The subscription-based model is is one of the foundational models of the digital media marketplace. It offers predictive and reoccurring revenue, reduces reliance on advertising, and provides a deeper customer relationship. The subscription business also comes with challenges ― conversion, churn, and subscription fatigue. Understanding consumers is essential for subscription-based businesses to optimize customer acquisition, improve customer retention, and stay competitive in the market.
New research, No sign of peak subscriptions conducted by Toolkits and the National Research Group, offers insight into consumer attitudes to publishers’ digital subscription products. The research findings indicate that 29% of subscribers report an increase in their subscriptions over the past year. In contrast, only 7% reported a decrease in their subscriptions during the same period, suggesting a lack of subscription saturation.
The rise of the “power subscribers“
Toolkit’s 2022 research revealed that a relatively compact yet deeply involved segment of “power subscribers” accounted for an outsized portion of subscriptions in the U.S. This group comprises approximately 4% of the population and does not show signs of subscription saturation. Further, this year’s data suggests that consumer’s appetite for additional subscriptions remains strong.
In fact, one-third of current subscribers (33%) anticipate increasing their subscriptions in the future, compared to 27% last year. Conversely, only 21% of subscribers plan to reduce their subscriptions compared to 29% in 2022. The availability of more subscription products and subscriber-only content likely contributes to this trend.
Subscription revenue and audience dynamics
While power subscribers continue to drive demand, reliance on a relatively small audience is not a strong business plan. If power subscribers reduce their subscriptions significantly or fail to add new ones, it would pose a strong risk to the subscription revenue stream.
The research highlights that attracting and converting first-time subscribers is essential to sustain growth in the digital media subscription market. Publishers must focus on reaching new audiences and investing in programs that target younger demographics. Consumers most likely to subscribe to at least one subscription include men, people earning over $100,000 annually, and those 25 to 34-year-olds.
Thinking about targeting across content categories could offer new subscriber acquisition opportunities. Top subscriber categories include those in news and current affairs (46%) and media and entertainment (41%) for the second consecutive year. Following closely in the rankings are sports (36%), cooking (29%), and lifestyle (29%).
Importantly, unlocking incremental growth depends on attracting first-time subscribers. Increasing investment in programs and strategies targeting younger audiences and educating them about the value of digital subscriptions is essential to sustain growth.
The power of a good bundle
The study shows that 81% of subscribers report owning subscriptions to more than one digital publication, up from 71% last year. As the number of subscribers owning multiple digital publications increases, there is an opportunity for bundled products. However, working with intermediaries offers challenges, specifically relinquishing the direct relationship with audiences to third-party platforms.
The subscription model is a vital and growing business in digital media. The availability of more subscription products and exclusive content contributes to this positive trend. To sustain the growth in direct consumer revenue, digital media companies must attract new audiences while super-serving their core power subscriber segment.
The Economist is a media brand that has led the way in subscription-based access to its content. But when it was reported by Axios last month that the media company would put its podcasts beyond a paywall, the industry took notice. As one of the first publishers to make such a move, insight into the strategic decisions around the launch are particularly valuable for any other publishers considering doing the same.
Claire Overstall, SVP, Global Head of Customer at The Economist spoke to us about the thinking behind the decision, how they have communicated the change to their millions of listeners, and what the company hopes to achieve with podcast subscriptions as part of its wider subscription strategy.
A value-add and a separate offering
The Economist’s paywalled podcasts will be available to full digital subscribers at no extra cost. “That is entirely in keeping with the general direction that we’ve taken over the last few years where we’ve been increasing the amount of things that are included in your subscriptions,” Overstall explained. “We’ve put all of our newsletters behind a paywall. We now do subscriber-only events. We’re just increasing the amount of value and the amount of things to engage with.”
The podcast subscription is being used by The Economist as a value-add for current subscribers, but also as a separate product offering. This is an unusual move; The Economist hasn’t had a separate product available to subscribe to since launching Espresso, an app which gives five short articles and a global news briefing each day. The decision to create a separate podcast offering – Economist Podcasts+ – is because of the millions of listeners the publisher has accumulated across its 18 different shows.
“There’s a whole audience there that for whatever reason enjoy our journalism but don’t want to pay the full $20 a month to subscribe,” said Overstall. “But in keeping with our belief that subscription should be the way that we fund our journalism, and making everything strategically match, we’ve decided that you can buy a podcast-only subscription in the hope that that might entice some of those millions of listeners who don’t want to pay for the full-fat product to support our journalism through paying for podcasts.”
The podcast subscription is currently the lowest cost offered by the publisher at $4.90 a month, or $49 a year. There is also currently a pre-launch half-price offer for the full year. Overstall noted that although there is every chance they may not have got everything right at launch, the pricing feels fair in comparison to the full-price subscription. “So far, we’re pleased with the response that we’ve seen,” she said of their pre-launch sale.
“There is a business benefit to upselling of course, and moving from one product to another, but also down-spinning; if people no longer have the time or the money for the full-fat products, having somewhere for them to go,” said Overstall of the lower costs options. “But in reality, the most important thing is that we’re meeting the customer at the level that they want to receive us, and with the right amount of information and the right price for where they are.”
