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A Bleak Future for Online News Subscriptions?

Posted by Kathryn LaBarbera on June 25, 2019 • ... comments

A few years ago, online news subscriptions were a hot topic of conversation across the digital realm. The “pivot to paid” showed a lot of promise for journalism, presenting the opportunity for publishers to establish a direct financial relationship with readers and supplement volatile digital advertising revenue

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From a consumer standpoint, value in online news subscriptions arose in the context of a decreasing trust in media news. In 2018, only 34% of Americans reported trusting news ‘most of the time’, compared with 44% in 2013.  With disinformation campaigns, clickbait, and bias reporting, a lot of people are overwhelmed and don’t know what to believe. The appeal of online news subscriptions stems from this because it gives readers access to high quality content they feel they can trust. 

Now, in 2019, chatter is slowing down and the paywall narrative is changing directions. While some large organizations like The New York Times are proffitting immensely (in 2018, they earned $400 million from online subscription revenue), others like The Sun (one of Britain’s largest newspaper companies) were forced to remove their online paywall because they couldn’t secure enough paying readers. Although no one can predict the fate of paywalls, slowed subscriber growth and subscription fatigue suggest that the future of paying for online news could be a bleak one. 

 

Willingness to Pay for Online News 

The market for people willing to pay for online news is small, and if subscription behavior in 2019 is any indication, the potential for growth is limited (note: paying for online news can be in the form of subscriptions, donations, or membership fees). The Nordic regions have the highest percentages and growth of paying readers, with Norway at 34% (4% increase since 2018) and Sweden at 27% (1% increase since 2018). In the US, 16% of people pay for online news, a number that’s remained stagnant since 2017. Many European countries are at the low end of the spectrum, such as the UK at 9%, Germany at 8%, and Spain and France at 10%.

The graph below, from Reuters Institute’s annual digital news report, shows the percentages of paying readers in 38 countries in the last year. While these percentages may shift slightly (up or down) in the coming years, there is certainly a cap on the number of people willing to pay for news, and unfortunately for publishers, it looks like we’re reaching the upper limit. 

Shrinking the market for paying readers even further, the average number of subscriptions per person very rarely exceeds one. No matter how you slice it (by wealth, education level, interest in news), few people find value in having more than one subscription. The likelihood that someone will pay for another news source that covers roughly the same material is slim, especially when there’s free access to other sites. In fact, one of the top reasons people don’t pay for news online is because they feel they can get it elsewhere for free. As long as the majority of content remains in front of a paywall, the demand for one--let alone two or three--subscriptions will remain low. 

A new subscription model might further decrease the willingness of people to subscribe to multiple sites. Mogul News and Apple News Plus are both harnessing the exclusivity and trustworthiness of multiple sources to create a subscription conglomeration that provides content from various publishers under one paywall. This could deter people from subscribing to individual sites. Why would someone pay a monthly subscription to one site when they could pay a similar (or cheaper) fee and receive content from multiple sources? In the case of Apple News Plus, it would cost a reader over $8,000 a year to individually subscribe to each of the publications available, whereas Apple’s model will charge $9.99/ month. 

All of these factors create competition amongst publishers to secure the limited segment of the public that will pay for online news. This “winner takes all” dynamic awards the paywall spoils to established, broad-range-coverage publishers at the forefront of subscriptions like The New York Times and The Guardian, and makes it difficult for others to get their foot in the door. 

 

Subscription Fatigue

The onset of subscription fatigue is another barrier to the success of online news paywalls. These days, it feels like every other link we click on requires us to open our wallets. It’s frustrating, draining (for the mind and the bank account), and people are over it. The internet was founded on the basis of being a cost free resource for information. Now however, between news and other subscription services like Netflix, Amazon Video, Spotify, HBO, etc., the internet doesn’t feel so cost friendly, and people are getting tired of being asked to pay for access to so many sites. 

Reuters Institute conducted a survey, asking what type of subscription people would choose if they could only have one (news, video streaming, music streaming, online gaming, etc.). Only 12% of people picked news. When broken down by age, that percentage becomes even smaller; only 7% of people under 45 chose news. When it comes to subscriptions and deciding where to spend discretionary money, most people will choose entertainment streaming services because they can’t get the same material elsewhere 

 

The Future?

It’s unclear what the future holds for paywalls. Whatever happens, space for new publishers looking to implement subscription models is limited in today’s market. Larger companies may continue to adopt paywalls into their business models, but for small-to-midsize publishers, it may be difficult to find meaningful business from subscriptions. Instead, investing in other strategies like developing valuable relationships with audiences and increasing user engagement are more reliable.

 

As always, we’d love to hear from you. What are your thoughts on online news subscriptions? Do you think they’ll become obsolete? 💭

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