The subscription economy is on the rise and in the digital age everything can be bought at a fixed monthly fee – from streaming media to dog food. This should be old news for many publishers who’ve proudly sold their print editions as subscriptions for many decades. Yet many of them have, surprisingly, not adopted this business model properly to the digital age. If they do, the rewards can be huge, and one solution to the ongoing revenue problem in the industry.
Media houses and publishers live in uncertain times, and the last decade has been particularly rough. Their advertising businesses are being squeezed, readers are abandoning print, and their cost base must constantly be adjusted. The situation means that all sources of new revenue are worth testing and it is up to each company to build their own toolbox of revenue models, depending on what works for their particular properties and audiences. Here, courage, innovation and low time to market are important talents, that all modern organizations must master.
All media houses and publishers must understand if and how digital subscriptions fit into their particular toolbox and their mix of revenue sources. Several companies have successfully demonstrated that digital subscriptions can become a new stable source of revenue and a realistic future alternative to print revenue. However, there are many things to consider.
Here are six questions to ask yourself, to understand if digital subscriptions and paid content is the right way forward:
Is the content unique enough?
Here’s a fact: No one will pay for what’s freely available. Publishers who produce content that is widely available from other digital sources will find it difficult to charge for it. On the other hand, if you produce unique content that is difficult to copy, then you’re in a better position
Is the brand and perceived value strong?
Publishers with a strong brand and credibility have an easier time charging for their content. If you have a high perceived value in your brand and product, it is easier to bring it into the digital paid world. The Economist is a good example of this and they were early on to charge the same price for their paper edition as for the digital.
Are digital loyal readers available?
Large digital presence and reach is a good starting point for succeeding with digital subscriptions. If you have readers who actively choose your brand, preferably through direct traffic, then there is a good opportunity to convert them to paying digital subscribers. In the long term, this will also reduce the acquisition cost, since it is possible to convert in own channels, which are cheaper than bought channels.
Are there print readers to convert?
A large base of print subscribers can be a good prerequisite for winning in the digital space. It demonstrates a willingness to pay for the content, as well as to provide the opportunity to convert or bundle digitally. However, it is important to understand that this target group can differ fundamentally from those who want to read digitally. Depending on the title, the overlap may be complete or non-existent.
What more can be offered?
In a digital world, there are many opportunities to offer complementary products and services, to spice up the subscription offer. Here it is important to consider what is relevant to the target group and what there is a willingness to pay for. It might be anything from loyalty programs to crossword apps and other digital services.
Will the numbers work?
This is where it hurts for most. You have to consider if there is a realistic chance of making a profit. This usually comes back to a matter of scale (many subscribers) or niche (higher willingness to pay). Few titles have both. Here, one needs to look at their addressable market size, the propensity to pay, and what costs will need to be considered.
Regardless of your answer to the questions above, there are likely opportunities for change. If the content is not unique today, then consider how it can be more so in the future. If the numbers do not seem work, then ask what would make them work. But, if digital subscriptions don’t seem to be the right choice, then consider the other possible business models for the digital domain.
Several players have shown that digital subscriptions can be a realistic way forward. Those who have come a long way are international big players (like the New York Times) and some national players. Those who need to prove the model now are business media, niche media, magazines, lifestyle and local players. Here lies the current and future battles.
However, it is well worth testing. If successful, new stable revenue streams are created, a closer relationship with readers and improved advertising. Those who have worked with digital subscriptions and paid content can witness about the fantastic alignment of incentives it produces. Everyone suddenly wants the same thing: create value for the readers, so that they stay and pay.