Industry Spotlight – Shift in Subscription Strategies

28 February 2017


As the traditionally dominant revenue streams of print and online advertising come under pressure, the majority of newspapers are looking to introduce a subscription based model for digital access to their newspapers.
The original model of relying on large numbers of visitor traffic to generate advertising revenue is struggling due to dwindling reader numbers, therefore publishers are looking at alternative strategies to increase their digital revenues. Many publishers have seen recent success by creating loyal subscriber databases whereby they offer premium content for these subscribers. These subscription based plans are available in a variation of forms, ranging from digital only to combinations of print, online and mobile subscriptions.
The large Norwegian newspaper, Aftenposten is the most recent publisher to see the value in creating loyal subscribers over simply trying to increase reader numbers. The past year has seen Aftenposten’s paying readers double from 32,000 to 70,000*. Chief Commercial officer, Tor Jacobsen explained: “There’s been a shift in mentality from views, reach and page impressions to how many subscribers we have and how we can make them happy”. They are now looking at articles that draw the most subscribers, not the most traffic.
Previously, Aftenposten allowed non-subscribers to read six articles a week, however, they understood that there was so much news content available in numerous places, such as Twitter and Facebook, that a change in strategy was required. The Norwegian newspaper realised that to get people to pay, they needed to add value. Therefore, in 2015, the publisher introduced more premium content for subscribers, while keeping the metered paywall. Now about 20 percent of Aftenposten’s 150 daily articles include more in-depth long form pieces.
The result has been outstanding, 65% of Aftenposten’s revenue now comes from subscribers, and 35% is from advertising. Typically, a monthly digital subscription is $24, but it also offers print and digital bundles for a higher price. As a comparison, five years ago, 60% of their revenue came solely from advertising.
The Post Newspapers launched with PageSuite in 2016 with the aim to completely change their traditional print strategy. By adopting a digital-first approach Post Newspaper re-imagined their paper to fit with their new vision to ‘marry digital with traditional print’ in a way that enhanced both offerings.
This involved completely changing the way their traditional print pages were set up, creating a new format designed specifically for smartphones. They have adjusted column widths, amended type sizes and re-worked the layouts. With the re-engineering of their printed pages for both print and digital, editorial and advertising is delivered immediately across multiple platforms.
The New York Times has also committed to a subscription based model and has thus far proved extremely successful. Revenue from the company’s digital-only subscriptions jumped 17% in 2016, to $233 million and they now have more than three million paid subscribers.
Mark Thompson, Chief Executive of the Times Company explained that their “subscription-based revenue model is now less reliant on the advertising revenue derived from page views and clicks”. The digital-first models seem to be working well for the NY Times, with digital-only subscription revenue rising 22%, to $64 million and digital advertising revenue rising to 11%. The New York Times is no longer trying to maximise clicks and sell low-margin advertising as a way of creating revenue. Executive Editor, Dean Baquet, believes that The Times will be much better off creating a business strategy that “provides journalism so strong that several million people around the world are willing to pay for it”.
Although this subscription model may be working for these large publishers, there is not one model that fits all. You must extensively research your readers to determine whether they perceive your content valuable enough to pay for. We predict that as print readerships continue to decline more publishers will have a change in mentality towards opting for a digital-first strategy.
If you would like to read more about the subscription options that are available to digital publishers, we have a whitepaper you can download here.
Alternatively, speak to our Digital and Mobile Specialists for further information about going ‘digital first’.