Prioritizing the audience experience
The main reason few publishers have tried paywalling podcasts is that the technology to do so smoothly across platforms has only emerged in the past 18 months. It was important for The Economist that people were able to listen wherever they wanted.
“It’s been really, really important to us to make sure that we don’t disrupt the customer experience,” Overstall explained. “If they want to listen on Spotify, if they want to listen on Apple that’s where they should listen. We shouldn’t force people to come on our site or listen on our app if that isn’t where they’re already listening to our podcasts.”
Although Spotify has had tools to work with third-party subscriptions for some time, Apple has only recently introduced the ability for users to connect publisher subscriptions within its Podcasts app in iOS 17. Apple has also implied it may help audiences discover publishers’ paywalled content by surfacing it across the app, mitigating one of the biggest risks for others looking to follow in The Economist’s footsteps.
Since the launch of Apple’s own podcast subscription tool last year, a number of publishers such as Tortoise and Immediate Media have developed subscriber-only offerings (shows, episodes and series) as a way of warming podcast audiences up to paying. In the case of The Economist, however, the transaction is not processed through a third party, such as Apple. Instead, the subscriber signs up through The Economists site and they are then seamlessly connected through their listening platform of choice.
The pre-launch sale of the Podcasts+tier went live on September 14th ahead of a full launch this month. So far, Overstall says the response from audiences has been positive, despite paid podcasts not being commonplace.
“It completely aligns with our strategy. paying for journalism was one of the things that we led with very early; The Economist has been doing that a lot longer than many of our peers,” she said. “So that’s well-embedded in people’s minds, the way that we’ve articulated how this is supporting our journalism.”
“Even if people are choosing not to pay for it, a lot more understand the need to pay for journalism… and that’s a sea change from where we were 10 years ago where people just didn’t believe in paying for news.”
What success looks like for Podcasts+
The podcast team is keeping an open mind around the paywall, and will be carefully watching the response. Crucially, their daily flagship podcast The Intelligence, which has had more than 630 million downloads since launching, will remain free. “We are hoping that that continues to be a funnel, and then we increase listenership to that, who then convert to full paid podcast subscribers,” Overstall explained. She also said that they will do sample episodes for the paid podcasts in The Intelligence feed in order to give listeners a taste of the paywalled content.
But for The Economist, longer term success won’t be all about paid subscribers, but also about continued growth to the free-to-access The Intelligence. “I think how well we are able to swell our listenership of The Intelligence is probably more likely our health indicator,” said Overstall. “If that suddenly dwindles away to nothing, then we may have done an amazing thing right now, but how are we going to continue to grow?”
Podcasts also provide The Economist with a means to broaden its audience base. Therefore, Overstall says that “one of the things we’re also hoping for is that it will begin to diversify our subscriber base as a whole. Podcast listeners skew younger and more female in general, but also specifically our podcast listeners do as well. So we’re hoping to diversify our audience base and reach more people with this subscription.”
“Fundamentally,” she says, “we are producing good products and hoping that people pay for them. So I think the primary metrics will shift more towards engagement and conversion.”
“Keeping an eye on The Intelligence, and trying to glean any data or customer surveys or anything like that on how many people are listening to sample shows and converting from those, that will probably be a key performance indicator.”
KPIs will also change for new shows the publisher develops. “Our priority of metrics will change now and will probably be on a show-by-show basis rather than just aiming for as many people as possible for every show,” Overstall speculated. “For The Intelligence, getting as many listeners as possible will still be key. But for shows like The Prince, we’ll debate as they come up and as we make them, and how many episodes we choose to sample for non-subscribers.”
Podcast listeners are known to be highly engaged, with more than a third listening daily. This gives Overstall hope that retention for this particular group of customers will actually be fairly straightforward. “[Listening is] natural, it’s already embedded. This is something they have really opted into,” she said. “Being a first mover means that anybody opting in really genuinely does want your content enough to stay. So I’m hoping that retention will be reasonable.”
For publishers like The Economist with hard paywalls, making audio content available for free may have felt at odds with the broader subscription goals. However, given that the technology to enable payments and subscriptions have grown more publisher-friendly, the media brand is able to extend its subscription-first philosophy to its audio offerings as well. Crucially too, audiences are much more accustomed to the reasons why they should pay for professionally-produced content. Still, given the vast listener numbers (and ad revenue) The Economist’s podcasts have garnered in the past and the relative lack of paid podcasts on the market so far, the move is not without risk.
As a brand, The Economist has not shied from making the clear correlation for its audiences between subscriptions that support its quality journalism. With the addition of premium podcasts, Overstall believes that the brand will continue to make this case, and enrich the value of its subscription bundles as well.
The way we consume news has dramatically transformed in recent years. Most news organizations adopted a digital news business model and now offer subscription products. Understanding online news payment trends and dynamics is crucial to support this business model.
Recent research from the Reuters Institute, the Digital News Report, shows a marked increase in people subscribing to or making one-off payments for news content. The industry is experiencing subscription growth ranging from 10% to 17% across 20 countries in the last 10 years. It’s worth noting that online news payments are beginning to stabilize in many of these 20 countries, and a notable correlation exists between high cancellation rates and the ongoing cost-of-living crisis.
