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  • Writer's pictureBart Melton

Subscriptions aren't the great savior!



In the last year or two, we have seen more and more digital publications move more of the content behind subscription paywalls. We have also seen the rise of the subscription newsletter model. Overall, the one bright spot in earnings for publications has been the rise of subscriptions over the last year while other revenue streams, particularly ad-based revenue, has continued to drop. I hate to be the bearer of bad news, but subscriptions aren't going to save the publishing industry or create a "creator middle class". Sure, some companies and individuals are doing very well, but most are barely getting a blip on the radar.

Here is the simple truth. The vast majority of people cannot afford 100 subscriptions per month. The vast majority of people don't have $500-1000 extra money each month to pay for subscriptions. The vast majority of people aren't going to budget $50 a month to pay for online subscriptions.


In reality most people don't get enough value from any single website to justify a subscription in the first place. People discover their content from social media. They don't go to a single site and read every article anymore. They might read 5 articles from a site in an entire month. Do you think they are going to pay $15 or even $5 every month for that? What we will end up with is the 99% and everyone else. People have a very limited amount of money they are willing to spend on content each month. The vast majority of that money is going to go to the largest institutions, which people use the most, and to a handful of industry related newsletters. Everyone else is going to be left fighting for crumbs. The move to a completely subscription based industry also opens up the qwandry of information becoming a walled garden that is only accessible to the wealthy. That is bad for society and that is bad for the industry. Smaller outlets won't fare any better in that situation. The publishing industry needs to get ahead of the curve for once. We have been hearing the hand wringing and watching the consolidation and collapse of the publishing industry for 2 decades because they didn't know how to adjust to people's changing behaviors. The subscription model is where the industry should have gone between 1995-2005. During that time, people did go to a handful of sites to get their daily content. Instead, the industry locked in the "free" (ad-based) model, which never paid enough and has (appropriately) gotten a bad reputation over the last 2 decades.


The publishing industry has cornered itself. Ad revenues continue to decline because the more people learn about how ads work, the more revolted they are. Banner blindness and ad-blockers largely define the industry. On the other hand, people have been conditioned to expect content to be "free". Now the industry wants people to go back to the subscription model, which defined the world of physical publishing, when the method of distribution, social media, no longer supports it. It's not going to work. If a publishing business isn't named The New York Times, then the business in trouble. Ad revenue will continue to drop. Adpocalypse is coming in 2022 when browser makers turn off 3rd party cookies by default. On top of that, ad-blockers are starting to have hockey stick shaped growth because people are appalled by the way the industry works. Subscriptions are not going to rescue the publishing and content industries. Businesses might see a modest uptick in subscribers, but it is not going to be enough to sustain. Subscriptions will ultimately lead to a downward spiral. Not enough people can afford subscriptions to sustain the business. Subscription prices will be forced to go up. Fewer people will be able to afford them. Repeat. The vultures are circling. Whether it is private equity groups looking to stripmine the operation before shutting it down, or it is one of the giant media conglomerates looking to add to their portfolio, if publishers look up, someone is licking their chops at the site of their business. However, there is good news from the recent uptick in subscriptions. It means that people are willing to pay for content. The average person just cannot afford to pay for 100 subscriptions and they likely don't get enough value from most sites to justify a subscription anyway. If businesses give people an option to give them money for the specific pieces of content that they want, at a price that anyone can afford, people will pay. Yes, there will be hand wringing and complaining because the publishing industry has conditioned people to expect "free" for twenty five years. People will get over it and get over it quickly, as long as the process is fast and easy, and the price is trivial. People do understand that publishing is business and businesses have to make money. People have chased the dragon of micropayments for content for going on 25 years now. If there was ever a time to make it happen, it is now. All of the forces of the market are converging on this reality. 1) Ad revenues continue to decline and the 3rd party cookie deadline is looming large in less than a year. 2) People are increasingly conscious of their online privacy. Going ad-free gives people an additional incentive to "buy in" to the idea of paying content. 3) After decades of expecting "free" people are more willing to pay for content than in the past, as we see from the increase in subscriptions. Micropayments pay orders of magnitude better than ads do. At the same time, everyone can afford them. Typically ads pay $1 to $3 per 1000 users with ads in text based content typically being on the low end of that spectrum. Micropayments pay $10 per 1000 users for every $0.01 charged. Charging $0.05 translates to $50 per 1000 users. From a user's perspective, $0.05 is trivial, everyone can afford it. If a user consumes 10 pieces of content in a day at $0.05, that is only $0.50 per day, $15 per month. On the other hand, $15 is what, maybe 1-5 subscriptions? Businesses will have at least 50x as many users who will pay $0.05 for exactly what they want than they will have users who subscribe. There is a bonus too. Businesses can have both subscriptions and pay-per-content options. Pay-per-content micropayments are the future of content. In countries, such as India, micropayments for content are already standard features for media outlets. The model does work. For the first time in 20+ years, the publishing industry can be forward looking and adapt to how users actually consume content, or the industry can continue down it's current course towards an inevitable end. Which will it be?

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