In this week’s Briefing:
- Normalized churn rates can provide a more nuanced understanding of renewal performance and the health of publishers’ subscription businesses.
- The Economist’s paid podcast strategy is intended to add value for existing subscribers and entice new ones.
‘Normalized’ churn provides a better understanding of renewal behavior
Churn is a key indicator for the health of any subscription-based business. But as publishers’ approaches to subscriptions become more sophisticated, the metrics they’re using to monitor and analyze their renewal performance are becoming increasingly nuanced, too.
When calculating topline churn, most publishers use the commonly understood approach of dividing the number of cancellations in a given period by the number of subscribers who were active at the beginning of that period. That’s often calculated on a monthly, quarterly, and annual basis.
But as FT Strategies notes, this approach doesn’t offer much insight into how effectively a publisher actually retained subscribers in any given period. If zero subscribers come up for renewal in a given month then retention rates might be close to 100%, for example.
That’s where the concept of “normalized” churn comes in – which only takes into account the number of renewals that were due in a given period – as opposed to the total number of active subscribers – and therefore offers a more nuanced view of renewal performance. (At Digiday I oriented our churn calculations around a similar normalized metric, which we referred to internally as “actual renewal rate.”)
Why is a normalized approach important? It allows publishers to understand if changes in their churn rates are the result of improving actual renewal rates, or if they’re simply limiting renewals and – potentially – kicking churn down the road as opposed to mitigating it. This becomes particularly pertinent when incentives and responsibilities vary between different teams or staffers within the same organization.
For example, publishers’ acquisition and marketing teams are often empowered to change the subscription terms offered to their audiences. This gives them the ability to influence the number of renewal periods by pushing audiences towards longer terms with less frequent renewals, which can reduce “standard” churn significantly but may cause increases in “normalized” churn or “actual renewal rate” down the line.
For any subscription business, different metrics can tell very different stories. As publishers’ subscription approaches mature and evolve, understanding the nuances of churn and the most accurate and useful ways to measure it will become increasingly important.
Inside The Economist’s paid podcast strategy
The Economist will begin reserving the majority of its podcast content for paying subscribers this month. The move is designed to add value for existing subscribers, but also to attract new ones who might not be ready to commit to a full subscription, according to the publisher’s global head of customer, Claire Overstall.
Every Economist podcast, with the exception of its flagship daily show “The Intelligence,” will be placed behind a paywall and accessible via its owned and operated websites and apps (in addition to other platforms that support subscriber-only podcast access.) Audio content will be available to full-fledged Economist subscribers, but also to subscribers to a new dedicated podcast tier called Economist Podcasts+.
In terms of adding value for existing subscribers, “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 told INMA.
The low-priced audio subscription will also serve as an on-ramp for new audiences. “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… 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,” Overstall said.
As we’ve explored previously, publishers are increasingly breaking apart subscriber-only features and positioning them as discreet standalone products. That’s helping them to maximize perceived value among existing subscribers, better serve the needs of specific pockets of their audiences, lower barriers to entry for new subscribers, and open up opportunities to market premium “bundles.” The relationship between subscription “features,” “products” and “bundles” is also shifting as a result.
Norwegian news publisher Aftenposten says it has doubled its audio audience with AI-voiced articles
“If we want to do something about our biggest challenge, which is users not engaging enough to feel like their subscription and their continued subscription is justified, we need to solve that problem by finding ways to help users get through more of the content they are paying for,” the publisher’s product and user experience lead, Karl Oskar Teien, told Press Gazette.
The Washington Post is cutting 240 jobs as it tries to offset challenges with subscription and advertising revenue
“Our prior projections for traffic, subscriptions and advertising growth for the past two years — and into 2024 — have been overly optimistic,” interim chief executive officer, Patty Stonesifer, wrote in an email to Post employees last week.
The Post currently says it currently has 2.5 million subscribers, down from a high of three million subscribers at the end of 2020. The publisher’s chief subscriptions officer, Michael Ribero, also departed the company earlier this month.
Restaurant coverage is driving subscriptions for Long Island-based publisher Newsday
The company began pivoting its food coverage from a long-running weekly print section to a dedicated newsroom beat with daily cross-platform coverage and multimedia content around five years ago. In 2022 restaurant coverage was the most efficient driver of new digital subscriptions, generating 8% of conversions despite being only 2% of all the newsroom’s output, the company says.
The Information has hired former Morning Brew chief operating officer, Matthew Resnick, as its new COO
Resnick will be tasked with growing both the subscription and sponsorship side of The Information’s business. The company’s first chief commercial officer, Karl Wells, will also leave the company after joining from Dow Jones in August of 2023.
Manga publishing giant Shueisha launches subscription app Manga Plus
Manga publisher Shueisha launched a subscription program for its signature international app. The new service is called Manga Plus Max and has two subscription tiers, each offering different perks. The move is designed to make manga more accessible globally, the company says.
Medium expects to be profitable in 2024
The publishing platform has experimented with various business models over its lifetime but oriented itself around subscriptions in 2017 and is now nearing 1 million paying subscribers.