Regional variances in online news payment
Authors Nic Neuman and Dr. Craig Robertson point out significant regional differences in consumers’ willingness to pay for online news. In some Nordic countries, over a third of the population subscribes to digital news services. In the U.S., 21% of respondents indicate that they pay for online news.
In contrast, in European markets like Germany and the United Kingdom, which offer high-quality free news options, subscription rates are lower at 11% and 9%, respectively. The variations highlight the interplay between market conditions, consumer preferences, and economic factors influencing online news payment.
The research identifies a combination of five factors that drive news subscribers:
access to distinctive and high-quality news and analysis
alignment with the brand’s values or political perspective
a commitment to supporting quality journalism
a premium user experience
the inclusion of lifestyle features, puzzles, and games
The U.S. news market is notable for its news loyalists. Approximately 47% of news subscribers say that they do so because to align with specific journalists or the viewpoints of news brands. The U.S. also stands out as one of the countries with a significant portion of its population donating to news organizations, accounting for 4% of the U.S. sample. This contribution includes paying podcasters, YouTube channels, and established brands like NPR and Vox Media.
The report highlights three phases that subscribers often undergo, from interest and intent to subscribe to retention and loyalty.
Subscription triggers: The first phase is a fundamental interest in news. This and other influences often trigger a subscription, including family influence, life-stage changes, enticing promotional offers, etc.
Building habits: The second phase includes engaging new subscribers during their initial 90 days through newsletters, podcasts, and personalization to build daily forming habits.
Maintain loyalty: The last phase is when subscribers develop loyalty to their chosen outlet and consider it their trusted source for information.
Changing payment methods
The way people subscribe to online news is evolving, with 46% of subscribers opting for ongoing digital-only subscriptions. Combined print and digital packages account for 28% of subscriptions, while 34% report someone else pays or it’s bundled as part of broader service packages (e.g., TV, broadband, or mobile).
Additionally, 12% of paying respondents report making one-off or ongoing donations to news services in the past year. These diverse payment methods reflect the changing expectations and preferences of news consumers.
Subscriber demographics
While most paying subscribers are older, the willingness to pay for online news is similar across age groups. However, younger individuals are likelier to have subscriptions paid for by someone else or make smaller donations.
Interestingly, 60% of paying subscribers are men, and a significant majority (79%) have medium to high household incomes. They tend to have received higher levels of formal education and lean more towards left-leaning political affiliations, especially in the U.S.
Consumer preferences, market dynamics, and evolving subscription models shape the willingness to pay for online news. As the digital news landscape evolves, publishers acknowledge the affordability gap and are crafting solutions in response. They look for ways to remain relevant by partnering and packaging all-access bundles, extending trial periods, and flexible renewal pricing to demonstrate value and commitment.
Advertising messaging is an important trigger in increasing people’s willingness to pay for online subscriptions. New academic research, Effects of Advertising Messages on Willingness to Pay for Online News, from Bartosz Wilczek, Ina Schulte-Uentrop, and Neil Thurman, evaluates effective advertising strategies for online subscriptions. The study focuses on four types of advertising appeals: digital-specific, social, normative, and price transparency. The findings indicate that digital-specific features appeal. Aspects like personalization, online-first delivery, and online-only offers significantly impact participants’ willingness to pay. This suggests that emphasizing the unique digital advantages of online news can increase sign ups and subscription interest.
Messaging impact
This research sets out to address two crucial questions. First, it seeks to uncover the most potent individual advertising message (digital-specific, social, normative, or price transparency appeal) to drive people’s willingness to pay for online news.
The study also looks to understand which combination of advertising messages among digital-specific, social, normative, and price transparency messaging ultimately boosts people’s willingness to pay for online news.
Messaging appeal
The different respondent testing shows that digital messaging is the most potent. Social messaging that emphasizes community membership and offline and online events also positively influences participants’ willingness to pay. This finding suggests that fostering a sense of belonging and engagement within a community can enhance subscription intentions.
Normative messaging, which focuses on the importance of supporting independent, inclusive, and watchdog journalism, has a moderate positive impact on willingness to pay.
Interestingly, the price transparency appeals, which provide information on the news industry’s critical financial situation, do not significantly impact willingness to pay. This suggests that while consumers may value transparency, it may not be a primary motivating factor for subscribing to online news.
Combining messages
The research reveals that combining advertising messages can increase people’s willingness to pay for online news. Combining the normative appeal with the price transparency appeal is the most convincing. In comparison, other combinations of advertising messages do not yield significant effects on people’s willingness to pay for online news.
What’s surprising is that neither the normative nor the price transparency appeal is sufficiently convincing on its own. However, combined, they effectively increase audiences’ willingness to pay for online news. Moreover, the findings suggest that adding a digital-specific or social appeal to a subscription pitch that includes both a normative and a price transparency appeal is ineffective. One explanation could be that the more appeals a subscription pitch contains, the longer and more complex it becomes—which might decrease its effectiveness. This suggests that the efficacy of a subscription pitch depends less on the quantity and more on the quality of arguments and how well they work together.
