Digital-only subscriptions to US local newspapers will overtake print subscriptions by at least 2027, according to a forecast from consultants Mather Economics. Strong growth in the digital customer base is welcome, but the report also warns lower price points for digital subscriptions have revenue implications.
- Mather’s quarterly subscription benchmarking report shows digital subscriptions account for about 21% of total paid subscriptions at local US newspapers, an annual increase of 32%. Digital only subscriptions will dominate by 2027 if this rate of growth continues, by 2024 if print declines speed up or online subscriptions exceed historical growth rates.
- The average monthly print subscription, priced at $29.71, is more than three times the average digital subscription at $9.49. The gap between introductory pricing is even greater – $3.48 a month for digital, compared with $16.95 for print.
- While growth is strong, the lower average price point for digital subscriptions could cause publishers problems. Mather reports that digital makes up less than 11% of the total circulation revenue for the newspapers that provided data.
The revenue shortfall is a challenge for local newspapers, but they can look elsewhere in the newspaper world for inspiration. Leading national titles in the US and UK are seeing strong success from reader revenue operations.
- The New York Times leads the field. It has nearly 8 million paid subscribers in total, 6.7 million digital only. It is on track to reach is 2025 goal of 10 paid subscribers, but growth has slowed recently. The paper has turned to non-news content like games and recipes to bolster its totals.
- This month the Guardian celebrates its 200th birthday. A dramatic three-year turnaround plan focused on reader contributions and has set the future course for the paper. Although print circulation, currently 100,000) is declining, The Guardian has more than 1 million paying readers and is now the sixth biggest news website in the world.
- The Telegraph, once seen as a stodgy establishment broadsheet, has put in place a digital subscriptions strategy that is delivering a growth rate of 18% per quarter. According to data from the FIPP Global Digital Subscription Snapshot 2021 Q1, it has almost 350,000 subscribers and has overtaken The Times in the subscription stakes.
Mather recommends that newspapers growing their subscription base should also develop strategies to raise prices on digital subscriptions to make up for print losses.
They also need to consider higher churn rates in digital, where weekly cancelation rates run at 0.85% compared with 0.66% in print. Readers are more likely to stick with a subscription that delivers content more frequently. This means daily editions have better retention rates than weekend-only content.
The report suggests that retention rates will improve further for publishers that encourage subscribers to make a daily habit of accessing their publications. Signing readers up to receive daily email newsletter or news alerts is one popular approach.
A recent report from paywall provider Piano echoes these findings. The ‘Subscription Performance Benchmark Report’ shows subscription growth among Piano’s clients at 58% last year. But it cautions publishers to pay attention to retention efforts, recommending strong onboarding practices and annual vs monthly subscriptions.
As subscriber-only access increasingly becomes the norm, readers may start looking for bundling deals that deliver the added value of multiple publications for a single fee. But publishers considering newsstand or bundle plays in place of developing their own subscription programmes should beware.
The recent failure of password-sharing service Subscribd to secure publisher approvals suggests this approach is unlikely to work for the time being. While individual publishers are aggressively pursuing their own subscription strategies, group deals will remain elusive.