Top Five Challenges for Subscription Publishers

Top Five Challenges for Subscription Publishers The publishing industry is moving towards sustainability thanks to the subscription model. However, new research sheds light on some unique challenges faced by subscription publishers.

Many publishing companies have embraced the subscription model in the past few years. Notable names include The New York Times, The Telegraph and The Atlantic which have moved beyond the digital advertising landscape to look at a more sustainable revenue model. Meanwhile, the digital advertising industry itself is in a state of flux: more brands are spending on digital advertising platforms such as Google and Facebook but advertisers are facing increasing resistance in the form of data privacy-focused ad environments.

The subscription model is thus the natural default for publishers in the digital age. However, while the business model is proving its worth, a number of challenges remain for subscription publishers to conquer:

1. Getting people to subscribe – The subscription model is great, but it doesn’t work if your readers are not willing to pay for content. With the internet making quality content accessible for free and commoditising regular news, it is hard to get readers to pay for news. The Digiday research cited above states that 63% of publishers have found it hard to convert regular readers to paying subscribers. Typically, publishers see an early spike when they move towards a subscription model as loyal users start paying, but the initial growth surge soon tapers out. This requires additional marketing efforts to acquire and convert readers which was highlighted as a big challenge by 12% of those surveyed. Getting buy-in from the internal teams was also a notable issue for publishers.

2. Margin and resources– While subscriptions may be a solid business model, publishers have to keep an eye on their margins and the resources spent on their subscription product. The research states that 20% of publishers have a margin of 50% or higher on their subscriptions, whereas 9% have a negative margin. The report further revealed that 39% of the companies spent less than 9% of the company’s resources on the subscription product and 75% of the respondents spent less than 24% of the company’s resources. Clearly, subscription publishers can do better when it comes to their margins and resources to achieve a better balance with business objectives.

3. Shifting marketing goalposts– Publishers recognise that readers are more likely to subscribe to a product on their own platform, rather than a third-party platform such as Facebook. As a result, 65% of publishers think that traditional email newsletters are the best way to acquire new paying customers. However, newer channels such as Podcast ads are increasingly coming to the fore.

4. ‘Platform Play’ or Not – The launch of Apple News+ earlier this year is seen as a double-edged sword for publishers. While it gives them access to a much larger audience base, it also means losing access to customer data, diminishing  brand value and having to share revenues with Apple. Consequently, publishers have given a mixed reaction to Apple News+ with The New York Times and Financial Times not signing up for the paid-for news aggregator platform. Working with such platforms and protecting their own interests remain amongst the biggest challenges for new-age subscription publishers.

5. Managing churn – Of course, subscriber churn is an industry-wide problem. Typically, mature subscription products have a more honed retention strategy compared with newer entrants. According to Digiday’s research, 41% of publishers stated that their churn rates were 10% or more, whereas only around 15% reported monthly churn rates under 2.5%. Note that measuring churn is often difficult in the subscription industry as various factors such as seasonality and offers may have a role to play in it. Nevertheless, managing churn involves a lot of hard work, and publishers have to be willing to put in the hard yards and see what works for their business.

Ultimately, subscription publishers need to ensure that their content and customer experience are on point, underpinned by an efficient subscription billing platform to automate their processes and create a scalable business. Publishers who can find a good balance between these three aspects will end up delivering a superior subscription experience and maximise their chances of success.

Read how our subscription billing platform Cerillion Skyline is helping French publisher English Language Media reduce subscriber churn and save 33% in operational costs.