Subscription revenue is safer than ad revenue for news media, but only with good journalism
It has taken time, but news is is heading from the Napster generation to the Spotify generation, writes Zuora subscription strategist Nick Cherrier.
In the world of news media, subscriptions have existed for decades, but the lifeblood of the industry has always been ad revenue. That’s changing radically, and I expect the change to be permanent.
A whole generation of news readers has now been exposed to the concept of paying for online stories. And while there’s a general amenability to the idea, this doesn’t mean gaining and retaining subscribers is a simple or inevitable process.
Placing value on high-quality content
Content is king in this segment of publishing, but not all content is created equal. If the way you turn a reader into a potential subscriber is through a click-bait headline or a fluffy gossip story, you can’t be shocked if they leave before their free trial ends.
High-quality content offered without a pay or registration barrier is an excellent way of attracting people to the work of your journalists – many major mastheads in Australia and across the world have offered exceptional and unrestricted COVID-related content during this pandemic – but it’s not sustainable. I like telling people that the most difficult concept to part with is the first one – and that means you inevitably lose people when you move from free to pay. If you get a registration via your free content alone, you can’t be shocked when you eventually put those barriers back up and registrants ignore the opportunity to become subscribers.
While stories about Harry and Meghan and the next ‘hot suburb’ may result in increased visitation and subscriber number spikes, they aren’t solid vehicles for building long-term growth.
The common denominator: brilliant journalism
It’s a well-worn truism in the Subscription Economy, but one that I never get tired of repeating: if you’re not offering something valuable and convenient, you’re asking for customers to move elsewhere. But even if you’re offering ease of access and quality, but you’re refusing to bite the bullet on payment, you’ve still got a problem.
This is not some impossible Catch-22, however. In February last year, News Corp Australia announced a 23% growth in digital subscriptions; its broadsheet national paper The Australian attracted two thirds of its readers online. In August 2021, the trend persisted; there was a further 25% subscriber growth across News Corp Australia’s mastheads.
A major part of The Australian’s subscriber growth can be linked to their hugely popular true crime series. The podcasts have won global audiences, a Gold Walkley Award and have helped to revive a 38-year-old murder cold case. Investigative journalist Hedley Thomas’ podcasts alone have been downloaded more than 50 million times and he’s just launched his third installment, Shandee’s Story.
News Corp’s major news media competitor in Australia, Nine (previously Fairfax Media) has also had enormous success with thoroughly researched podcasts like Phoebe’s Fall. Their investigative reporters such as Kate McClymont in Sydney and Nick McKenzie in Melbourne are among the best in the region.
While it’s true that these podcasts are free, they lead to subscriptions, and in many cases, those who subscribe to a related masthead – News Corp’s The Australian, for example – receive podcast extras and advantages. The point is that people are enticed by and will subscribe to high-quality content, whether that takes the form of TV shows, digital news or investigative audio stories. The common denominator is outstanding journalism; those media outlets that invest in it are being rewarded via increased subscriber loyalty.
There are examples from across the world, as well. The New York Times in the United States and The Telegraph in the United Kingdom are demonstrating the robustness of subscriber models just like News Corp and Nine in Australia. Both Australian mastheads place enormous importance on editorial content and are reaping the rewards through very significant and sustained subscriber growth.
Subscriptions + quality = sustainability
But let’s get back to advertising for a moment. In this sector, it no longer takes the form of the classified “rivers of gold” of the print newspaper era, but that doesn’t mean it’s completely disappeared. In fact online ads are standard across just about every digital news service in the world and remain an important source of revenue. They are, not however, the resilient source that subscriptions are and will continue to be.
I use the word “resilient” because, compared with ad spend, subscriber numbers are much less vulnerable to budget cuts. By that I mean that in times of crisis spending on advertising is very often one of the first things sliced by CEOs and CFOs. You might think that the same goes for subscriptions, that it’s an easy item for a family to cut from their budget. But that’s not the case if the service provided has become essential during the difficult period – or at least remains highly valuable. And so we get back to the importance of unmissable content.
In music we’ve moved from the Napster generation to the Spotify generation. It will take time, but news is heading exactly the same way. Those media organisations that stick to the old ad model without taking into consideration the fundamental needs of their subscribers put themselves at great risk.
Nick Cherrier is a subscription strategist at Zuora.
