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Should You Put Subscription Revenue First?

subscription revenue

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

Headlines have been brimming lately with news publishers taking back their profits with paywalls and paid content.

A recent May 2019 headline in the Wall Street Journal boasts: New York Times Posts Higher Profit, Adds 223,000 Digital Subscribers. A quote from the articles notes that the Times “ended the [first] quarter with 3.58 million paid digital subscribers. Including print subscribers, the Times had 4.5 million paying customers at the end of the quarter.” They’re well on their way to reaching their goal of 10 million subscribers by 2025.

This new confidence in digital subscriptions as a revenue source has started to turn the heads of magazine publishers who had been giving away premium content online for so many years. Magazines like Wired, Yankee, and others have all adopted metered paywalls that allow a few free articles per month, but require subscription after. For their most active readers, who frequently click on headlines through social media and email, the need for digital subscriptions become clear quickly.

If nothing else, it’s clear that publishers are no longer afraid to charge for content, and subscription revenue [1] goals are at the forefront. And there are three reasons for it.

Most pundits would point you toward “fake news [2]” as the sole reason for the influx of paying subscribers, but we 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.

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 digital content libraries powered by magazine and newsletter archives for our publishing partners. The irony here is that we as subscription publishers already have massive archives of content that is both incredibly valuable and often unused.

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 [3] for FREE instead, to find out how you can improve your digital magazine rapport with subscribers.

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.

Over the past two decades, we’ve guided more than 300 niche publishers through the process of transforming themselves from legacy print publishers into multiplatform operations that often dominate their industry niche and generate operating margins that surpass those created by their legacy print business. Learn more about how we can help you apply these strategies to your publishing business by scheduling a FREE consultation [4] today.