How the Publishing Industry is Embracing the Subscription Model
The key to survival in today’s world of ever-changing business strategies, is embracing digital transformation. Companies that fail to keep pace with fast-changing technological facets, may end up struggling. The publishing industry is trying to engage readership – which is on the decline, compete with the availability of free content, and navigate different platforms to distribute their content.
These trends have led to a considerable decrease in revenue generation, and publishing companies must venture into agile models of growth, propounded with the ever-changing need to cater to the digital world. Publishers must be able to predict what readers in different demographics and geographies click and read.
This knowledge enables creating dynamic content, which is adaptable to multiple devices. This can be brought about by developing artificial intelligence which predicts interest levels, and possible browsing patterns, and by using advanced analytics to automate workflow management for global streamlining, and to automate the subscription model.
Subscribed audiences are earned by the best-in-class content purveyors, as the ‘quantity’ game has now become the game of ‘quality’. The publishing industry must walk hand-in-hand with digital transformation, and the subscription model is an excellent start.
The Attention Economy
The attention economy has inspired three fundamental shifts, each of which has a massive impact on consumer behaviour, and the audience in question. These shifts present the next wave of challenges, faced by marketing teams, and the publishing industry at large.
- As is the case with OTT media services providers like Netflix, Hotstar, and Amazon Prime, among others, audiences are now willing to pay for direct access to high-quality content, in the form of premium packages. This has disrupted the pattern of free content provision, which has been subsidized by advertising over the years.
- The face of commerce has changed. A fair portion of the shopping experience has been replaced and supplemented with content that make shopping informative, personalized, efficient, informative, and most importantly, virtual.
- Data is now an asset class. Its value is substantial and it provides for the means to directly connect with audiences.
While it may seem that technology appears to be at the centre of these revolutions, content is the common theme in these shifts. Publishers continue to fight for attention, and tend to create more content. The value of these efforts is diminishing, as quality has taken over quantity.
The best content providers reap the benefits of a loyal customer base, most customers of which, are willing to pay upfront to enjoy continued services. The subscription model is now firmly at the fore of the publishing industry, as age-old advertising revenue streams continue to diminish.
Advertising Revenue Streams
Traditionally, digital publishing houses had thrived on providing readers with free access to content, to help drive and establish audience demand. Content production was influenced by search engine algorithms, and the model was simple – build bigger audience, create more content to suffice them, and generate more revenue.
While there are several reputed publishing houses that still operate on this basis, the Internet no longer works like it once did. Publishers pursuing this model, are dependent on significant traffic from powerhouses like Google, and Facebook. Facebook, and Google are on the constant lookout for methods to optimize their viewing experience for users, and publishing houses must embrace change too.
If Google and Facebook were to play it nice, and aggregate a fair revenue share percentage between the creators of the content, and themselves, it would still make sense. Instead, Google and Facebook claim a huge share of the digital advertising revenue generated by an associated publisher. Real-time bidding has led to a decrease in CPM values, and has forced publishing houses to compensate for this, by generating even more content.
These dynamics have led to a crisis in the digital world of publishing, as the content volume game remains a business model which is unsustainable. To make matters worse, according to the Bureau of Labour Statistics, employment in the digital publishing industry has doubled since 2010.
This statistic is a direct result of the need to create more content, to counter lower CPM values, and the apparent need to keep audiences interested – by supplying content aplenty. Diminishing margins need to be tackled with better strategies, and this is why the top guns in the publishing industry are embracing the subscription model.
The Subscription Model
These changes have led to publishers deciding on reclaiming their monetization independence. Taking cue from OTT media service providers like Netflix, digital publishing powerhouses like The New York Times, The Washington Post, and The Wall Street Journal, among others, have transformed the way they generate revenue.
Look no further than The Financial Times. Their business is so successful – having embraced the subscription model, that they are now sharing their subscription learnings with the world at large, via their ‘FT Strategies’. The means by which you can access data in real-time, is in turn determining the highest revenue generated from the medium of digital publishing.
