An industry-wide slowdown in subscription growth
An industry-wide slowdown in subscription growthIt’s not just Netflix that’s stalling out; lots of publishers are struggling to maintain their early subscriber growth numbers.
My latest: How a former Cosmo editor built Australia's largest women-focused media companyMia Freedman started Mamamia as a one-person blog and bootstrapped it into a multi-media outlet that reaches 7 million people. Reader mailbagHello there! This is the latest edition of my Q&A series where readers ask me questions and I do my best to answer them. But there’s a catch: while the answers are free to read, only the paying subscribers get to ask the questions. If you’re a paying subscriber who wants to ask a question for the next edition, you can leave it in this thread over here. And if you want to subscribe, the link below will get you 10% off for your first year. Not only will you be able to participate in these Q&A sessions, but you’ll be supporting the work I do for my newsletter and podcast. Ok, let’s jump into it… We may be witnessing an industry-wide slowdown in subscription growthI received two separate questions that are somewhat similar in subject matter. The first comes from Esther Kezia Thorpe
The second comes from Jeff Perry
First, I want to issue the caveat that I’m not an economist and certainly not an expert on inflation. Now that I’ve gotten the necessary disclosures out of the way, I think the media’s singular obsession with inflation has painted an unrealistic picture of the average person’s economic situation. While yes, inflation is at record highs, we’ve also seen record high job growth and rising wages. Depending on how you squint at it, one could argue that wage growth is being outpaced by inflation, but you still have to account for said wage growth when calculating the impact of inflation. So I’m not sure that inflation is hurting subscription business models all that much, especially since the marginal costs of serving a new digital subscriber are relatively low. If you have to print 10,000 extra copies of a newspaper, then you’re subjected to the rising costs of ink and paper, but it really costs you very little to service 10,000 additional digital subscribers. That being said, I do wonder if we’re witnessing an industry-wide slowdown in subscription growth, and not because of inflation or “subscription fatigue” or anything like that. It’s not just Netflix that’s stalling out; I’ve seen reports that everyone from the Washington Post to The Atlantic are struggling to maintain their early subscriber growth numbers. I think the reason behind this might be simple: it’s been a few years since most publishers launched their paywalls, and they’ve simply run out of low-hanging fruit. Once they converted all their superfans, they then had to begin the long, difficult task of bringing in new superfans, something that’s notoriously difficult to do when your casual readers keep hitting a paywall long before they’re ready to convert. Ironically, this has led to some publishers actually tightening their paywalls by reducing the number of free metered stories, thereby cracking down on “freeloaders.” The downside is that this strategy leads to a shrinking sales funnel as people start bouncing off your website because they’re not ready to pay. It’s probably time for many publishers to admit to themselves that the paid subscription model was never going to be the silver bullet that would completely reverse all the trends that gutted many legacy news outlets. For a time, we looked at the subscription success stories coming from places like The New York Times and Wall Street Journal and really wondered if we were entering a new era in which reader revenue could single handedly save us from declining ad rates. And while subscriptions certainly did help publishers find a more stable footing, it turns out that the future of media still heavily depends on diversified business models, i.e., digital advertising. That’s probably why we’re seeing more and more publishers switch to looser paywalls. The Globe & Mail created an AI that predicts when a reader is most likely to convert into a paid subscriber. Gordon Edall, the project manager who helped build the AI, told me in an interview that some readers can consume dozens of articles without ever hitting a paywall. The basic logic here is that it’s better to keep serving a reader with more ads than it is to bounce them off the website. Several publishers are eschewing paywalls entirely. Digiday published a good rundown of these experiments, which range from Vox asking readers for donations to The Guardian reaching 1 million recurring payments. The newest entrant to this cohort is Quartz, which recently removed its website paywall. Here’s how CEO Zach Seward explained the logic of the move:
When I wrote about Quartz in June 2021, a spokesperson at the company told me that it had 27,000 paying members. That recent Digiday article places its paid membership at 25,000. That’s a clear sign that its subscription growth had stalled out, and I don’t think it’s alone in that regard. As I’ve written before, subscription economics are pretty brutal, and it’s only a matter of time before churn eats into all of your growth. When it does, you have to be ready with Plan B. Subscribe to The Tilt[Sponsored] Looking for audience-building or revenue-generating ideas? That's why The Tilt was created. 2x per week in your inbox ... completely free. Subscribe now My take on Elon Musk buying TwitterThe next question comes from Jeff Perry
By the Twitter deal, I assume you mean Elon Musk’s successful bid to buy the company? I generally try to avoid culture war discourse in this newsletter, but since you asked… Honestly, I think both sides are being a bit hyperbolic and histrionic in their responses to this news. Chances are, not much will change in the short term if this deal goes through, and it’s important to remember that even though Musk has an asshole persona on Twitter, at the end of the day he’s your standard Center Left billionaire, probably not all that different from a Jack Dorsey or a Jeff Bezos. Depending on whether you’re on the Left or the Right, you’re perhaps fearful/hopeful that Musk will do away with most of the content moderation policies that Twitter established over the past half decade, and that he might even let Donald Trump and his hoards of MAGA trolls back onto the platform. I don’t pretend to know much about the internal bureaucracy of Twitter, but my general sense is that tech workers tend to be overwhelmingly liberal and generally supportive of the moderation policies that are now common on social platforms. Does Musk really want to go to war with that constituency? Consider for a moment what’s been going on over at Facebook these last few years:
At the end of the day, Elon Musk will sink $44 billion into the purchase, and he’s already running several other companies. How much energy does he have to alter Twitter’s entire trajectory, and how much risk is he willing to take on? I think he’ll find that it’s much easier to simply shitpost to his Twitter account than it is to steer the company in a radically different direction. What’s a good newsletter click-through rate?From Tim Benjamin
So, by click-through rate, I’m assuming you mean the percentage of newsletter openers who click on at least one link within the newsletter? It really depends on what kind of newsletter you send out. If you’re just aggregating links to web articles, then your click-through rate should be pretty high, somewhere north of 20%. If you have a self-contained editorial newsletter that’s meant to be consumed in the inbox, then a lower click-through rate is more acceptable. I think my average is hovering around 10%. Quick hitsHow do I become an adviser at one of these creator investment funds? [Forbes] A profile of one of the few social media stars to cross over into genuine A-list stardom. [Rolling Stone] "Opinion and its focus on multi-media projects are among the best retention vehicles for the [New York Times’s] subscription, said Kathleen Kingsbury, opinion editor of the Times." [Axios] So CNN's team projected that it would reach 30 million paying subscribers for CNN+. That's three times the current subscriber base for The New York Times. Yeah right! [Axios] These NFT gimmicks are already starting to feel old. The vast majority of publishers are not going to see significant revenue from this kind of stuff. [Digiday] ICYMI: Inside the career of a successful ghostwriterJonathan Rick’s writing appears in hundreds of mainstream publications, but it rarely includes his byline. Want to reach my influential audience?My audience spans across industries that include media, marketing, advertising, public relations, and tech. Basically, it includes anyone whose job touches digital content in some way. Name a major media outlet or tech company, and chances are that several of its executives either read my newsletter or listen to my podcast. Want to reach this audience? Here’s where you can find details on advertising in my newsletter and podcast: [link] You’re a free subscriber to Simon Owens's Media Newsletter. For the full experience, become a paid subscriber. |
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