Digital news publishers can leverage these insights to tailor their advertising strategies and enhance subscription uptake. By highlighting the unique features of online news, fostering a sense of community, and emphasizing the societal importance of independent journalism, publishers can increase consumers’ willingness to pay for online news subscriptions. However, it is important to note that normative and price transparency appeals may have a limited impact on subscription intentions on their own, suggesting the need for a multi-faceted approach to advertising online news subscriptions.
Media Voices co-host Peter Houston is tired of hearing the same old industry buzzwords. The publishing platitudes are starting to wear a bit thin, and he’s decided to see if he can shake the conversation up a bit by speaking to some of the biggest characters in the business.
The latest episode of Media Voices’ Big Noises podcast features Michelle Manafy, Editorial Director at Digital Content Next (DCN).
Michelle started out as a journalist. The rise of digital media saw her embrace the changes and after working for a range of publications, from alt weeklies to B2B titles, she joined what was then the OPA to help premium publishers with their ongoing their digital evolution. She now manages online content and events for the group, which is known as DCN.
More than a decade in, Michelle still has hope for the media, but is frustrated by many of the publishing practices she sees. “Now we’re in a world where two thirds of our job is to rise above the noise. ‘Listen to me. Look at me’ right? Are we providing a value exchange? When people give us that gift of their attention, do we provide them with value… was it worth their time?”
Understanding the habits and motivations of non-subscribers is just as crucial as studying subscribers’ behaviors when building a successful subscription-based news product. A Norwegian study, The Burden of Subscribing: How Young People Experience Digital News Subscriptions, delves into the motivations and experiences of young adults, ages 26-30, who read news online but do not pay for it.
The study takes a qualitative approach and sheds light on three key motivations for not subscribing: content exclusivity, time constraints, and unappealing payment models. Further, the study identifies additional factors contributing to people’s reluctance to subscribe to news. These factors relate to socio-demographic variables, the perceived value of news, notions of free news, payment models, and different content.
Newsgathering habits for non-subscribers
Participants access digital news but employ various strategies to gather information from non-subscription news sources. These strategies include searching for alternative coverage, borrowing login credentials, or relying on friends and family. Young adults don’t inherently oppose the idea of paying for online news. However, they express concerns about being charged for certain types of content, particularly information of significant importance and general interest. They believe such content should be free to serve the public interest.
Attracting young adults
Surprisingly, the style, format, or journalists did not influence young adults’ decision to pay for news. Instead, participants primarily focused on the content itself. They questioned whether the same information is free elsewhere, indicating a perception of a zero-reference price. Young adults were less concerned about a news provider’s unique perspective or comprehensive coverage and more focused on the availability of similar information from alternative sources. This finding highlights the need for news organizations to offer unique content not found elsewhere.
Another dimension that emerged from the analysis is how young adults perceive subscriptions in relation to time. Some participants expressed a sense of commitment to reading more thoroughly if they were to pay for a news service. However, a common trend across the sample was the perception that subscriptions were time-consuming, creating a potential barrier to their adoption.
Multiple subscription options
Interestingly, many young adults viewed subscriptions as an addition to their existing news consumption habits rather than a complete replacement. While this presents an opportunity for news organizations to attract paying subscribers, it also poses a challenge. Some participants described the experience of keeping up with multiple subscriptions as a draining chore, leading to feelings of information overload. This finding underscores the importance of considering the user experience and ensuring that subscriptions offer tangible benefits without becoming burdensome.
When considering the price of digital subscriptions, participants viewed it within the context of their overall news consumption habits. Young adults feel the value they derive from various news sources and weigh the cost of subscriptions against alternative options.
Payment options
Participants also express the need for novel subscription models to cater to their diverse media appetites. Young adults preferred micropayments and the ability to access individual articles rather than committing to full subscriptions. This approach resonated with their desire to personalize their news consumption experience. Others called for a “Spotify model” where they could select and choose content from different providers through a joint subscription.
Value proposition
This study highlights the importance of understanding non-subscriber habits and preferences to design subscription models that align with their needs. News organizations can create compelling value propositions for young adults by offering flexible payment options and exploring joint subscriptions and personalized news portfolios. By considering the overall media repertoires of young adults, news organizations can build stronger relationships and attract a loyal subscriber base.
Subscriptions are far and away the most consistent source of revenue for newspapers. However, to grow their subscriber numbers, sometimes they need to throw away consistency in favor of a more experimental approach.
The Independent has been a digital-only title for six years, having sloughed off its loss-inducing paper edition in 2016. While it has been solidly profitable for those years, its revenue has largely been generated through digital advertising; the same sort of business model that led to mass layoffs and bankruptcy at BuzzFeed and Vice respectively.
To head off problems with digital advertising, the Independent has made it a priority to diversify its revenue. While ecommerce and video advertising are core, its chair John Paton told me it sees a way clear to multiplying its direct reader revenue by five within three years.
To do that, he states the Independent is pursuing an “unknown to known” approach to its audience. Like many digital publications, it asks audiences to register to read. This provides the publication with data that can be used to track their propensity to ultimately pay for editorial content, among other things.
He said direct revenue is “now going to be a fast-growing. Part of that based on the back of the fact we’ve got these registered users who want to talk to us, and our marketing towards that as well. This improved our pitch and led to revenue of about 2 million. That’s going to be a big number like 10 million in two [or] three years.”
