For newspapers and magazine publishers, growing paid digital subscriptions has become a nearly unanimous pick as an essential tool for rebuilding the business model. Unfortunately, a counter-trend is rapidly forming as consumers take a hard look at how much they are paying monthly for a wide range of subscriptions and whether that adds up to household budget-buster.
The focus is typically on entertainment and shopping charges. Do you really need cable and Netflix and Hulu and Amazon Prime and maybe a clothing service, a meal plan and a razor club thrown in? Multiply those recurring monthly charges over a year, and you are dropping a serious chunk of change — more than $3,000 is not out of the question.
Newspaper and magazine subscriptions — print or digital — stand to be collateral damage if cutting back catches on big.
The industry years ago embraced “auto-pay,” authorizing a recurring credit card payment unless you cancel. That payment form is typically required now for discounted trial subscriptions that soon roll over to full rate. Cancellation is often a hassle, and inertia helps keep subscribers in the fold. From the publishers’ standpoint, that keeps circulation numbers up, while cutting down on expensive subscription churn.
To be clear, aiming to increase audience revenue as print advertising declines is not a strategy that is going away, but executing it could become substantially more difficult. The higher the price, the more the danger.
Jeff Sonderman, deputy director of the American Press Institute and a careful watcher of all things audience related, has had an eye on so-called subscription fatigue for at least six months now.
He told me in an interview that credit cards such as Capital One’s Eno — as in enough already — offer apps that track your recurring payments and invite you to drop some. Eno notices ask “Are you sure?”
Banks are moving into this space as well (Wells Fargo’s Control Tower, for instance, launched last October), and there are third-party services like Trim and Truebill to help weed out unwanted subscriptions.
“I don’t think they are doing it spontaneously,” Sonderman said. “It must be something people want.”
The subscription fatigue phenomenon throws an interesting light on Apple’s high-profile introduction last week of its News+ product (along with an even higher profile entertainment offering).
On the one hand, Apple’s new services become two more monthly subscriptions in an already crowded field. But at $9.99 a month, some portion of iPhone users (and there are 900 million of them) will bite. Apple News+ costs less than a third of a Wall Street Journal digital subscription; most magazines are onboard, too. Just what content a subscriber gets remains a bit cloudy — but what a bargain!
How to adjust? Mike Reed, CEO of New Media Investment, owner of the GateHouse chain, commented in his most recent conference call with analysts that the company has shifted to a “volume over price” strategy.
Reed explained in an interview that he had been talking mainly about print plus digital subscriptions. When the price point climbs above $700 a year, as it has at some chains, numbers of subscribers can fall too fast. And that’s at a time when large chains with their big audience numbers are seeing improved prospects for digital advertising.
Similarly, Michael Kuntz, COO of USA Today’s national network, in a podcast interview with Digiday last month, said the company plans to keep USA Today and its related sports sites free now and for the foreseeable future. National digital advertising has been a bright spot of growth over the last year, he said.
But not everyone is buying into the notion that the climate is shifting. David Chavern, president of the News Media Alliance, told me he does not see a general trend of stalled audience numbers or reduced subscription prices.
“But the business is not homogenous the way it used to be,” he added. “You’re now seeing strategies that are wildly variant” (among chains and individual papers).
Mike Klingensmith, publisher of The Star Tribune in Minneapolis, said in an interview that he was aware of the new focus on household subscriptions as a consumer issue but thought it mainly applied to fragmenting entertainment services.
“That’s a different marketplace than information and news.”
He added, “We are betting it all on digital subs” as the linchpin of a future revenue strategy. Klingensmith has set a goal of 210,000 digital subscribers by 2023, triple the current number.
Other leaders among regional papers include The Boston Globe with roughly 112,000 digital-only subscriptions, sources tell me, and annual revenues a healthy $32 million. (A Globe spokesperson confirmed the 112,000 but declined to comment on revenues.) In an interview with Nieman Lab, Los Angeles Times owner Dr. Patrick Soon-Shiong said his paper now has more than 150,000 paid digital subscribers.
What is less clear is the price of those subscriptions, and therefore the revenue that growth generates. The Globe and Star Tribune charges more than $250 a year for digital and holds to that price. But I suspect that the fast growth numbers at some chains have been fueled by extended introductory rates and some flexibility at renewal time.
API’s Sonderman was a leadoff speaker at the industry Mega Conference in late February, with a host of encouraging measures of the potential for audience growth.
But he cautioned in our conversation that the audience seems to be splitting into three groups: those who don’t like paying for news at all, those who are willing to pay but are very value conscious (the “thrifties”), and those who will pay because they support a news organization’s mission.
With that mix, Sonderman said, “We can get people in … but the problem now is retention.”
Matt Lindsay, a consultant on pricing and other elements of audience strategy, emailed me:
“We do not have hard data to show that there is a cap on the number of subscriptions someone will take on. I believe there is a budget constraint and an attention constraint, and these two limiting factors affect customer segments differently. Household disposable income is one factor that is easy to model. The second is an individual’s propensity to read. There are households that have historically taken lots of print subscriptions. They will have two newspapers and several magazines. I believe this is what will happen digitally, too.”
All of which is to say that most publications are likely to go full speed ahead with a paid digital audience strategy despite the likelihood of fresh headwinds (to use a favorite industry term in recent years).
Only this weekend, Google announced that one leg of its current initiative to help local publishers will be six months of assistance for 10 papers through the Local Media Association in building a reader revenue development dashboard.
Meanwhile, I look for paid print subscriptions to continue to fall, a natural trend as the pool of loyal older readers thins. Also, with higher prices, consciously or not, publications are nudging audiences to the cheaper digital alternative.