- Publishers are cutting staff as advertising revenue slows, but those with reader-revenue bases are fairing better than those without.
- Subscribers are increasingly annoyed by advertising alongside paid content, suggesting publishers could revisit “ad-free” subscription tiers.
- Over half of readers say they regularly look for ways to access paywalled content without paying, and two-thirds say they avoid sites with paywalls entirely.
- How The New York Times’ dynamic paywall balances conversions and engagement.
- Subscription takeaways from Defector’s annual report.
Publishers cut staff as advertising revenue slows
Large digital and legacy publishers alike – including BDG, Disney, Gannett, Vox Media and The Washington Post – have shed staff via multiple rounds of layoffs that began as far back as late 2022. By October 2023, the media industry had announced over 19,000 job cuts year-to-date, compared to 3,000 in the same period in 2022, Digiday reported.
In the first two weeks of November alone: G/O Media shuttered Jezebel and made some cuts at Gizmodo and The Onion, Vice Media said it would shutter a number of Vice News shows, CNBC cut around 20 people at CNBC.com, and Condé Nast said it planned to cut about 270 jobs, or 5% of its workforce.
Media execs blamed a challenging economy and a soft advertising market as the primary reasons for cost-cutting measures. Essentially: Advertising revenue is proving harder to come by. Economic factors play a large part, but the challenges run much deeper. Competition for ad dollars among publishers continues to intensify thanks to an oversupply of inventory, advertisers continue to express little interest in appearing next to news and potentially polarizing content, and advertiser attention continues to shift toward large platforms such as Google, Amazon and Meta. Consumers are increasingly trying to avoid advertising when they can, too, as outlined above.
Why it matters: Debates about the merits of subscription models for digital publishers continue to rattle around some corners of the industry. However, it’s becoming increasingly clear that publishers with strong reader-revenue bases are faring better in the current media environment than those without. While it’s true that subscription models aren’t “silver bullets” that magically solve publishers’ revenue challenges, what serious publisher was expecting them to be? Survival in digital media often hinges on identifying the least bad option, not crossing your fingers and hoping for a perfect one.
Yes, managing churn remains a challenge – as it does for any business with repeat customers. And no, subscriber growth isn’t getting any easier. But in an increasingly shaky advertising market, the relative stability of subscription revenue continues to help many publishers keep the lights on.
Subscription models have allowed publishers to more closely align their business models and content strategies with the needs and interests of their audiences, and publishers that have succeeded in developing compelling subscription offerings are sitting in far stronger positions than those that haven’t. Layering revenue from advertising, events and other streams on top of a robust and reliable subscription base continues to prove a relatively sustainable model, as evidenced by Defector and others.
Subscribers are increasingly annoyed by advertising
Too much advertising is one of the primary reasons consumers are not satisfied with publishers’ subscriptions, recent Toolkits research found.
Aversion to advertising within subscription products is growing, too. Among consumers who are not fully satisfied with the value for money they received from publishers’ subscription products, 28% highlighted “too many advertisements” as a key reason for their dissatisfaction, up significantly from 19% in 2023.
This shift in sentiment coincides with a difficult economic period for publishers, as many seek to maximize both advertising and subscription revenues in an effort to sustain their businesses. In many instances that’s led to increases in advertising loads across publishers’ properties and the introduction of advertising within previously “ad-free” subscriber experiences.
Publishers can also monetize logged-in users and paying subscribers much more effectively than other portions of their audiences, on average, thanks to the availability of powerful first-party data to help inform targeting and measurement. Some publishers have specifically stepped up their efforts to monetize subscriber attention via advertising which could explain subscribers’ growing distaste.
Implications for publishers: “Ad-free experiences” have not typically been viewed as particularly valuable or desirable benefits of publishers’ subscription products to date. Many publishers have opted to provide them, but the data often showed that such perks had little influence on consumers’ likelihood to subscribe, and they often cost publishers the ability to generate revenue from their most lucrative advertising audiences.
The data suggest this dynamic could be changing, however. Consumer perception is likely being influenced to some degree by streaming platforms, which have rapidly dialed up ad loads in their services in recent years and now charge hefty premiums to remove them.
