- An eventful news cycle in 2024 could drive strong growth for publishers’ subscription businesses.
- OpenAI says it wants to partner with news publishers “in a way that works” for them.
An eventful news cycle could fuel strong subscription growth
2024 is shaping up to be an eventful year for global politics, international conflict, and major sporting competitions, all of which typically drive consumer demand for access to high-quality journalism and reporting.
Elections are due to be held in 76 countries, impacting over 4 billion people, including those in major news markets across Europe, India, and the U.S. Tensions continue to mount in the Middle East and Taiwan while Russia’s war in Ukraine persists. And sports fans around the world are preparing for the Summer Olympics in Paris and the European football championship in Germany.
Why it matters: For subscription-first publishers, a busy news calendar represents an opportunity not only to reach and engage new paying subscribers but also to develop and deepen relationships with audiences during a period of heightened news interest.
For the past two years, publishers have dealt with a relatively quiet news cycle compared with the bumps they enjoyed in the runup to the 2016 U.S. election and during the onset and fallout of the coronavirus pandemic in 2020 and 2021. News publishers across the board found converting and retaining subscribers increasingly challenging during 2022 and 2023 as the market for their subscription offerings matured and consumers controlled their spending more tightly in the face of economic uncertainty.
Many publishers now expect those difficulties will subside somewhat in the months ahead, however, as major global events draw consumer attention back to the news and – hopefully – their paid offerings. INMA predicts that news publishers’ reader revenues will increase 13% on average by Q3 2024, compared with Q1 of 2023. It also expects an average news brand will see a 10% increase in both digital subscriber volume and revenue in the first quarter of 2024 compared to 2023.
It remains to be seen which publishers and brands might benefit from a news cycle bump most. It stands to reason that household news brands with large existing subscriber bases could fare best, while smaller or niche publications might see organic demand grow to a lesser degree. Toolkits research suggests subscription demand remains strong generally, and that concerns about “peak subscription” are so far unfounded as consumers continue to add to their subscription portfolios. Some publishers say they’re particularly hopeful that an eventful year might help them unlock incremental growth among the 63% of consumers who say they’ve never held a digital publication subscription.
OpenAI says it wants to partner with publishers
ChatGPT owner OpenAI says it wants to partner with publishers to ensure that publishers are incentivized to help its technology surface accurate and reliable information. Speaking during an INMA webinar, OpenAI’s head of platform accounts, James Dyett, implied that the company intends to partner with – and presumably compensate – publishers and media organizations in exchange for access to their reporting, information, and editorial capabilities.
“Our job when it comes to accuracy is to work with media who are producing authenticated verifiable facts and find ways to point the model towards these verifiable facts,” Dyett said. Then, the model will be able to provide accurate information “in a way that works for the journalists doing the hard work to create these facts and surfaces something useful for our customers.”
OpenAI is incentivized to engage with the news media industry to ensure that happens, Dyett added: “I think you have a lot more experience on how to sort out what is a high-quality set of facts versus one that might be less reliable,” he said. “And we’re going to have to make some tough decisions.”
Why it matters: As far as many publishers are concerned, OpenAI’s technology – and similar generative artificial intelligence tools from rivals such as Google – has the potential to disintermediate their relationships with audiences and fundamentally undermine their business models. Publishers selling access to content – on a subscription basis or otherwise – have expressed particular concern that highly valuable and unique reporting reserved for paying subscribers is essentially being cribbed and repackaged by AI platforms.
OpenAI has been in conversations with several publishers and previously said it proposed a “high-value partnership” to The New York Times that would see it include and attribute NYT reporting within ChatGPT. OpenAI claimed discussions with the news publisher “had appeared to be progressing constructively” until The New York Times filed a copyright lawsuit against OpenAI and Microsoft on Dec. 27. OpenAI previously agreed a licensing deal with Axel Springer that would allow ChatGPT to dip into content from brands including Business Insider and Politico.
Major publishers will continue to tread carefully in negotiations with AI platforms after finding themselves beholden – to varying degrees – to the needs and whims of major search engines and social media platforms such as Google and Facebook for the best part of two decades. When it comes to the wave of AI platforms and technologies now sweeping the market, publishers say they’re eager not to repeat mistakes they’ve made previously regarding their relationships with intermediaries – particularly as they look to generate more of their revenue directly from audiences.
Over half of readers attempt to circumvent publishers’ paywalls
Over half of digital publication readers say they regularly look for ways to access paywalled content without paying, and two-thirds say they avoid sites with paywalls entirely, according to new research by Toolkits and National Research Group.
In a study of 1,007 U.S. consumers who have subscribed to digital publications, 58% said they typically look for ways to get around publishers’ paywalls without paying when they encounter them, down slightly from 63% who reported doing so in August 2022.
Sixty-eight percent said they avoid clicking links to websites they know use paywalls, down from 73% last year. And almost as many, 67%, also said they avoid clicking links to sites they know use registration walls.
Why subscription fatigue is like the Loch Ness monster…
…lots of people talk about it, but nobody’s seen it, as INMA points out. Despite ongoing conjecture about subscription fatigue and “peak subscription,” the data simply don’t suggest it’s true – at least not yet. Nothing grows forever, but the number of digital-only news subscriptions tripled between 2019 and 2023, according to INMA data, while monthly churn stayed relatively consistent at around 4%. Recent Toolkits research also found that more U.S. consumers hold digital publication subscriptions than ever before and subscribers to digital publications are adding more subscriptions to their portfolios.
2024 will be a year of tough strategic choices
With advertising revenue declining, distribution challenges mounting, and existential threats being posed by artificial intelligence, it’s fair to say publishers face a difficult road ahead. In the quest for sustainability, 2024 will be the year of tough choices and strategic reckoning on four main fronts, argues FT Strategies’ Lisa MacLeod: What to focus on, what to stop doing, where to cut costs and consolidate, and where to invest.
The power of registration
Lisa MacLeod also resurfaced a noteworthy stat on the relationship between user registration and profitability for publishers: 68% of “very profitable” publishers (average profit margin of over 10%) recorded logged-in audiences of more than 7.5%, according to research by the News Sustainability Project. By comparison, 63% of loss-making publishers recorded 0 – 4.9% logged-in audiences. Owning and capitalizing on first-party data drives loyalty, reader revenue, and most importantly, an increase in advertising CPM.
The Washington Post adds a chief growth officer role
The Washington Post named Karl Wells as its chief growth officer, a new role for the publication. He will oversee the next stage of cross-functional business growth, including subscription strategy, partnerships, licensing, and data and analytics, the company said. Wells previously served as chief commercial officer at The Information and chief subscription officer for Dow Jones. The Post is currently advertising for its open chief subscription officer role, but it’s unclear if that position will be eliminated or changed following Wells’ appointment.