The Subscription Economy Matures

Crypto Trading Bots
March 10, 2020
Popup Newsrooms and Limited-Edition News Products
March 10, 2020

The Subscription Economy Matures

Whether you call it a subscription, a membership or a donation, we’re living in the age of audience revenue.

Key Insight

Whether you call it a subscription, a membership or a donation, we’re living in the age of audience revenue. For media companies—news outlets especially—that means business incentives may soon align what consumers want.

Why It Matters

The risk is that the propagation of subscriptions will overwhelm audiences’ willingness (or ability) to pay.

Examples

Everywhere you look, a new subscription product is launching: Disney+ and Apple TV joined the crowded streaming subscription landscape last year. Conde Nast announced in January 2019 that it was putting all of its magazine websites—historically ad supported—behind a paywall.

Local newspapers are pushing to launch new subscriptions or to refine existing offerings. And it’s not just in media: There are subscription services for toothbrushes (Quip), “ugly” discount vegetables (Misfits Market) and probiotics (Seed). Launching a subscription or membership program is relatively easy. Keeping your subscribers is harder: A report from subscription service platform Zuora estimated an average annualized churn rate of nearly 34% for media business, the highest of any sector studied. Churn isn’t just a legacy media problem, though: on-demand streaming services suffer higher churn rates than news media, according to estimates cited by The Information.

July marked the first time that Netflix reported a loss in domestic subscribers, and the streaming service has reported flat numbers in the U.S. since then. The platform is still expected to grow internationally, but the lesson about saturation is important for anyone pursuing a subscription model, especially niche and local publishers.

The Los Angeles Times sought to double its digital subscriber base to 300,000 in 2019, according to a memo leaked in July. While the Times was able to add more than 50,000 new subscribers, its net growth was only 13,000 because of churn.

What’s Next

Look for more services that monitor—and cancel—unused subscriptions or free trials, such as True Bill and Free Trial Card. In California, companies selling subscriptions must now offer a clear way to cancel them online, thanks to California Senate Bill No. 313, which went into effect in July 2019.

The Impact

Watch for consumers to become more discriminating in their choice of subscriptions as more companies compete for a fixed share of wallet. For publishers, that means a focus on improving subscriber retention, not just recruiting lots of new users.

Watchlist

Apple TV, Conde Nast, Disney+, Bean, Do Not Pay, Free Trial Card, Knewz, Netflix, Membership Puzzle Project, Scroll, True Bill, news organizations and media worldwide.