The process of turning a user from an anonymous, fly-by-night stranger to a potential customer is vital because every user’s likelihood of signing up for a subscription is wholly unique. The more data a newspaper has on its users the better its chances of converting them.
At the same time, many general-interest newspapers eschew that approach in favor of a one-size-fits-all hard paywall, sacrificing flexibility for clarity. So which approach, then, works best for different types of media brands?
Flexi and freemium
For many titles, flexible paywalls grew out of a freemium model. Austria’s Kleine Zeitung, for example, offers the traditional freemium model with a number of articles available to read before the paywall prompt appears. Other titles can also manually drop the paywall for certain premium articles, the better to entice people to pay.
In this model, eventually, inevitably, the paywall slams down. This is often paired with messages asking for support for independent journalism, or for registration to continue reading. This multi-pronged approach is vital, as research has demonstrated that the single-approach strategy of demanding payments rarely works.
Ultimately, however, these are largely blanket strategies, decisions made manually by human editors based on analytics and gut instinct. It is a beneficial approach both in terms of cost and messaging, as it reinforces the idea that the journalism behind the paywall is universally valuable.
Over the past few years, though, things have shifted. More personalized approaches have come to the fore, powered by AI and machine learning.
Tech and touchpoints
Analyst and founder of A Media Operator Jacob Donnelly explains that audience ID tech is making personalization of paywalls appealing to newspapers after years of scale-based priorities: “You have to start every conversation with the who, and really be clear about who the audience is, so that you can get everything else right.”
It’s a view echoed by Tim Rowell, general manager APAC for Piano, a paywall tech provider. He says that tools to model propensity to pay have been high up publishers’ agenda for years: “The reality is that, for most newspapers, these data are in disparate systems and the challenge is how to to turn all these data points into insight that can be acted upon. Those that can have built models to identify propensity to pay”.
One of the tech advances has been early deployment of proprietary AI tools. Swiss newspaper NZZ, for example, uses AI to personalize its paywall based around individual users’ propensity to pay.
Its managing director Stephen Neubauer explains: “We’re using machine learning today to derive dynamic segments, and to identify these patterns of preference” as a result of which the paywall can be rigidly enforced or relaxed on a per-person basis, the better to entice that reader to pay.
NZZ, however, is one of the most successful digital newspapers out there. As such it is well-positioned in terms of resources to develop and experiment with that AI tool. For many regional and local news groups that time and spend is beyond them, even as the cost of the tech falls. It is far from a foolproof system, as explained by the New York Times’ own applied/data scientist Rohit Supekar – but it is powerful provided you have the resources to do it.
Experimentation and confusion
But to what extent can newspapers try new things with paywalls without confusing their readership – or more likely causing them to wait for a better deal or free access during trial periods?
The same technology and techniques that allow for personalized paywalls is ameliorating that issue. For one thing a vanishingly small number of readers are likely to compare their own paywall offering with others, preventing confusion at a macro level. At the individual level, the ability to tailor messaging also helps users to understand that they are being served deals based on their usage habits rather than some arbitrary decision.
Rowell says: “It’s theoretically possible that audiences get confused by experiments. But the experiments would have to be pretty extreme to do that. We’d argue that it is a fallacy. Sound experiments based on insight and data and designed to improve conversion rates are likely to involve offers that are attractive to the audience”.
Despite all the advances in tech and strategy that allows papers to entice readers down an ever-shifting, personalized funnel, there is still one fundamental issue: a sizeable proportion of people say they will never pay.
According to the latest Digital News Report, 65% of UK news consumers said nothing could encourage them to pay – compared to 49% in the US, both higher than the 42% average across the 20 surveyed markets where paywalls are in effect. That is primarily ascribed to a lack of perceived value in the news products. And if audiences never seek out your site, the opportunity of going from unknown to known to paying subscriber vanishes.
Full research report for DCN members only. Register to or login to download (on desktop see top right corner of page, on mobile the top center). Download buttons will appear at the top and bottom of the page.
DCN Members can access the video of today’s virtual event – a review of the study’s topline findings here.
Digital media companies recognize the important role of subscription-based models in monetizing content effectively. Understanding consumer behavior to support this business model is crucial for attracting and retaining subscribers, optimizing user experiences, and staying competitive. DCN’s new consumer subscription study: Digital Media Subscription Tracking offers a deep dive into consumer subscription behavior and covers a wide range of digital subscription services, including SVOD, MVPD, vMVPD, digital newspapers, magazines, and audio – and usage metrics for AVOD and FAST services. The report is DCN members only, please login or register to access (on desktop see top right corner, on mobile the top center).
The Q1 2023 report is available to all DCN members; all subsequent waves will be exclusive to DCN Benchmark participants as part of their Benchmark’s suite of reports offering timely market intelligence each quarter.
This quarterly research, conducted with Screen Engine/ASI, will identify trends and track market penetration, shifts, and growth in the rapidly changing media landscape. The first wave, Q1 2023, surveyed 1,893 adults 18+, representing the U.S. Census population by age, gender, race, and ethnicity. The sample was online-only and represented approximately 89% of U.S. households and adults 18+ with access to the Internet.
