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Should You Put Subscription Revenue First?

As ad sales decline, subscription revenue is picking up the bill

Headlines have been brimming lately with news publishers like The New York Times, The Guardian and Wired taking back their profits with paywalls and paid content. The New York Times made 60% of their 2017 revenue from subscription sales, The Guardian’s 800,000 subscribers are now accounting for more revenue than advertisers, and Wired has followed their lead by instituting a new $10 annual digital subscription. It’s clear that publishers are no longer afraid to charge for content, and subscription revenue goals are at the forefront. And there are three reasons for it.

Most pundits would point you toward “fake news” as the sole reason for the influx of paying subscribers, but I would postulate that the fake news angle is simply one of a set of larger trends that are forcing us into a pivot point as users decided that paying for content is a good idea.

Consumers are telling us loud and clear what they want—are you listening? How much would you pay for that information? Download a copy of our 2018 Mequoda Magazine Consumer Study for FREE instead, to find out how you can improve your digital magazine rapport with subscribers.

Here are the three things going on that are improving subscription revenue for publishers:

First, we all should be thanking Amazon, Netflix and other large online businesses who have trained customers to think that using their credit cards to secure access to great content online is normal.

Back in 2001, our biggest problem was consumer fear around using credit cards online. The travel industry made the initial breakthroughs with Amazon close on their heels. Most recently Netflix has become a massive subscription marketer with a trusted following for their video library on demand. Thousands of small publishers are now building digital libraries full of high quality articles, video and software tools using a similar business model.

At Mequoda we currently market 45 digital content libraries powered by magazine and newsletter archives. The irony here is that we as subscription publishers already have massive archives of content that is both incredibly valuable and often unused.

The second big factor driving the consumer pivot to paid content is cheap high-speed bandwidth available on many devices. It’s easy to overlook the fact that consumers now spend thousands of dollars per year so they can access the Internet on their mobile phones, tablets and flat screens at home.

The consumer is now picking up the lion’s share of the cost for content delivery whether it’s being delivered or not. If you do the math you’ll discover that one of the reasons that publishing on the Internet can be so profitable is the shift in delivery cost from publisher to consumer. And this trend continues to move in our favor with Internet costs for the consumer and the publisher continuing to decline.

Finally, fake news and the mainstream media coverage of fake news has made consumers aware of quality in a new and perhaps frightening way. This is feeding their willingness to pay for content from a trusted source that has been curated and organized for easy access.

This is not news, as the Internet has always been a content cesspool based simply on its unregulated nature. For those of us concerned with special interest publishing from investing and health to crochet and history, quality is still very much a factor. Consumers want their recipes to taste good, their health information to be factual and their weekend projects to have positive outcomes. Travel reviews that are consistent—because they are curated by editors with journalistic standards—is finally trumping the flood of user-generated content that can be tainted by malicious players of all stripes.

The Internet is both creator and disrupter, and those who prosper in the 21st century will do so with high quality content and an effective and efficient subscription marketing strategy.

If you’re a legacy publisher with a strong archive of content and the desire to make the Internet your biggest source of new magazine, newsletter and membership sales, please schedule a free consultation a member of our executive team to discover how we can help you increase your audience, subscription revenue and profits.

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