‘Show the money’: Publishers prioritize monetization over subscriber growth

Publishers have been slowly evolving their subscription approaches in recent years, optimizing toward subscriber revenue and engagement as “North Stars” instead of chasing subscriber volume for the sake of subscriber volume. But as the global economic outlook becomes increasingly precarious, that reorientation is accelerating rapidly. 

Publishers across the board are now deprioritizing subscriber growth initiatives and “volume at all costs” mentalities, and are instead focusing their attention firmly on the highly engaged, highly monetizable audience groups that are most likely to sustain their businesses through a difficult period. 

Vanity metrics are being replaced by an emphasis on revenue generation and yield maximization as publishers attempt to inject greater discipline into their subscription approaches and align them more closely with their business needs. Subscriber bases might be leveling off or even contracting, but publishers have a new goal in mind: revenue.

“Subscription publishers will pay more attention to their price-volume-mix in 2023,” said Fortune’s chief customer officer, Selma Stern, referring to the heavily reduced pricing many publishers have offered in recent years as they’ve optimized to subscriber volume. “Ultimately, paywall revenue will become more important than subscriber numbers,” she added.

The Washington Post’s chief subscriptions officer, Michael Ribero, said he expects a similar recalibration. As the bar for attracting and retaining paying subscribers gets higher, publishers will need to “focus on the customers and products with the highest return on investment,” he said. Publishers with robust data and a close understanding of their existing subscriber bases will be best positioned to “make better choices for a sustainable future” as the year unfolds, he added.

Maximizing revenues

This shift toward revenue maximization is being felt by subscription teams across the industry. Many publishers have spent the past few years in land-grab mode, focusing much of their time and attention on aggressive marketing initiatives, growth tactics and highly sophisticated conversion approaches designed to drive conversions and boost subscriber numbers by any means possible – often at the cost of short-term revenues. 

But emphasis moves away from raw subscriber volume and towards revenue generation, adjustments to mindsets – and potentially skillsets – are required.

This trend is evident among publishers across the International News Media Association’s network of members, according to its researcher-in-residence, Greg Piechota. Subscription teams are under increasing pressure to “show the money,” Piechota said, which is forcing them to reorient around revenue and profitability rather than market share and growth. That pressure is being exacerbated by rising costs and an ongoing slowdown in advertising spend, he added.

The sharpened revenue focus will result in some fundamental changes to the ways publishers operate their subscription businesses on a day-to-day basis. Lofty conversion and retention goals are increasingly being replaced with those oriented around more meaningful business metrics, such as revenue per subscriber and subscriber lifetime value.  

Staffing may also be adjusted to place greater emphasis on subscriber engagement, analytics and retention, rather than pure acquisition. At the very least, acquisition efforts will likely be adjusted to focus on the quality of subscriber conversations as opposed to simply the quantity.

Some executives also suggest that pricing increases are inevitable as publishers attempt to offset subscriber volume declines. Most publishers have expressed reluctance to adjust their pricing in the current economic climate, but there’s a growing feeling – particularly among business-to-business publishers – that money is being left on the table on a per-subscriber basis. For those publishers with uniquely valuable products and highly engaged subscriber bases, raising prices could help them boost revenue – even if it’s generated from a smaller subscriber base.

Reprioritizing core audiences

This recalibration of publishers’ mindsets isn’t just about maximizing short-term revenue, however. Publishers are increasingly questioning if an overemphasis on reaching and converting new subscribers has resulted in neglect of their core subscriber bases and offerings.

Some suggest the quest for subscriber growth has resulted in weaker content, products and subscriber bases, as marketing and editorial teams have strayed further from their primary audiences and editorial missions in order to uncover new pockets of potential subscribers. 

Refocusing attention on their core audiences and value propositions could therefore enable publishers to create sharper, more valuable products that could ultimately prove more economically sustainable in the long term, the thinking goes.

“It’s time for publishers to commit to our ‘authentic audiences,’” said Bloomberg Media’s chief digital officer, Julia Beizer. “For years, we have been intoxicated by the scale game… but subscriptions businesses are built on audiences who deeply care about and value our brands. They’re built on people who get repeated value from the utility we provide and crave a deeper connection with us in order to get it.”

As a result, Beizer predicts that publishers will begin to pay closer attention to the needs of their existing customer and subscriber bases. “We’ll see smart publishers segment their audiences accordingly – and put their resources and time into learning deeply about the needs of their authentic audiences and being consistently useful to them, day in and day out,” she said.

Getting the basics right

Multiple publishing executives echoed Beizer’s sentiment and stressed the ongoing importance of getting the basics right when it comes to content and product. 

The ongoing economic climate will continue to “put pressure on newsrooms to reliably produce indispensable need-to-know reporting that their readers cannot get anywhere else,” predicted David Skok, founder and chief executive of The Logic. And market headwinds do not change the fundamentals of operating a successful content-based product, Piechota noted. 

Ultimately, the ongoing viability of publishers’ subscription products will therefore continue to hinge on their ability to create genuinely valuable, unique and differentiated content on a regular and recurring basis – and the ability to deliver it to audiences in effective and engaging ways.

Publishers frequently talk about the difference between “nice to have” and “must have” subscription products. As 2023 unfolds it will become clearer which publishers are successfully delivering the latter, as subscribers are forced to make difficult decisions about how they allocate their renewal dollars and vote with their feet.