Category penetration
One of the study’s key findings is that the U.S. had more than one billion paid subscriptions in Q1 2023 across the digital media landscape – SVOD, MVPD, vMVPD, digital newspapers, magazines, and audio. This indicates that almost all online U.S. households (97%) subscribe to one or more digital media subscription services. On average, households subscribe to approximately nine different pay services when combining all seven digital media services measured in this study.
The SVOD service category has the most subscribers, with nearly a 60% share of total pay subscriptions, followed by MVPDs and vMVPDs, digital newspapers, digital magazines, and digital audio services. The study also indicates that 29% of all subscribers plan to add one or more services next quarter, while 26% plan to cancel one or more, with MVPDs potentially continuing to decline and vMVPD subscriptions potentially increasing.
The study also highlights that free, “ad-only” AVOD and FAST services will continue attracting more traditional media consumers, who tend to be older and watch more linear TV. SVOD with ads and AVOD services will provide a much-needed incremental and growing revenue stream, especially as growth for pay-only services that don’t carry ads slow their subscriber penetration.
Demographic appeal
The demographic profile of digital media service subscribers shows that the heaviest concentration of subscribers for all services combined are slightly younger (P18-34), more male (M18-34), more diverse (Hispanic and African American), family-oriented (parents with children under 18), higher income (households with income $150K+) and slightly more educated. This demographic profile is extremely attractive for advertisers, making the launch of more digital “hybrid” (pay + ads) services likely.
The Digital Media Subscription Tracking study offers digital content companies essential consumer research to support new revenue models and pricing strategies to stay competitive and retain their subscribers.
Please reach out to me at rande@digitalcontentnext.org with questions about the Digital Media Subscription Tracking study.
Full research report for DCN members only. Register to or login to download (on desktop see top right corner of page, on mobile the top center). Download buttons will appear at the top and bottom of the page.
Digital media continues to transform the way people consume news and information. Native digital news organizations have become a vital source of information for many people around the world. With fierce competition and the role of social platforms as intermediaries, how can digital native media businesses grow, develop, and publish information with greater independence and sustainability? New research, Project Oasis, from Sembra Media, examines the trends, impact, and sustainability of independent digitally-native news organizations.
To help support the growth and sustainability of independent digital native news organizations, the report includes a searchable media directory. This database includes 530 digital native news organizations in more than 40 countries across Europe. It contains information on the types of stories each organization covers, their funding sources, and their audience reach ‒ showcasing the need for diverse voices and perspectives.
The directory is a valuable resource for journalists, editors, and publishers looking to connect with other independent digital native news organizations. It provides a way to easily find and share important stories and sources that offer diverse perspectives, which are essential to accurately informing audiences.
Challenges
Project Oasis highlights some of the many challenges facing native digital news organizations. One of the biggest is the struggle to achieve financial sustainability. Many of these organizations rely heavily on one or two funding sources, such as donations, subscriptions, and advertising. However, the report found that these sources of funding can be unpredictable and unstable, which can makes it difficult for organizations to plan their future. The research identifies the need for two to six revenue sources as optimal for native digital news organizations to be sustainable and remain independent.
Another challenge facing independent digital native news organizations is the need to build trust with their audience. Many people are skeptical of the news they see on social media and other online platforms. As a result, there is a greater need for independent digital native news organizations to establish their credibility and build trust with their audience.
Optimism
Despite these and other challenges, the report finds reasons to be optimistic about the future of independent digital native news organizations in Europe. These include several key trends that are shaping the future of the industry, including the growing importance of mobile and social media, the rise of video journalism, and the increasing use of data and analytics to inform reporting.
The research also focuses on identifying profitable business models for independent digital native news organizations. These models include advertising, subscriptions, memberships, events, grants, and partnerships.
An advertising-based model is the most traditional revenue source for digital news organizations. Competition from big tech platforms like Google and Facebook presents a difficult ad sales marketplace for smaller players. However, advertising is still a viable revenue source for digital news organizations. Digital news organizations should differentiate themselves by focusing on building high-quality content, engaging audiences, and offering first-party targeted advertising solutions to advertisers.
Subscription models require high-quality content that engages the reader and convinces them to pay for the content. There are also membershipmodels, which offer a more community-focused approach to revenue generation. Memberships typically offer readers access to exclusive content, events, and other perks, in exchange for a regular fee. The report notes that membership models can be particularly effective for organizations with a strong and loyal following.
Events-based revenue models involve hosting conferences and workshops to generate revenue. The report notes that events can be an effective way to build relationships with readers and generate revenue. However, they require significant resources to organize and execute successfully.
Grants and philanthropy in funding independent digital news organizations are also available. The report notes that grants and philanthropic funding can be an effective way to support journalism that is not commercially viable. Organizations must carefully maintain their editorial independence and avoid conflicts of interest. The report also notes that there may be viable partnershipsand collaborations between digital news organizations and other media outlets, as well as non-media organizations. Partnerships can offer benefits such as shared resources and expertise, as well as access to new audiences and revenue streams.
