Taking a look at where subscription revenue starts
If news organizations knew more about their digital customers could they have prevented their drastic drop-off in advertising revenue? Maybe, maybe not. But, regardless, there remain plenty of interesting questions about the topic as news companies continue to evaluate their revenue opportunities.
We know, for example, that Facebook and Google can collect more data and analytics from users, so they’re at an advantage when it comes to advertisements and stories for targeted audiences on the newspaper websites. That’s put more pressure on publishers to build up revenue from monthly subscriptions and memberships. In an article, “News Industry Pivots to Subscriptions 2019”, Statista shows that 52% of digital news revenue is now coming from subscriptions, whereas only 27% comes from display advertising.
On both fronts — collecting customer data and getting readers to buy subscriptions — it all begins with the “Open an Account” screen. So, I took a deep dive into those pages to learn more about the efforts to gain some traction on both sides of the revenue equation.
For my research, I evaluated over 130 different digital sites gathered from the largest 25 companies that own newspapers in the United States. I selected about 5 to 8 newspapers from each large company, including companies like Gatehouse and Gannett, which at the time were two different companies. From these, I divided each newspaper into four different categories: weekly newspapers, small town newspapers (population of 30,000 or less), big(ger) town newspapers (populations of 30,001 or more) and metropolitan papers coming from the top 50 largest cities in the United States. The newspaper’s subscription service was then evaluated for characteristics that help or hinder the process of subscribing (data can be found here.)
It’s obvious that now more than ever, these news organizations are pushing for subscriptions in order to increase revenue in other places than just advertisements.
Some sites have the option to sign up with Facebook or Google during the process of creating an account. In doing this, Facebook or Google is receiving important information regarding the user’s online activity and habits. Letting third-party sites access users’ information is something that hinders the papers’ profits because the paper automatically loses vital data that could be useful in targeting ads. Once they lose this information, the papers are at a disadvantage when it comes to selling valuable ad space to advertisers. This is why the papers now rely more heavily on revenue from subscriptions to the newspaper. To that end, the websites that aid the push for subscription purchases include offers of a discounted subscription or a trial period at a discounted price, bundling print and digital newspaper as a package, and pop-up windows advertising subscription services and benefits upon entry to the site. The newspapers were evaluated simply to see whether or not the website had these features, to try to gain a better understanding of how newspapers are shifting their areas of emphasis.
I found that big city and metropolitan papers are more likely to have the option to sign up with Facebook or Google, ranging from 22% to 29% of websites versus the smaller paper’s 4% to 5%, but usually the largest papers from places like Los Angeles or Chicago offered neither and only allowed a subscription through their own websites. There were also a few unique approaches like using LinkedIn (The Flint (Mich.) Journal) or Ancestry.com (Sterling Daily Gazette, Stilwell Democrat Journal).
On the deals front, the majority of metropolitan papers offered some type of discounted subscription or trial period, and all that I looked at offered a print and digital bundle as well as a Sunday paper delivery option. The number of discounted subscriptions steadily decreased as the population decreased, accounting for 76% of metropolitan papers and only 46% of small city papers.
While discounts fell off, print and digital bundles, as well as the Sunday paper delivery, were actually larger in smaller cities than in the big(ger) cities’ newspapers. As seen in this ‘What’s New in Publishing’ article, newspapers choosing to bundle their digital and print copies are actually helping raise the sales of print newspapers, hooking the readers with a discounted trial of print delivery, which many times leads to a full subscription purchase
About 80% of small city papers had bundles of print delivery and digital access whereas in the big cities, only about 68% of papers had the option.
Many newspapers have developed another way to convince readers to subscribe. Pop-up windows appear immediately on entry to sites, advertising discounts or trial periods of subscriptions to the news. All types of newspapers, ranging from 15% in the small papers to 52% in the metropolitan papers, had some kind of pop-up window enticing viewers to subscribe to the newspaper.
Another factor, the discounted trial period, also helps to increase sales of both digital and print. This report by the Media Insight Project shows that one of the most important factors when getting readers to pay for news is their investment, attachment, and overall trust of the news and its website. Giving readers a trial period helps them trust the news on their terms, leading to a full subscription purchase as well.
Overall, larger papers were much more likely to provide a discounted trial period of a subscription, lasting on average for one month. All the metropolitan papers also had a print and digital bundle, where only 80% of small city papers and 67% of big city papers offered that bundle.
Newspapers have come to terms with and began to implement strategies that support the notion of subscriptions as a major means of funding. Strategies like this emphasize the importance of increasing revenue opportunities in this up-and-coming digital and advertising age.
Taylor Gion is a Discovery Fellow and student at the Missouri School of Journalism. She’s from Des Moines, Iowa.