Subscription themes that shaped 2023

Publishers spent 2022 calibrating their subscription approaches to ensure they aligned with their editorial output, the interests and demands of their audiences, and their own business needs. Those efforts evolved and matured in 2023 as subscriptions became a more central part of many publishers’ audience offerings and business models.

The value of audience revenue became apparent as advertiser demand softened, and many publishers moved beyond vanity growth metrics and “subscriber volume at all costs” mentalities to focus on revenue generation instead.

Meanwhile, fears of “peak subscription” appeared largely unfounded as consumers continued to grow their spending and add more publisher subscriptions to their portfolios, although other headaches emerged as regulatory scrutiny around subscription cancelation processes intensified and the rise of artificial intelligence threatened to undermine their subscription offerings and broader businesses.

For subscription publishers, the year was defined by a handful of key themes: 

1. Subscription revenue showed its value in a tough advertising market
2. Fears of “peak subscription” appeared unfounded
3. Emphasis shifted to revenue growth vs. subscriber growth
4. Subscription offerings became more fragmented
5. Regulatory scrutiny around cancelation processes intensified

Subscription revenue showed its value in a tough advertising market

Publishers’ businesses faced headwinds throughout 2023, 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 deliverables and campaign performance, which ate away at considerably at their margins. 

Short-term economic factors played a large part, but ongoing challenges with primarily ad-supported models run deeper for many publishers. Competition for ad dollars among publishers is intensifying thanks largely to a never-ending supply of inventory, and advertisers are increasingly wary of appearing next to news and polarizing content. Meanwhile, marketer attention continues to shift toward larger platforms such as Google, Amazon, and Meta, and audiences are increasingly trying to avoid advertising anyway.

Debates about the merits of subscription models for digital publishers continue to rattle around some corners of the industry, but it’s becoming increasingly clear that publishers with strong subscription and reader-revenue bases are faring better in the modern media environment than those without. Managing churn remains a challenge – as it does for any business with repeat customers – and subscriber growth isn’t getting any easier. But in a shaky advertising market, the relative stability of subscription revenue continues to enable many publishers to keep the lights on while their ad-reliant peers are being forced to downsize to make ends meet.

Subscription models have allowed publishers to more closely align their business models and content strategies with the needs and interests of their audiences, and publishers that have succeeded in developing compelling subscription offerings are now sitting in far stronger positions than those that haven’t. Layering revenue from advertising, events and other streams on top of a robust and reliable subscription base continues to prove a relatively sustainable model in an increasingly challenging digital media environment.

Fears of “peak subscription” appeared unfounded

Industry observers and media reports continued to question whether we’ve reached “peak subscription.” It remains unclear exactly what “peak subscription” means or how it might be defined, but evidence suggests that overall consumer appetites for publishers’ subscription offerings remained throughout the year.

The proportion of U.S. consumers paying for news grew from 19% in 2022 to 21% in 2023, according to The Reuters Institute for the Study of Journalism. That’s in line with research conducted by Toolkits which found that 19% of the U.S. population now subscribes to at least one digital publication.

Toolkits research in October 2023 also found that digital publication subscribers continued adding subscriptions to their portfolios, suggesting consumers had not reached a saturation point in terms of the number of subscriptions they were willing to maintain. Twenty-nine percent of subscribers said they increased their total number of subscriptions over the prior 12 months while just 7% said they’ve decreased. Thirty-three percent also said they expect to increase their number of subscriptions in the future (compared with 27% in 2022) and 21% said they plan to reduce their number of subscriptions (compared with 29% last year).

There were numerous subscription success to stories to point to for publishers large and small. The New York Times crossed the 10 million subscriber mark and said it grew average revenue per user for five consecutive quarters. Bloomberg reached 500,000 subscriptions and said it was setting its sights on 1 million. Smaller publishers such as The Information and Defector Media credited subscription models for funding the type of journalism and content that advertising models seemingly no longer allow for.

Not everyone’s winning in subscriptions, of course, and some publishers have seen contractions in their subscriber bases even as overall subscription spending grows. Competition for consumers’ dollars is intensifying as more subscription offerings hit the market, and weaker products are suffering as consumers gravitate toward the subscription products that provide them with the most value. 

Meanwhile, consumers’ tastes and interests continue to evolve and shift. It’s no secret that publishers of general news are finding it increasingly difficult to attract and engage audiences, for example, as consumers continue to find the prospect of news content less appealing and trust in the media falls to historic lows.

Emphasis shifted to revenue growth vs. subscriber growth

Many publishers deprioritized subscriber volume and market share as their primary barometers of success and reoriented their subscription operations around more meaningful revenue-based metrics. Vanity metrics were slowly replaced with an emphasis on revenue generation and yield maximization as publishers attempted to inject greater discipline into their subscription approaches. 

