New Numbers Show Audio and Products Drive Publisher Subscription Growth

Now the challenge: maintaining that growth

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It was a big week for media companies and their subscription businesses, with the numbers showing that 2020, while annus horribilis for news, was roaring in terms of readers paying for it. 

Digital subscription revenue is The New York Times’ largest and fastest-growing revenue stream, thanks to its 7.5 million total subscribers. The Wall Street Journal and Dow Jones reported the highest year-on-year growth in subscriptions in its history, with The Journal netting 3.22 million subscriptions, up 19% from the year prior. Elsewhere, La Repubblica in Italy doubled in 2020 to 220,000 subscribers. In December, The Guardian announced a 60% year-over-year increase, taking it close to 1 million subscribers.

Subscription peaks won’t last forever. A new presidential administration, extended unemployment in the U.S. and a changing news cycle means the inclination and the ability to pay for news will get slimmer as the year rolls on. Ad revenue, continuing its downward trend, will be more challenged from ongoing efforts from browsers and regulators to crack down on audience tracking. The pressure to hold on to recent subscribers is on.

Here’s what the latest earnings say about the outlook for subscriptions. 

Products fend off the post-outlier slump

“We regard 2020 as an outlier year for net additional subscriptions,” CEO Meredith Kopit Levien said after Thursday’s earnings report. Still, The Times expects total subscription revenue in the first quarter of 2021 to increase 15% compared to this time last year.

Keeping up with 2020’s rate of growth is daunting. Publishers should match rates with 2019, said Lamberto Lambertini, research analyst at Enders Analysis, adding that “2021 will have a slump in absolute terms.”

While drawing comparisons between The Times and the rest of the industry is not always useful—the paper of record has cash and is industry-leading—most publishers can lean on products for driving retention like newsletters and podcasts.

The good news, Levien pointed out on the earnings call, is that digital habits built during a pandemic are especially sticky. Capitalizing on this, in September, The Times hired Jonathan Knight as general manager of games, building the success of games like the Crossword, the Mini and Spelling Bee, building more products in the vertical that has proven popular during lockdown.

The audio opportunity

The number of cases for how audio fits in with media companies’ subscription businesses is growing.

Nearly a third (202,000) of the 627,000 total net subscribers added to The New York Times in the fourth quarter were from Games, Cooking and Audio, although the publisher doesn’t split out the categories.

During the first quarter of 2020, The Times acquired subscription-based audio product Serial Productions. Approximately 20,000 of the audio product’s subscriptions were included in the Company’s digital-only other product subscriptions at the time of the acquisition, according to its earnings report.

This was the first year The Times reported podcast ad revenue ($36 million in 2020, up $7 million from the year prior). This mostly comes from ads: The Times has benefited from luxury brands’ growing appetite to run ads in podcasts, but it has dabbled in offering early access to podcasts for subscribers and runs subscription ads within its podcasts. 

Subscription models, thanks to their resilience and high margins, are getting more popular. “If businesses are able to capitalize on these models now, subscriptions could become the key to surviving the current climate whilst preparing for the future landscape,” said John Phillips, general manager at technology platform Zuora.

The B2B boom 

Business-focused publishers have robust foundations to diversify and monetize audiences. Global economic crises and more people working remotely have only improved those chances.

Bloomberg Media, which caters to both the business and consumer market, saw a large spike in traffic and subscriptions in January, with 80% growth in new subscribers acquired and 20% growth in traffic from December, according to people familiar with the matter. Three years after launching its paywall, it’s projecting to reach nine figures in revenue from subscribers.

Last year “was not an outlier for subscriptions growth for Bloomberg, and we expect to see ongoing growth in 2021,” Lindsay Horrigan, general manager of subscriptions and global head of consumer marketing, Bloomberg Media said. She added that “2020 marked a new era for quality business news as business professionals and leaders sought out news to understand what lies ahead. The pandemic’s impact on business, markets and finance, across all industries around the world is irreversible, and our audience continues to see Bloomberg as a pivotal resource as they navigate the post-2020 world and the new economy. “

Financial information company Euromoney Institutional Investor has also grown subscription revenue 14% year-on-year, thanks to a growth in subscriber acquisitions of 6%. Touting increases in subscription numbers often overshadows actual revenue growth. 

“There is optimism around the world economy and a renewed focus on cash flow which is what makes subscriptions often very interesting as they spread over time,” said Felix Danczak, chief operating officer at subscription tech company Zephr.

While companies strapped for cash might have looked at monthly subscription outgoings as discretionary in the early days of the pandemic, the desire for competitive advantages mitigates earlier losses. The massive rise in home-workers has forced companies to take out more subscriptions rather than entire organizations piggy-backing off a single account coming from the same IP, said Danczak.

Preventing simultaneous logins and people copying content typically leads to Zephr’s clients seeing increases of between 20% and 30% in business account value. The effect “can be massive” he added.

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