Publishers double down on subscriptions as broader challenges mount

Major publishers say they’re stepping up their focus on subscriptions as a core revenue driver as monetizing their audiences via other means – such as advertising and commerce – becomes more challenging. Many believe robust subscription revenue is becoming increasingly important for maintaining viable businesses as the media landscape shifts quickly around them.

Toolkits asked senior executives from 28 individual publishers how focused their companies are on building subscription revenue now compared with last year. Seventeen said their focus has increased, 11 said it’s about the same as it was 12 months ago, and none said their focus on subscriptions has decreased. All of the companies currently operate a subscription business, even if they didn’t last year.

Responses were sourced from the Toolkits Executive Circle, a panel of carefully selected executives representing over 50 major publishers who contribute sentiments and perspectives on key industry themes and issues.

“We’re even more focused [than we were a year ago]” said a senior revenue executive for a major news publisher. Other respondents noted that their companies’ perspectives on subscription revenue have not changed because it was already their primary revenue focus a year ago. “Subscription revenue was our priority then and it’s still our priority now,” one said.

The findings imply that publishers reversing course on subscriptions remain in the minority, and there’s little evidence at this point to suggest a broad “subscription reversal” is underway among publishers as some observers have suggested. It appears publishers abandoning subscription efforts are a small (and perhaps vocal) minority, and their businesses could be facing fundamental challenges that aren’t directly related to their monetization approaches anyway.

Challenges mount

Publishers’ growing focus on subscription revenue is unsurprising given the mounting challenges facing their businesses generally, and indirect revenue streams specifically.

Traffic is declining for many publishers, which typically has a direct negative impact on revenue from advertising and commerce. Platforms continue to refer less traffic to publishers’ properties, and the rise of OpenAI and Google’s AI-driven search results has some bracing for even sharper declines in the months and years ahead. Reductions in traffic impact all aspects of publishers’ businesses, of course, but subscription and other direct audience revenue is typically more insulated from fluctuations in topline traffic and pageviews, publishers say.

Generating advertising revenue from their existing traffic isn’t getting any easier, particularly for publishers focused on news and politics. Economic factors play a part, but the systemic challenges run much deeper: Competition for display ad dollars is intensifying thanks to an oversupply of inventory, and publishers are running out of space on their pages to squeeze more ads. Major advertisers are displaying little interest in appearing next to news or potentially polarizing content, and continue to shift budgets toward major technology companies, streaming platforms, and other environments they deem more “brand safe.” A busy news year might help prop up revenue in 2024, but some publishers worry interest from both audiences and advertisers could dry up in 2025. 

The most viable model 

Debates about the merits and limitations of subscription models for publishers continue in some corners of the internet, but publishers with meaningful reader revenue are currently faring better than those without. 

Subscription models haven’t magically transformed publishers’ fortunes, but there’s a growing belief among many publishers that strong subscription revenue will be crucial for maintaining viable businesses as the media landscape continues to shift quickly around them. Current examples include the rise of generative artificial intelligence, significant alterations to online advertising infrastructure driven by the deprecation of the third-party cookie, and changing consumer expectations around privacy and advertising more generally.

In a world where so much is outside of publishers’ control, focusing on building direct paying relationships with audiences might at least enable them to retain some influence over their destiny, the thinking goes. Speaking at an event in London last week, for example, Wall Street Journal editor-in-chief Emma Tucker emphasized that the publisher was focusing on what it can control rather than worrying about the impact of AI or the whims of major platforms.

“It’s that focus on the relationship you have with your readers and do your best within those confines… The key for us is our subscription model and making sure we’re giving people original, distinctive, quality journalism that they can trust,” she said. That rationale is also why companies such as The Financial Times are actively reorienting their entire businesses around direct reader revenue. 

Paywalls continue to draw criticism from some circles – particularly regarding the effect that limiting access to news could have on democracy – but it’s becoming increasingly difficult to see how publishers might operate sustainably in the years ahead without a meaningful subscription element to their businesses. News publishers cannot “protect democracy” if they don’t exist.

DMG Media chief executive Rich Caccappolo suggested last week that paywalls are “dangerous for democracy”, but it’s notable that Mail Online continues to expand its own subscription offering. Caccappolo acknowledged that publishers currently have little alternative as the media landscape becomes increasingly inhospitable. “Publishers advertisers, agencies, regulators, Google, etc – need to realize that is at risk and that a lot of publishers are going to be challenged unless things change,” he told Press Gazette. 

Advertising’s changing role

Advertising will remain an important part of publishers’ businesses as they look to diversify their revenue as much as possible – particularly as their ability to leverage first-party data and logged-in subscriber bases become more sophisticated. But as emphasis on subscriptions and direct audience revenue grows, the relationship between advertising and subscriptions will continue to evolve.

One publisher executive said the roles of advertising and subscriptions had “flipped” in recent years. Subscriptions were initially expected to “fit around” the company’s advertising and sponsorship business, but in the past twelve months that balance has shifted, they said. The company is now focused on how it can drive subscription revenue first and foremost, and how advertising can “augment” its business rather than drive it.

That mix is becoming increasingly common for publishers that have placed subscription revenue firmly at the core of their models: subscriptions often contribute around half of their revenue, with advertising, licensing, events and other sources contributing the rest.

The rise of AI licensing

For some publishers, a renewed commitment to subscriptions is coinciding with a growing emphasis on content licensing – particularly as they look toward a future dominated by large AI platforms.

As more publishers strike content licensing deals with AI companies, this could give rise to a model where casual readership is monetized primarily on third-party platforms, and publishers focus their efforts instead on monetizing their most engaged audiences via subscriptions, events, and other products sold directly to audiences.

In that scenario, publishers with both healthy licensing arrangements and robust subscription businesses may feel they’re relatively well-positioned to capitalize as AI platforms continue to gain traction. But those without could find themselves squeezed from both sides as their distribution dries up and generating advertising revenue becomes increasingly difficult.

Evolving approaches

Publishers will continue to adjust and evolve their subscription approaches to ensure they’re extracting as much value as possible from their audiences in the years ahead. For some, that might mean experimenting with dynamic paywalls, micropayments, flexible subscription options, and even letting users choose between subscribing or being subjected to a heavier advertising load. Some will conclude that portions of their content will be more successfully monetized or leveraged outside of a paywall. 

As publishers continue to adapt to the world around them, conversations about “balancing” different revenue lines are quickly evolving into ones focused on optimizing overall revenue instead. “Total revenue optimization” approaches will increasingly seek to understand and optimize revenue generation across a range of sources including subscriptions, advertising, e-commerce, licensing, events, and more, to maximize publishers’ overall revenue and ultimately squeeze as much revenue from individual audience members as possible.

But as they continue to tweak and optimize their models, it’s clear that many major publishers are continuing to reorient their businesses to place subscriptions and other reader revenue sources at their centers.