Subscription trends that shaped 2022
Publishers got a reality check in 2021 when it became clear that building sustainable subscription businesses meant much more than throwing up paywalls and watching the money roll in. That realization drove many publishers to reevaluate and recalibrate their subscription approaches in 2022.
Some publishers recognized the models they had in place simply weren’t aligned with their editorial output or the needs and demands of their audiences. Others found that attempts to attract large subscriber bases with broad, catch-all products ended up falling short of audience expectations. Perhaps most importantly, it became increasingly apparent that the approaches publishers used to convert loyal audiences and existing “superfans” would not drive continued growth beyond those segments.
For subscription publishers, the year was defined by a handful of key themes:
- Subscription models and approaches were adjusted
- Simplicity and focus became a differentiator
- Retention took center stage
- Growing beyond “superfans” presented new challenges
- Long, cheap promotional periods became standard
- Recurring revenue showed its value in a tough economic climate
Subscription models and approaches were adjusted
As their subscription efforts continued to evolve and mature, it became clear to some publishers that the models and approaches they were employing weren’t best suited to their editorial output and capabilities, the needs and interests of their audiences, or indeed their own editorial missions and business models.
Some industry observers pointed to “peak subscription” and questioned the ongoing viability of subscription models, but the reality is that a shakeup was overdue. Some publishers had simply failed to deliver products that audiences deemed valuable or differentiated enough to pay for on a recurring basis, while others had adopted suboptimal models and product approaches for the nature of their content. Adjustments were needed.
Publishers that initially introduced metered paywalls across their properties increasingly moved towards “freemium” subscription models instead, which saw them reserving specific portions of their content for paying subscribers rather than simply taxing consumption volume. Freemium models would allow them to serve and monetize specific segments of their audiences via subscription products, while ensuring that free-to-access content could help drive discovery, audience growth and advertising revenue.
Some publishers realized they’d pushed too aggressively into subscriptions and that their approaches and products simply weren’t aligned with their editorial capabilities and output. That drove them to consider much more carefully what unique and differentiated value their subscription products provide, and to rethink which content should be placed behind paywalls and which might be better monetized through other means.
Meanwhile, it became increasingly clear that a blend of advertising and subscriptions provides the optimal approach for most publishers to maximize revenue, drive sustainable growth, and to meet the needs and expectations of audiences. In 2022 many publishers took a more sophisticated and nuanced view of how subscriptions can fuel their businesses as part of a broader revenue mix, and that mindset will be crucial for publishers looking to maximize their revenues in 2023.
Simplicity and focus became a differentiator
A steady move toward simpler subscription offerings has been underway for years as publishers continue to hone and optimize their products based on subscriber reception and feedback. That trend accelerated in 2022, however, as the global economic outlook worsened and publishers raced to position their products as “must haves” rather than “nice to haves” in subscribers’ minds.
Publishers began actively distancing themselves from vague product promises, confusing feature sets, aggressive marketing tactics and convoluted pricing structures. In an increasingly tight market, the ability to succinctly communicate to prospective subscribers what they’re paying for, why it’s valuable and how much it will cost them quickly became a competitive differentiator.
This shift toward subscription simplicity resulted in:
More clearly-defined value propositions: As subscribers looked for clear and quantifiable value to justify their subscription purchases, many publishers began thinking far more carefully about the specific and differentiated value their products delivered, and reworking their product packaging, messaging and marketing activity to reflect it more pointedly.
Sharper products with fewer, easily understood features: Many publishers ditched the smorgasbord approach to subscriber benefits and features, opting instead to reorient products around one or two high-value features that might build a more compelling case for subscription. Long lists of subscriber benefits and features aren’t typically as impressive or appealing as publishers like to think: Less is often more, and simpler products are often deemed more valuable than those padded with second-rate features that can simply dilute or distract from the core value on offer.
Straightforward pricing and terms: Publishers began to move away from convoluted math puzzles and dark patterns when marketing their subscription offers in favor of more transparent and direct approaches. Simple offers of “$X every 4 weeks” or “$Y per year” became commonplace as audiences tired with convoluted arrays of subscription terms, tiers and packages and thinly veiled attempts to obfuscate pricing.
Retention took center stage
Retention was a growing focus for many subscription publishers in 2021, but those efforts kicked into overdrive in 2022. Economic conditions made converting new subscribers increasingly difficult as the year progressed, prompting publishers to shift their attention and resources to maintaining their existing subscriber bases and revenues as a priority.
