The power of subscriber retention
Retention was a growing focus for many subscription publishers in 2022, but those efforts have kicked into overdrive in 2023. The reason: retained subscribers are typically far more profitable than newly acquired ones, especially as converting new subscribers becomes increasingly challenging and costly.
As a result, publishers are now deprioritizing subscriber acquisition and focusing their attention instead on the highly engaged, highly monetizable audience groups that are most likely to sustain their businesses through a difficult period. Subscriber monetization has quickly moved front and center, prompting many publishers to think more carefully about how they can maximize yield from their subscriber bases and the impact that increased retention rates could have on their revenues and businesses.
In a blog post it published last week, FT Strategies illustrated why retaining subscribers is so crucial to the profitability of any subscription business. Many publishers generate very little profit from a subscriber during their first year, largely because of discounts and promotional rates, the cost of advertising and other acquisition tactics, and overheads such as customer support.
These costs typically decrease in year two and beyond, however, boosting subscribers’ lifetime value and profitability significantly. Research by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) found that increasing customer retention rates by 5% can increase profits between 25% to 95%, for example.
Retention may have been the buzzword of 2022, but in 2023 it could be the variable that makes or breaks publishers’ subscription businesses. Those that have succeeded in creating must-have products and have invested in robust retention and win-back strategies should be well-positioned to hunker down and navigate a tricky economic period successfully. But those that have paid lip service to retention efforts while focusing largely on costly subscriber acquisition may need to adjust their approaches quickly.
What publishing leaders expect from subscriptions in 2023
Toolkits asked a selection of publishing leaders what trends and challenges they believe will shape the year ahead for content-based subscription businesses.
A handful of key themes emerged, including the prioritization of monetization over subscriber growth, a renewed focus on publishers’ core audiences and subscriber bases, greater emphasis on registration walls, and the inescapable need to create valuable, differentiated content on an ongoing basis.
- Julia Beizer, Bloomberg Media’s chief digital officer
- Michael Ribero, The Washington Post’s chief subscriptions officer
- Selma Stern, Fortune’s chief customer officer
- George Montagu, FT Strategies’ head of insights
- Greg Piechota, Researcher-in-residence at International News Media Association
- David Skok, The Logic’s founder & CEO
- Angus Macaulay, Stat News chief operating officer
- Jason Clampet, Skift co-founder and chief product officer
News aggregation app Informed partners with major publishers
A handful of major publishers are licensing some of their subscriber-only content to a new paid news aggregation service called Informed, which launched in November.
The Financial Times, Bloomberg, New York Times, Economist, Reuters, Wall Street Journal, Washington Post, Telegraph, Der Spiegel, The Independent and Foreign Policy have all established deals with Informed, which pulls together news content from various publishers into daily digests but does not allow full access to publishers’ subscriber-only content. It’s a similar model to Apple’s paid news aggregation service, Apple News+.
Informed says it’s targeting an audience of consumers who are unlikely to pay for access to individual publishers’ subscription products. If that proves to be true, the approach could present an opportunity for publishers to generate incremental revenue from paywalled content without cannibalizing their own subscription efforts. In theory, it could also introduce publishers to new readers who might be convinced to purchase full subscriptions directly down the line.
It remains to be seen if such aggregation or “bundle” products will prove sustainable in the long run. But as publishers hunt for ways to shore up their revenues in a difficult market, it stands to reason that they’ll increasingly experiment – cautiously – with opportunities to extract additional revenue from their existing assets in ways that don’t undermine their own subscription products and ambitions.
Other items worth noting
- Axios said its “Pro” subscription product has attracted 3,000 paying subscribers and generated around $2 million in revenue in its first year. The company previously said it hoped Pro subscriptions would generate half of Axios’ total annual revenue. In 2022, they generated around 2%.
- Reuters is recommencing its plan to launch a subscription product after placing it on hold in 2021 following a legal dispute. The company previously said it hoped professional audiences would be willing to pay around $40 per month for deeper coverage and data on key business verticals as well as general news and live streams of its events.
- News organizations can use lessons learned from the recession of 2008 to inform how they respond to the challenging economic environment of 2023, according to FT Strategies. Publishers should look for ways to cut costs judiciously without downsizing their workforces, but also look for opportunities to invest strategically, the consultancy suggests.
- Here’s a roundup of paywall approaches and implementations being employed by some major publishers.
- Austrian newspaper Die Presse is allowing subscribers to “gift” articles to non-subscribers. The publisher says the feature has resulted in a significant increase in new-reader engagement and has also been viewed favorably by subscribers.
- Brands with in-house publishing operations are increasingly attempting to distance themselves from “content marketing,” in part to gain audience trust and in an attempt to attract higher-quality editorial talent.
- The Weather Company is offering a subscription “bundle” that includes access to Consumer Reports. The IBM-owned media brand says it sees an opportunity in connecting media companies that aren’t “traditionally connected.”
Highlighting the arduous hoops some publishers force customers to jump through in order to cancel their subscriptions, designer Soren Iverson asks: “what would happen if trying to unsubscribe became a game?”