To put it into perspective, The New York Times’ advertising revenue in 2010, was roughly half of their total earnings. Come 2018, and this number has dipped to 30%. In Q3 of 2017, their digital subscription revenue rose to 46% – this number is on the rise. While the switch from print to digitalization did take time, publishing houses are wasting no time in embracing new technologies that engage their readers.
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The base of their revenue is now the subscription model, backed with technologies that help predict what readers are looking for. This in turn ensures that loyal readers pay upfront, for the services publishing houses provide for. This change has led to publishing houses prioritizing quality, over quantity.
Being reader-centric is essential, and deeper engagement is necessary, when it comes to attracting a loyal user base. Focussing on quality, direct monetization, and the distribution experience is paying dividends, and is good for the subscription model. According to the Poynter Institute, this shift is being referred to as the ‘Service Era’ of journalism.
Instead of relying on advertising revenue, journalism will be paid for directly. According to The Atlantic, the media apocalypse will cease, if you embrace the subscription model, and cater to the rise in reader subscriptions. Pivot your monetary strategy on the basis of this change and reap its benefits.
Serving focussed, highly passionate audiences is more likely to offer greater utility, than the option of providing for disruptive ads. The content viewing experience must be seamless, and tend to customer preferences and loyalty. Publishers are now in a direct relationship with their readers, and this partnership of sorts, is powered by the medium of technology.
Marrying viewing habits with usage metrics, and demographic information, is the new gold, and the subscription model is the heart of this journey. Real-time data is a booming industry, and is becoming increasingly valuable when it comes to finding new streams of revenue generation, and new strategies. The subscription model drives business growth exponentially.
Driving Business Growth
According to research, publishing houses that are taking advantage of the subscription model are faring well, and are outperforming the Publisher’s Weekly Stock Index for sale growth, by more than twice the expected growth of sales.
Photo by Sam Wheeler on Unsplash
According to research conducted by Digiday, of the 100 plus media houses in the United States, and the United Kingdom, they have conducted their research on, more than half of them admit that the biggest contributor to the growth of a publishing house will be (is) subscriptions.
Revenue diversification is essential in today’s day and age, and subscription models will play a huge role in this, and are already paying dividends.
Apple TV+ and Disney+
Real success in the subscription economy is based on establishing strong customer relationships. While Apple TV+ and Disney+ are OTT media service providers, and not publishing powerhouses, their example is essential to propounding the basic metrics of a subscription based model.
Conventional wisdom may dictate Disney+ to be a resounding success, and overpower Apple TV. While content is important, usage and engagement plays a key role in determining one’s success. Today, companies live or die by engagement and usage, be it a publishing house, or an OTT media service provider. Apple roughly has 1 Billion registered users. These users interact with Apple, via iPads, Macs, and iPhones among others.
While Disney is a leading entertainment company, how many users do they have? How many times has Disney interacted with their customers on a daily basis? Does Disney have the same data and knowledge about its user base, as does Apple?
Adopting the subscription model requires much more than just amazing content.
The Guardian is widely known for its successful subscription model. Recently, The Guardian launched a new app, called ‘Daily’. This app caters to digital subscribers, and helps combine user experience, with the experience of a traditional newspaper – in the form of a digitally native product.
One of the most important facets of a subscription model, is retaining your customers. The Economist is experimenting with YouTube videos, to help drive new subscribers to its website, and keep the interest levels of its current subscribers. New technologies like VR, and AR will help publishers connect with their readers, in a closer manner, and offer them unique experiences.
To succeed in the subscription economy, you must ensure business flexibility. The ‘inherent’ need to try new things and iterate on offerings as per the change in the condition of the market, is essential. This could mean providing new services for readers, offering new payment methods, loyalty schemes, or creating new pricing models.
Successful publishers understand the need to embrace change, and cater to the ever-changing needs of readers. Delivering a seamless, flexible, and above all, a personalised experience, is essential, and is the only way going forward, when it comes to the publishing industry. Constant innovation and evolvement will lead to the success of a publishing house, provided they are worth their weight in salt in the first place.
The future of publishing is indeed, subscriptions.