What consumers say and what consumers do are often very different things, but as sentiment toward advertising continues to sour for some audiences, some publishers might consider the reintroduction of ad-free tiers for subscribers who are willing to pay for them.
NYT’s dynamic paywall balances conversions with engagement
The New York Times’ subscription strategy is oriented around a relatively simple but effective funnel: Unknown users are allowed to access a fixed amount of content before they’re asked to register, and registered users are given access to more content before they’re asked to subscribe.
It’s during that second registered state where NYT’s “dynamic meter” steps in, which the company says is powered by machine learning. The model learns from the behavior and engagement of registered users and determines customized meter limits for individual users to optimize to one or more business outcomes.
There’s a trade-off between driving engagement (content consumption) and monetization (subscription conversions), however. Higher meter limits allow for greater engagement, while lower limits typically result in more subscriptions – but risk limiting access before readers are ready to reach for their credit cards. The algorithm’s job is to strike a balance between the two, allowing the company to tweak the dial to suit its business goals and needs.
Implications for publishers: As organic distribution becomes more scarce and publishers are increasingly forced to pay to drive traffic to their properties, maximizing any and all opportunities to nurture and engage users is a growing priority. As competition for consumer attention intensifies and the economics of digital media businesses continue to get squeezed, publishers don’t have the luxury of leaving opportunities on the table. As such, we expect to see publishers segmenting their audiences more granularly and, where possible, leveraging dynamic approaches such as NYT’s to deliver more personalized experiences and offers.
Subscription takeaways from Defector’s annual report
Defector Media published its third annual report, and said it’ll keep doing so “until the structures and dynamics of a business like ours (i.e., a subscription-first, worker-owned and -operated media company) feel so conventional as to be boring to our subscribers, interested media parties, and ourselves.” The refreshingly transparent report included a handful of interesting related nuggets about its business, including:
- Subscription revenue is sustaining Defector’s business: The company generated $3.75 million in subscription revenue for its financial year, up marginally from $3.6 million the year prior. Subscriber volume remained relatively flat, with churn offsetting new subscriber adds.
- Promotions helped drive growth: In July and August, the company ran a promotion offering new subscribers their first month for $1.08 and marketed it on-site and to its email list of 200,000 prospects. The promotion converted 1,500 new subscribers and 80% converted to full-price after the promotional month was over.
- Winback efforts proved effective: The company began offering churned subscribers a temporarily discounted price to re-up, and those efforts converted around 8% of the ex-subscribers it contacted back into active subscribers. That group is set to graduate back to full price in the next month, and the company says it expects around 75% to survive that transition.
- Content that converts is not the same as content that engages: “We believe good blogs are our best marketing tool for acquiring subscribers… Good blogs are good for business, whether that’s keeping current subscribers happy or attracting new readers,” the company said. Although a relatively small number of “blogs” (posts) generated a majority of new conversions and registrations, the company found that paying subscribers engaged with a much broader range of content.
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.
The Guardian sees record reader revenue in the U.S.
The Guardian expects to make $33 million in digital reader revenue in the U.S. for its fiscal 2023/2024 year — a new record. That revenue will make up roughly 57% of its total U.S. business, executives told Axios, helping to offset softening demand for advertising. The company hired former Condé Nast exec Emilie Harkin earlier this month, who will head up consumer revenue as senior vice president of growth.
Newsroom transformation drives subscription growth
The notion that newsrooms and editorial staffers should have little or no role in subscription growth and other commercial endeavors is counterproductive to sustainability and growth, argues FT Strategies’ Lisa MacLeod. A closer relationship between commercial, editorial and technology has resulted in long-term revenue growth for the FT, she writes.
Insider reverts to Business Insider brand
Henry Blodget is stepping down as chief executive of Insider, and the company has returned to its former name of “Business Insider” as it shifts its focus away from general news and lifestyle content and rebrands with a new logo. Some staffers within the company have expressed concerns about an identity crisis at the brand, which some feel may have hurt its ability to compete with other business-focused publications such as The Wall Street Journal and Bloomberg – particularly on the subscription side of its business.