Revenue may have been the new “north star”, but growing subscriber bases proved increasingly challenging as competition intensified and consumers continued to judiciously. Publishers seeking revenue growth were therefore left asking themselves a key question: How do we convince existing subscribers to pay more?

A focus on average revenue per subscriber (ARPU) growth marked the second half of the year and will play a central role in many subscription strategies in 2024. This shift is already being reflected in earnings reports and public statements from publishing executives, with many publishers crediting ARPU increases for driving revenue growth in recent quarters as opposed to subscriber base growth.

This time last year, most publishers viewed attempts to raise subscription pricing as risky. In a precarious economic climate, the prospect of raising prices and risking widespread churn was not a particularly appealing one, even if the data suggest it could result in greater revenue yield over time.

Fast-forward 12 months and the thirst for ARPU has moved conversations about pricing and yield maximization front and center. Publishers are now actively exploring how to increase their pricing and, crucially, to migrate subscribers on cheap (and often long) introductory terms to more lucrative and sustainable ones.

Subscription offerings became more fragmented

As publishers oriented their businesses more firmly around subscription models, it became increasingly apparent that one-size-fits-all product approaches may not prove the best way to maximize revenues or meet the needs and interests of different segments within their audiences. 

A growing number began breaking apart and repackaging subscriber features and offering them as standalone products as a result, enthused by the success publishers such as The New York Times had seen with the approach. The Economist launched a dedicated podcast subscription offering access to its podcast content exclusively, for example, while CNN began mulling a similar playbook.

Publishers explored what their suites of subscription offerings and tiers might look like as the benefits of this more fragmented approach became increasingly clear. These included:

• Sharper value propositions: Publishers found that focused products are typically easier to market and sell to specific audience segments. Products firmly oriented around solving simple problems or satisfying specific audience needs often resonate with some buyers more than those with complicated or vague value propositions.
• Lower barriers to entry: More targeted subscription products can typically be priced more attractively, lowering barriers to entry for audience members who may not be enticed by broader subscriptions and enabling publishers to monetize more of their audiences as a result. Individual products can be used as effective “on-ramps” from which broader subscriber relationships can be built over time.
• Downgrade options: As publishers hunt for effective ways to minimize churn and maintain paying relationships with subscribers, broader product arrays enable them to offer palatable downgrade options that aren’t purely oriented around price reductions – offering them a powerful way to keep subscribers in the fold.
• The bundle opportunity: Of course, part of the appeal of “unbundling” subscription features is the opportunity to rebundle them and market them to consumers as high-value cost-saving packages. NYT has once again led the charge here with its “All Access” bundle, which it’s now pinning its growth expectations on.

Regulatory scrutiny around cancelation practices intensified

To help maximize revenues, many publishers and media companies have employed aggressive retention techniques and cancellation policies deliberately designed to make ending subscriptions difficult.

Dark patterns, confusing cancellation flows, and forcing subscribers to call or chat with representatives may have proved effective for reducing churn, but such tactics are increasingly catching the eyes of regulators around the globe. Many are now proposing new regulations and legal requirements aimed squarely at subscription-based businesses which are designed to put greater control and autonomy in the hands of consumers.

In March, the U.S. Federal Trade Commission (FTC) proposed several significant updates to its rules regarding subscriptions and recurring payments, including a “click to cancel” provision that would require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. In France, a new decree has entered into force requiring that businesses allow consumers to cancel subscriptions and contracts online in three clicks or fewer. In the U.K., the Digital Markets, Competition and Consumers Bill is seeking to reform local laws to further protect consumers from practices including “subscription traps.”

As the regulatory environment tightens – and consumer support for greater transparency and control grows – publishers and media companies are now being forced to consider how to comply with various new legal requirements while minimizing potential impact on their subscription businesses. While spikes in churn may be inevitable, many are exploring measures designed to prevent a wave of cancellations or opportunistic attempts by subscribers to negotiate lower rates as new requirements go into effect. Others are coming to terms with the fact that consumers will increasingly dip in and out of subscriptions, and are putting mechanisms in place to make doing so on their terms as easy as possible.

Some publishers say they’re hopeful tighter regulation around cancellation practices might help grow subscription revenue in the long run. If consumers trust that they can easily cancel a subscription when desired, they might be more likely to subscribe in the first place, the thinking goes. Recent Toolkits research found that two-thirds of U.S. consumers say they would be more likely to subscribe to digital publications if the process of canceling subscriptions was easier, perhaps lending credence to that theory.