As Facebook and Google continue to dominate the US digital advertising market — and capture nearly all its growth — digital publishers look to paid content for stable revenue and diversification. Consumer subscription models also provide publishers with a strong consumer touch point, allowing for deeper data and insights for content development and engagement. New Digital Content Next (DCN) proprietary media strategy research, DCN Paid Content Benchmark and Best Practices – Part 1 provides marketplace intelligence on paid content revenues and deal structures to support premium publishers with ongoing efforts to accelerate revenue diversification.

DCN members are actively developing paid content initiatives including direct-to-consumer subscription products and third-party revenue streams for licensed content. The study shows that monetization of distributed content for the first half of 2017 represent an estimated $22.4 million average revenue for the 20 participating DCN member companies. This report encompasses branded SVOD products (e.g. PBS Passport) managed by digital publishing operations, it does not include long-form digital video content through third-party virtual MVPDs (e.g. Hulu Live), SVOD services (e.g. Netflix) and download-to-own channels (e.g. Amazon). These businesses are for the most part run from corporate distribution operations.

Key findings

• One quarter of digital revenue comes from digital content subscriptions, and 27% from paid content overall. It’s important to note that eight companies reported less than 5% of their revenue coming from paid content.

• Eighty percent of paid content is comprised of consumer subscription products sold directly by publishers, while the balance is divided between licensing and syndication (11%) and third-party sales of consumer subscription products (9%).
• Companies reported an average of 12.3 digital subscription products sold directly to consumers, however after adjusting for the large portfolios of print brands included in the study, the average is 2.9 digital subscription products per company.

Distributed content

Facebook and Google technologies and policies limited publishers’ ability to leverage new audiences sourced through distributed content. Such subscription business models require the control of paywalls, the ability to track and differentiate the experience of repeat visitors, and the capture of data to manage the relationship with subscribers. Facebook and Google’s recent announcements of plans to support publisher digital subscription models with subscription tools and new policies are promising but still at early stages of planning and activation.

Best practices

DCN identified five best practices publishers developed for successfully managing paid content.

1. Support commitments to paid content initiatives at the highest levels of top management.
2. Invest in premium content — including the creation of original content — for direct-to consumer subscription products that inform, educate, enrich, benefit, entertain and thrill consumers to drive subscriptions, high levels of engagement and renewal.
3. Support direct-to-consumer subscription products with opportunity for growth with investments in dedicated staffing, marketing, and technology and develop disciplined subscription marketing operations to optimize your marketing spend.
4. Where possible, push for a high level of accommodations from key third-parties – Amazon, Facebook and Google in particular — for subscription content and products. These platforms need to continue to develop policies and tools that provide for the data capture, paywall management and the direct customer relationships required to manage a subscription business.
5. TV/cable companies should also consider launching strongly branded Subscription Video on Demand (SVOD) services.

While there are many examples of digital subscription success, there are still those publishers who exhibit a cautious yet opportunistic approach. DCN Paid Content Benchmark and Best Practices (which is only available in full to members of DCN) serves as the starting point for additional member research on paid content planned for 2018. Next up is a series of case studies that will dive deeper into the strategies and best practices that are driving success for select DCN member companies.