There are countless reasons why consumers cancel their media subscriptions.
It could be as simple as a subscriber deciding their affiliation with a publication has run its course after a change in the tone of the journalism. It might reflect financial circumstances. Or it could simply be too many things to read or watch and too little time. The National Research Group found that 23% of people who cancel subscriptions say they do so because they weren’t using them enough, which in many cases is not a failing on the media company’s part.
The Reuters Institute for the Study of Journalism also found that a proportion of subscribers do not want to feel “tied down” to any one news source. Other media companies – always in competition – might make active efforts to lure subscribers away through aggressive and antagonistic advertising campaigns.
However, there are macroeconomic factors that publishers cannot control that lead people to cancel subscriptions. In the face of challenging financial times, it won’t surprise any newspaper or magazine publisher that “poor value for money” is cited as among the most common reasons for cancellation. That’s a difficult barrier to overcome – although it is one some publications try to address by reminding consumers of the value of their subscriptions through newsletters and content recommendations.
Media companies may have to grapple with more churn in the near future. While suggesting that consumers have not reached “peak subscription,” research from Toolkits has found that a large percentage of people who have taken up news subscriptions expect to cancel some in 2024, for a variety of reasons including those mentioned above.
These factors are likely to be impacted by new legislation coming into force in the UK and EU (as well as proposed legislation in the US), which aims to streamline the process by which consumers can cancel subscriptions. For media companies – many of which argue they are not responsible for the trends that have made such legislature necessary – that presents two main challenges. The first is that they would have to bear the cost of enabling cancellation through new channels, which UK broadcaster Sky says will add significant costs to its businesses. The second is that, at a time when the rush to find sustainable subscription revenue is hotting up, it could increase the levels of churn.
For example, Sky argues the government’s proposals to tackle the problem of customers being billed for unwanted subscriptions were “too prescriptive.” This call is echoed by many media companies, which in some cases still require consumers to call to cancel a subscription.
But there is a growing body of evidence that such pain will be short-term, and that it is in media company’s favor to enable one-click-cancellation.
Research from McKinsey finds that of the 40% of consumers who choose to cancel subscriptions the majority that do tend to cancel do so early in their subscriptions. Those early terminations have a deleterious impact on the data that can be gathered on the consumer, making attempts to prevent cancellation more difficult.
However, it is also the case that the relationship doesn’t end as a result of cancellations. Some media companies, including Guardian News & Media, use a cancellation as a cause for further contact. Its subscriptions and sales teams will often reach out to a subscriber who has cancelled a direct debit or regular payment to find out why.
It is a technique used by other subscription-based businesses, which make distinctions between lapsed and unengaged consumers. While the latter require much more work to bring into an ecosystem, the former already have an emotional connection with the brand. Most importantly for digital subscriptions, many will continue to share their data with a brand following cancellation, making efforts to re-engage and remonetize them quicker and easier.
Given that the maxim that new consumers are five times as costly to acquire as existing subscribers are to re-up, that creates a huge incentive for media companies to continue their marketing efforts towards lapsed subscribers. Doing so mitigates the risk highlighted by McKinsey that lapsed subscribers do not continue to provide data for use in honing subscription strategies.
In the US, the risk of more churn and less certainty around subscription revenue has been exacerbated by what the Federal Trade Commission considers effectively duplicitous activity from subscription-based companies. FTC Chair Lina M. Khan said: “Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place.”
Just as in the UK, media companies in the US feel that their businesses are going to be unduly impacted by the bad behavior of other actors in the subscription space. As a result, they are largely opposed to the implementation of “ease of cancel” rules that could lead to consumers cancelling more easily.
However, there are early signs that such efforts would not impact media companies quite as badly as might have been expected. Toolkits conducted a study of over 1,000 consumers in the US who have subscribed to digital publications. It found – in the face of expectations – that over two thirds (67%) would “more readily purchase new subscriptions if they thought those subscriptions could be cancelled easily”. Over three-quarters (77%) percent of consumers also said they would support the proposed laws requiring “one-click cancelation” mechanisms.
Zamir Walimohamed is head of digital, marketing and subscriptions at Motor Sport Magazine. He acknowledges that as a legacy brand the magazine has an advantage in converting paid print subscribers to digital: however he also notes that even niche titles face challenges around churn and re-upping subscribers.
Despite those challenges he argues that easy cancellations are not necessarily the end to the relationship between media companies and consumers. Instead, he says, it is an opportunity to better understand readers and what makes them subscribe in the first place: “If a customer is on a bundle and cancel a pop up appears saying ‘Are you sure you want to do this? Or would you also be interested in a lower offer’, which is only digital only, for example.”
He states that it is on media companies to demonstrate an understanding of why consumers would want to cancel in the first place. Moreover, he argues that the relationship is better served by making that process as easy as possible.
However, as he and other subscription managers note, the data collected throughout the active lifecycle does not lose its value the moment a subscriber cancels. Instead, the data points about why a consumer has cancelled are valuable not just enticing them into the fold, but for preventing other readers choosing to cancel as well.