This article was first published on Digital Content Next
Once seemingly unstoppable, subscription-based digital media services like Netflix now look vulnerable. Netflix reported seeing a drop in subscribers for the first time in 10 years, prompting a recent selloff that shaved more than $50 billion off the company’s market cap. Other streaming services, from Disney to Roku, also reported similar drops. Many worry that we’re witnessing a phenomenon known as “peak subscription,” where consumers facing an increasingly uncertain global economy are growing weary of committing to a laundry list of ongoing subscriptions.
Some publishers have felt the repercussions of peak subscriptions and competition from free alternatives. Quartz reported that some readers subscribe just to read one specific article and then quickly unsubscribe afterward; behavior that hindered real growth. Although metered paywalls have proven effective at driving subscriptions for many publishers, some believe it is a “blunt-force instrument” that won’t work for everyone.
Even as the total number of subscriptions is still high across publishers and creators, there are concerns that the supply of content sources outstrips demand, particularly when we consider more commoditized content. Despite the fact that the global subscription economy is projected to grow by $51 billion dollars in 2022, competition is fierce – even for the likes of Netflix.
As subscription fatigue becomes a growing concern, and competition among subscription-based content of all kinds continues to intensify, media companies seek ways to go beyond pure subscriptions and increase their revenue. The good news is that various solutions already exist.
Redefining the journey to becoming a subscriber
One of the key solutions to combat subscription fatigue is to let audiences become paying readers and members at their own pace. Instead of asking people to lock themselves into a subscription model off the bat, some companies monetize the subscriber journey in smaller steps.
To move away from relying solely on the one-size-fits-all subscription model, streaming services like Disney+ have opted to offer a lower-cost version of their service that includes ads. The potential rewards of this move are clear: Disney's own Hulu streaming service has turned commercials into a $1 billion revenue stream. Comcast's Peacock and AT&T's HBO Max now both come with ad-supported and ad-free versions. Even Netflix, which stood clearly opposed to integrating ads in the past, will now launch an ad-supported version sometime in the future.
Publishers such as Vox and The Guardian have also moved to a membership model, believing that readers will want to voluntarily support their publication even without the added pressure of a paywall.
Quartz also offers a subscriber-only newsletter that gives paying members exclusive access to additional content and various other benefits. However, it has made content on its main site free to access. Vice News has opted for an even more reader-friendly approach by adding a tip jar to its website, in case readers want to voluntarily make a contribution to the publisher.
The demand for incremental revenue streams to reach readers averse to committing to a subscription is why à-la-carte payment solutions emerged for publishers and content creators. These solutions allow users to buy paywalled text, audio, or video content with one-off payments or make voluntary contributions for open content.
Publications understand that having multiple monetization solutions builds engagement from different audience segments. This also feeds the subscription funnel with loyal users. Instead of asking casual visitors to commit to a subscription with discount offers, they are given the chance to engage in incremental steps.
The new era of reader revenue
The shift from relying solely on subscriptions signifies a clear acknowledgment of the need to give consumers flexibility and freedom. For audiences, this is a sure boost to their overall experience.
Digital publishers and content creators will benefit as well. Overall, a growing number of people are willing to pay for content. According to the 2021 Digital News Report from Reuters, 17% of people surveyed stated they were ready to pay for media content — a definite increase from the previous year.
Offering multiple reader-revenue solutions like exclusive memberships, micro-bundles, ad-supported bundles, à-la-carte payments, and even a tip jar makes it easier for publishers and content creators to monetize different audiences segments and capture rich first-party data. Alienating large swaths of audiences with an all-you-can-eat subscription offer will no longer suffice in a world where users are spoiled with choices.
It is also imperative to understand users’ willingness to pay for different types of content. For example, the exact same content bundle might be worth $10 per month to half of your audience and worth $5 per month to the other half. The one-size approach is to offer a $7.50 bundle to everyone. However, the maximum revenue approach entails creating two separate bundles for each of the audience segments. Unbundling content to understand user willingness to pay for each type of content can actually pave the way for publishers to resurrect the appropriately priced recurring payments.
If you’re a subscription-based digital publisher, the message is clear: the time to look for incremental ways to monetize and engage with a wider audience — including the elusive “never subscribers” — is now. Learning from the examples set by the companies above will save you from wasting time forcing one, rigid monetization strategy on an audience that doesn’t want it.