Future focus
As the digital marketplace continues to evolve, independent digital native news organizations will play an important role in shaping the future of journalism, filling news gaps, covering underserved communities, and combating mistrust and disengagement.
The Project Oasis report and its searchable media directory offer important resources to support the future of independent digital native news organizations. The research provides a comprehensive look at the challenges and identifies opportunities for sustainable growth. The directory also provides a valuable resource to help protect democracy by sharing resources, collaborating on projects, and amplifying each other’s voices.
Connecting with younger audiences is essential for digital news organizations. And, like each generation, their habits and preferences differ from the ones before. The good news is that today’s young people both consume and pay for content. The trick is engaging them and demonstrating value worth paying for.
New research, The Media Insight Project, a collaboration of The Associated Press-NORC Center for Public Affairs Research and the American Press Institute, shows a positive connection between younger cohorts and paying for news content. Their findings state that while news consumption among younger audiences is rooted in social media, more than half (51%) of Gen Z (ages 16-24) pay for or donate to the news. Paying/donating for news content is even higher among younger Millennials (ages 25-31) and older Millennials (ages 32-40), 63% and 67%, respectively.
Notably, more Gen Z and Millennials, regardless of race or ethnicity, pay/donate for some news than not: 68% of Black Americans, 63% of Hispanic Americans, 60% of Asian Americans, and 57% of white Americans.
Online behavior
Those who pay/donate for news content have distinct usage behaviors compared to those who do not.
1. Time online
Twenty-seven percent of Gen Z and Millennials who pay/donate for news reports spending 9 hours or more online. In contrast, only 19% of those who do not pay/donate to any news source report spending 9 hours or more online.
2. Activities online
Gen Z and Millennials do numerous online activities. However, Gen Z and Millennials who pay/donate for news content are more likely to keep up with what’s happening worldwide, do more research online, listen to podcasts, and watch videos.
3. Seeking out the news
Gen Z and Millennials who pay/donate for news are more likely to seek out news (45%) than those who do not (27%). Yet, Gen Z and Millennials who pay/donate are also likely to bump into the news (54%), given their time and activities online.
4. News consumption
Gen Z and Millennials who pay/donate for the news are more likely to get news and information at least daily from traditional media sources than those who do not pay/donate for news content (56% vs. 28%). In contrast, when getting news daily on social media platforms, there is less distinction between those who pay/donate for the news and those who don’t (77% vs. 62%).
Facebook, YouTube, and Instagram are the most-used platforms for those who pay/donate for the news and those who don’t. Interestingly, Twitter registers the most significant difference between those who pay/donate for the news and those who don’t (30% vs. 13%, respectively).
Topics of interest
Not surprisingly, the research finds that Gen Z and Millennials who pay/donate to the news tend to consume more across all content categories.
Topics most often followed by those who pay/donate for the news:
Information about Covid-19
News about celebrities, music, or TV
Sports
News about national politics or government
Information on traffic, transportation, or weather
Topics most often followed by those who don’t pay/donate for the news:
Information on traffic, transportation, or weather
News about celebrities, music, or TV
Sports
News about social issues such as abortion, gun policy, and LGBTQ issues
Information related to health or mental health
Content worth paying for
Younger audiences are likelier to pay/donate to independent news content creators than digital or print newspapers. Gen Z and Millennials also find newer and independent sources relevant, especially among those more racially and ethnically diverse.
The Media Insight Project research shows strong potential for digital news companies to develop younger and more diverse audiences. If news organizations create content valuable to Gen Z and Millennials, these audiences will pay/donate for access. Importantly, news businesses must meet younger audiences where they are, which means developing relationships with younger cohorts on different platforms.
The Association of Online Publishers’ (AOP) new report, Digital Publishing: Outlook and Priorities 2023, offers insight into this year’s top priorities for media companies – which unsurprisingly featured revenue growth. Publishers are also focused on talent and building a diverse and inclusive workplace.
As digital media companies look to grow their businesses, they assess internal strategies and external macroeconomic and legislative influences. Both publishers and solutions providers report being well-positioned for the year ahead and rate their confidence level a 7.2 based on a 10-point rating scale.
The AOP surveyed 92 digital publishers and 16 solution providers; 26% of respondents are at the board level in their organization, and 51% are heads of departments.
Internal business priorities
Revenue remains a top priority for publishers. Subscriptions (17%), sponsorships (15%), and lead generation (13%) rank as top revenue sources for growth among consumer-based publishers. B2B publishers see stronger growth opportunities in lead generation (28%), events (22%), and sponsorship (20%). Digital publishers targeting business and consumer audiences rank developing new revenue streams through product innovation as their highest priority (3.9).
Developing new audiences is important for revenue growth. To that end, consumer publishers work across multiple platforms to drive content discovery while B2B publishers are more reliant on LinkedIn (44%).
For advertising, publishers targeting consumer audiences report they depend more on advertising deals in the open marketplace. In contrast, B2B publishers divide more evenly across open and private marketplaces and non-programmatic. Further, 44% of all publishers expect revenue growth from private marketplaces and 42% from non-programmatic revenues.