For many, that meant doing everything they could to maximize subscriber engagement and reinforce value perception around their products. It also meant embracing greater flexibility as subscribers were forced to make difficult choices about where and how to allocate their dollars.
To help keep existing subscribers aboard, publishers experimented with shorter subscription terms, increased product and feature flexibility, temporary price reductions and reduced rates in exchange for longer commitments. Customer service also became an increasingly powerful retention tool as consumers looked to understand and control their subscription spending more closely.
As far as some publishers were concerned, flat was the new up when it came to subscriber numbers and revenues in the second half of the year. That mindset looks set to continue into 2023 as the economic outlook becomes increasingly precarious, and retention efforts will continue to intensify as a result.
Growing beyond “superfans” presented new challenges
Economic headwinds made converting new subscribers more challenging, but for many publishers it also became clear that growing subscriber bases beyond their most loyal audiences could be more difficult than they thought. The products and tactics they had employed to successfully attract and convert “superfans” would not necessarily be sufficient to turn larger portions of their audiences into paying subscribers, which meant new approaches would be needed.
For many publishers that meant a renewed focus on understanding their broader audiences’ needs, challenges and interests, and experimenting with new features designed to satisfy them. For others it meant breaking apart and repackaging existing subscription products in creative ways, and offering multiple subscriptions designed to service the needs of more targeted and granular segments of their audiences.
As their subscription businesses mature and subscriber growth inevitably begins to slow, publishers will need to continue to diversify their products and offerings in order to monetize broader portions of their audiences via subscriptions.
Long, cheap promotional periods became standard
Heavily discounted trials and promotional offers became standard in 2022 as publishers attempted to offset slowing conversions and consumers demanded to try products for free (or close to free) before committing to ongoing subscriptions.
Toolkits research throughout the year found that the vast majority of major publishers now offer heavily discounted trials, and that trial pricing was reduced and trial lengths were increased as the year progressed. That culminated in many publishers offering months-long trials for as little as $1 during Cyber Monday subscription promotions.
With promotional pricing inching toward free and promotional periods elongating, the hard work of “selling” subscriptions began taking place after a conversion occurred in most instances. That prompted many publishers to rethink and reorient their conversion funnels to place greater emphasis on promoting engagement and extracting meaningful revenue from trial holders.
This shift comes with downsides, however. Publishers may remain confident that essentially free subscriptions will convert to paid ones six or 12 months later, but as promotional periods continue to stretch further into the future, the reality is it’s getting harder for publishers to predict with any accuracy what portion of new conversions are likely to stick around when promotional rates expire – and what price points they’re likely to tolerate.
At some point, heavily discounted long-term promotional offers can begin to resemble a house of cards, particularly during periods of economic uncertainty. The question is where that line lies, and how confident publishers are in their ability to identify it.
Recurring revenue showed its value in a tough economic climate
Publishers faced headwinds across the board in 2022, but subscription-first publishers said their revenues held up relatively well as other revenue streams faltered.
As the year progressed, publishers reported softening demand from advertisers and sponsors and said that those that continued to spend demanded more bang for their buck in terms of campaign performance, which ate away at margins. Meanwhile, commerce revenues suffered as consumers spent more judiciously, and despite showing promise over the past few months, most events businesses have yet to rebound to anywhere near pre-pandemic levels.
Subscriber growth slowed too, but subscription revenue proved relatively well-insulated as other revenue streams and business lines slowed or became more costly and cumbersome to operate. Some publishers said the availability of recurring subscriber revenue helped stabilize their businesses during periods when revenue from other sources proved far more volatile.
Subscription revenue lines are typically more challenging and time-consuming to develop than advertising ones, but they may be more resilient to the effects of broader economic conditions. In conversations with executives at subscription-first publishers in recent weeks, almost all have said they’ve seen no meaningful contraction of their subscriber bases or revenues since the summer. Revenue can be a lagging indicator of performance, but they’re seeing nothing in their renewal rates that’s causing them concern, they say.
Looking forward to 2023
Publishers are bracing for another difficult year ahead as the economic outlook appears increasingly shaky and the threat of recession looms. As conditions continue to tighten and competition for subscription dollars gets more fierce, many of the trends we saw in 2022 are likely to continue or intensify.
It remains essential that subscription publishers have the right models and approaches in place, and are laser-focused on delivering highly valuable, differentiated products. Those that succeed may find themselves well positioned to weather any incoming storm, while those that fail to do so could find themselves in sticky situations.
