the publishing toolkit for years, it exploded into popular culture with the release of tools like ChatGPT, Midjourney, Dall-E2 and Stable Diffusion. This triggered a lot of concern about the pressures that this would put on journalists and writers’ already precarious employment situation, but it has also sharpened the focus on AI in media across the business from operations, distribution and revenue models.
We need to acknowledge some issues around AI that are forcing media leaders and staff to respond quickly, particularly around editorial operations.
Publishing leaders need to be aware of these issues with generative AI due to the potential for reputational damage. But it’s also important to note that these issues are external to the operations of media companies. We’re going to quickly review how publishers have been and could be using AI.
Publishers have been using a suite of AI technologies for content production and management for years. The applications include:
Journalism groups, including The Associated Press, McClatchy and Bonnier, have worked with AI content generation company United Robots to generate content from these data-rich stories, and customers are quick to point out that the technology doesn’t replace journalists but frees them up to focus on value-added reporting while also increasing the volume of local content.
When considering when to use technology to automate work, Paul Leonardi has some excellent advice for media leaders that comes from “The Digital Mindset,” a book that he co-wrote with Tsedal Neeley. “If you are going to automate (tasks) with digital tools, which is great, that means we should be figuring out what are the ways to use our employees’ brain power to do something better and more interesting and more helpful for the company,” he told Brené Brown during a recent podcast interview.
AI technologies could also have a profound affect on the distribution of journalism if it disrupts search. Google recently declared a “code red” to rally its employees to respond to the threat that chatbots like ChatGPT posed to its search business.
With search recently surpassing social media as the top referral for news sites, it is easy to see how this could pose challenges for the distribution of their content. And Ezra Eeman, change director at Mediahuis, recently told WAN-IFRA that publishing leaders need to consider their response to AI and posed a series of questions to help them frame their response. “Do we want to be in those new environments like ChatGPT and Bing, or any other upcoming search or conversation engine? Or do we still try to bring people to our destinations? And how do we do that if search doesn’t work anymore?” he asked.
The danger with simply being in new environments is that this will have an impact on publishers' place in the value chain, as we saw relying on social media platforms to distribute their content. Publishers also need to consider the copyright and intellectual property implications of large language models like ChatGPT scraping their content. Visual creators, image archive Getty, writers and even software coders are already engaged in legal efforts to force LLMs and visual tools like Midjourney to pay for using their content to build their models. It will be important to establish licensing models early in the development of these tools.
Eeman said that the most pressing challenge for media leaders is to consider how AI technologies will affect their business models. Leaders will need to look at all stages of the media production and distribution value chain to understand how AI will shift the creation and capture of value, a process he described as “Business School 101” thinking.
On one hand, AI is powering paywall providers like Piano, Evolok and Sophi to offer up the right offer for a potential subscriber at the right time, but if AI disrupts users relationship with our digital destinations, it might put pressure on our key revenue streams of advertising and subscriptions.
We still believe that the opportunity of applying AI technologies to publishing outstrips the threats, and Pugpig Consulting stands ready to help you navigate these times of change.
Digiday+ recently published its latest survey of publisher professionals, in which they asked questions about the level of effort they’re putting into their subscription business and the amount of revenue it’s generating for them. These are the key findings.
Revenue from subscriptions has remained steady over the last two years
Overall, the number of businesses generating revenue from subscriptions has stayed pretty level over the last three years. Digiday+ reported that 62% of publishers said that they were making at least some revenue from subscriptions as of January 2023, whereas it was 58% last year and 62% in 2021. This indicates that a large position of the market — 38% — are not generating any money from subscriptions and this has not changed for a few years now, despite the increasingly difficult advertising environment.
This plateau has been noted elsewhere. Greg Piechota, researcher-in-residence at INMA, gave a presentation at the Media Subscriptions Summit in Stockholm back in March where he presented a levelling off in subscription growth at the end of last year. However, Piechota saw a silver lining for publishers looking to increase revenue from subscriptions: “If you compare the share of consumers having a subscription on a print newspaper 20 years ago with the share having a digital subscription now, the difference is 70%,” he pointed out. There is still room for digital subscription growth, he believes.
Subscriptions are becoming (a bit) less of a focus
Whereas almost half (47%) of respondents last year said that building their subscription business was a large or very large priority, this is down to 39% this time around. However, the number who view it as a moderate priority has gone up by 8 percentage points to 17%, making up the difference. It’s not that businesses are moving away from subscriptions entirely; they’re just diversifying their focus slightly. This was something we identified in our State of the Publishing Media report where one of the top three challenges publishing leaders identified was diversifying revenue.
This has come against a backdrop of concerns about retention. Back in January we used this newsletter to propose that 2023 was the year of retention and mentioned a report from Minna Technologies in partnership with FT Strategies that found that retention was now the top priority for 68% of publishers. The age of subscription growth is on ice and we’re moving into the era of retention.
There’s a growing difference between large and small publishers
For large publishers there’s been a big jump in those that make money from subscriptions. It’s up from 66% last year to 78% this year. This has mostly been driven by publishers who make a very small or moderate portion of their revenue from subs, which increased by 5 percentage points.
But for small publishers the trend is reversed. Thirty nine percent now say they get at least a small portion of revenue from subscriptions; last year it was 45%. This is probably due to failed ventures to diversify revenue, especially in the face of increasing economic uncertainty, and a return to known revenue streams for many small media organizations. In spite of success stories like DC Thomson’s growth to 25,000 paid subscribers, the market remains challenging.
Pugpig’s Consulting Services team is helping our publishing partners design strategies to increase subscription growth, enhance retention rates and diversify revenue. If you would like to discuss how we can help you, contact us at info@pugpig.com.
Here are some of the most important headlines about the business of news and publishing as well as strategies and tactics in product management, analytics and audience engagement.