Publisher respondents appear to be highly focused on their employees. Asked to rate how important different organizational priorities are [where 0 is not a focus at all and 5 is a very strong focus], B2B publishers ranked recruiting and retaining new talent as the most important priority, with a score of 4.1. Consumer publishers ranked ensuring a diverse and inclusive workplace as the most important priority, at 3.9.
External factors
With new legislation a key focus, digital media companies are mildly confident of their knowledge of the UK’s Online Safety Bill. This legislation establishes a new regulatory framework to ensure tech companies protect users from illegal content and activity, specifically social platforms, and other user-generated content-based sites. Publishers rate their confidence in understanding the Online Safety Bill’s impact on their organization at 5.6 on a 10-point scale and solution providers at 5.3.
Some publishers report that their companies are preparing for this new law by consulting with their legal teams, providing a comprehensive editorial policy, and relying on browser options. However, many also reply that no actions are needed because quality content publishers do not target children.
Further, publishers’ confidence rating is 6.5 regarding their readiness for the end of third-party cookies, while solutions providers report lower confidence in readiness (4.8). Publishers prioritize their investment in first-party data and user experience in preparing for the end of cookies:
Enhancing the engagement funnel to build better first-party data (23%);
Implementing tech solutions to provide a 360-degree view of audiences (15%); and
Investing in solutions to deliver a more personalized user experience (15%).
With a strong focus on first-party data, 58% of publishers are working to ensure their audience informs their business decisions and their investment in a data-led organization. Another 21% highlight the importance of internally managing and communicating audience insights throughout their organizations.
The AOP provides a snapshot of important focus areas for the year. A strong confidence level among media companies reflects positive internal alignment on essential strategies to develop and grow their businesses further. They are focused on building a diverse and strong talent pool. In terms of strategy, they are taking an audience-focused strategy and look to diversify revenue growth beyond advertising sales and subscriptions and increase sponsorships, lead generation, and event revenues.
Successful digital publishers produce content that connects with audience expectations. These publishers are committed to engaging audiences more deeply with an audience-first approach. To assist digital publishers in attracting new audiences, the World Association of News Publishers (WAN-IFRA), in partnership with Google News Initiative, created Table Stakes Europe (TSE). Their latest report, Building and engaging specific audiences, outlines case studies in which publishers tackle core challenges to connect to new and distinct audience segments based on targeted demographics or psychographics.
The TSE identifies seven core strategies for news publishers to employ in developing new audiences. Notably, the process is relatively the same, regardless of the target audience — whether they be younger, sports-minded or niche, religious, and cultural segments.
Serve targeted audiences with content and experiences they want.
Publish on the platforms your targeted audience uses.
Produce and publish constantly to match your audiences’ lives.
Funnel occasional users into regular and paying loyalists.
Diversify and grow the ways you earn revenue from the audiences you build.
Partner to expand your capacity and capabilities at lower and more flexible costs.
Drive audience growth and profitability from a “mini publisher” perspective.
Finding younger paying readers
Using the TSE framework, FWT, a regional and local news publisher in the region of Värmland, Sweden, sought to appeal to a younger audience. Their case study deals with the publications’ concerns around their aging audience and the need to attract readers under 45.
NWT’s business model is subscription based, with a hard paywall. They offer articles free only for the first hour after their publication. Their current reader revenue contributes 70% of their total revenue, with advertising the remaining 30%. NWT’s first step is to learn about the interests of a younger audience. Focus groups and research studies immediately provided needed intelligence. They found that adults 18-29 like to read about entertainment, relationships, careers of other young people or celebrities, and breaking news. While adults 30-45 are interested in society and investigative journalism, real estate, new stores and restaurants, and topics about kids and family life.
NWT identified five goals to measure their effectiveness in attracting a younger audience:
20% of subscribers will be under 45
65% of all new digital subscribers will be under 45
30% increase in subscriptions on e-paper
20% of page views from logged-in users under 45
37% percent increase in digital subscriptions
Notably, NWT increased its digital reach among the 18-39 segment from 24.4% to 35.1%, and digital reader revenue increased too. NWT identified six steps attributing to these achievements.
Learn about the younger audience’s needs, interests, passions, and problems.
Produce relevant content for the right people on the right channels at the right time.
Educate and recruit both current and new staff.
Make changes to the current digital product to serve a younger audience.
Constantly test and evaluate product(s) against set goals.
Develop and implement a social media strategy.
Identify tactics to target new audiences
Another case study using the TSE framework to help attract a younger audience focused on Le Parisien in Paris.
The French publisher used vertical videos on TikTok to appeal to new and younger subscribers.
The plan for TikTok was to focus on “explainer” videos, offering essential details and insight during the French presidential elections. They hired a dedicated TikTok journalist, introduced an experiment-to-learn attitude, and included segments of hard news in addition to their explainer series.
Le Parisien’s TikTok following grew from zero to more than 400,000. While Le Parisien is not monetizing on TikTok, the vertical videos are essential to building brand awareness among a younger audience – their future paying subscribers.
TSE offers an important framework for digital news businesses to identify and attract new audiences. While the two case studies offered here focus on attracting younger audiences specifically, the report includes additional target audiences. Importantly, the transformational process includes a similar process regardless of the target audience. Connecting newsrooms to audiences and personally resonating with each is essential for publishers’ success.
