Read all about it… online: How newspapers are thriving on digital subscriptions

Read all about it… online: How newspapers are thriving on digital subscriptions Once the standard-bearers of subscriptions, print newspaper revenues are increasingly under threat in an ever more competitive market of 24-hour and online news. With papers betting big on digital subscriptions to keep the presses running, what strategies are the biggest publications adopting to avoid becoming tomorrow’s fish and chip paper?

Nestled between the emergency cash injections of economic adrenaline that dominated this month’s UK Budget was the comparatively hushed announcement of abolishing the “reading tax” on digital content, which means that 20% VAT will no longer apply to online newspapers, as well as ebooks, emags, audiobooks and journals.

Since VAT was introduced in 1973, print publications have dodged the charge to prevent any “tax on knowledge” but in November 2018, an EU Directive relaxed restrictions on member states altering their respective taxes. While most countries slashed the rate to single digits, Britain has opted to cut it entirely, freeing consumers from approx. £210 million a year in VAT charges.

The decision comes at a time when newspapers are seeing online subscriptions as the panacea to year-on-year drops in print circulation, with estimated falls of up to a half since 2010, combined with losses in advertising revenue. Many leading broadsheets are offsetting these declines by erecting paywalls around online editions. Despite this, publishers remain slow on the uptake, making the least revenue from usage-based pricing of any industry.

Just as they were one of the earliest subscription services, online newspaper subscriptions predate the current boom by two decades; way back in 1995, USA Today announced it would charge users of its nascent online newspaper $12.95 per month for three hours of access, plus $2.50 per hour after that. An interesting early attempt at a usage-based pricing model. However, after four months, it had only attracted about 1,000 subscribers, in contrast to its two million print readers; the paywall was soon dropped in favour of free access. In contrast, The Wall Street Journal launched its website one year later, with a hard paywall that remains to this day. By targeting America’s business elite (with subscriptions usually subsidised by their companies), the Journal succeeded – though didn’t quite profit – in the salad days of the World Wide Web, and still operates today.

The New York Times, after launching and aborting a subscription service for select columns, pioneered a metered, or “soft” paywall in 2011, allowing non-subscribers to read 20 articles per month, and revitalising the trend for digital subscriptions as the range of multimedia content available and the technologies able to handle payments had vastly improved.

In March 2016, The Independent became the UK’s first online-only national newspaper – today, its millions of page views dwarf the mere tens of thousands of readers it had when it departed the print market. Users may subscribe for £8.99 a month (after a three-month introductory period for £3), granting them ad-free browsing, premium content and free access to events and ebooks.

By August 2019, The Times had clocked up over 300,000 digital-only subscribers, three quarters of its print circulation, nearly a decade after introducing a paywall to its website. For £26 a month, users get full access to content online. Additionally, they offer an introductory deal of £8 for eight weeks, and a £26 a year student subscription (50p a week). Furthermore, its registered-access programme grants users access to two free articles of their choice per week. It’s estimated that the new tax rules could boost revenues for The Times’ publisher News UK by £20 million, if subscription fees remain unchanged.

At the end of last year, The Telegraph announced it had 420,000 subscribers to its digital edition, more than they had for print. While a weekly print subscription costs £11.50, a digital subscription costs only £2 per week (£3 for a digital newspaper). And for just £1 per week, users may access its sports section. For The Financial Times, its 796,000 online subscribers is three-quarters of its total reader base, while the paper has also expanded its international readership with the digital model – now, 70% of all FT readers are from outside the UK.

The Guardian, in comparison, remains un-paywalled. Those wanting to commit further can pay £5.99 per month for premium, ad-free web access, or £21.99 per month for a combined print and digital subscription. The website also accepts voluntary donations from those who want to contribute short of a subscription; since March 2016, one million users have opened their wallets. While The Guardian’s weekly print circulation is the lowest of any British national newspaper, its website is the most widely-read, with 5.2 million weekly readers.

Worldwide, publications such as Germany’s Bild, France’s Le Monde and Sweden’s Aftonbladet have also pursued similar growth strategies through increasing online subscribers, but it’s in the United States where the digital subscription model rules, with The New York Times, The Wall Street Journal and The Washington Post combined wielding over five million online subscribers.

Newspapers reflect their readers’ lifestyles, interests and aspirations as much as – sometimes more fervently than – any other product. Media publishers should take heed; by incorporating usage-based pricing and giving readers the freedom to determine what their subscription is to them, they are less likely to get caught up in the churn.

Cerillion Skyline streamlines and automates recurring billing for publishers and more. Find out more about how Skyline invigorated English Language Media’s subscription and renewals process.
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