This article was originally published in What’s New In Publishing by John Phillips, GM of EMEA, Zuora.
Over the last few weeks, we’ve seen the launch of two promising entertainment options – Apple TV+ and Disney+. Conventional wisdom (and most ‘experts’) will say that Disney will win this battle, but I disagree. On the surface, Disney’s long-standing dominance in the entertainment industry and its vast library of content suggests that it will easily overcome any challenger. But, here’s the thing – while content remains important, the real measure of success in the Subscription Economy is strong subscriber relationships. And on this front, Apple is miles ahead of Disney.
Today’s media companies live or die by usage and engagement. Apple has roughly a billion registered users. The average iPhone user unlocks their phone eighty times a day and interacts with Apple in so many other ways (iPad, Macs, Apple TV, etc). Contrast that with Disney. How many registered users does Disney have? How many times have you interacted with Disney today? Does Disney have the same knowledge and data about its customers as Apple does? The race isn’t even close.
Publishers understand direct customer relationships
Unlike newcomer Disney, the publishing industry has long made a success out of establishing and developing direct customer relationships. Being one of the first sectors to adopt the subscription business model, publishers have always understood the value of providing engaging experiences to their readers. Look no further than the success of the Financial Times, whose business is so successful that it is now sharing its subscription learnings with the world via FT Strategies.
While the switch from print to digital took some time, today’s publishers are wasting no time in embracing new technologies to meet their readers where they are and engage with them on any and every device possible.
In the UK alone, eMarketer estimates that adults will spend 5 hours and 16 minutes (5:16) on digital media consumption by the end of this year, a 13-minute increase from last year. And more than three hours of this is expected to be on mobiles. As a result, many publishers are not only ensuring that their content is built for these new ways of consuming content, but are also looking to diversify their offerings.
The Guardian which is known for its super-successful membership model recently launched a new app called “Daily” to cater to its digital subscribers. The app “combines the user experience and design of a digitally native product with the best of a newspaper experience.” Another great example is The Economist which is experimenting with YouTube videos designed to drive new subscribers back to its site. I believe that even new technologies such as AR and VR will help publishers connect more closely with their readers and offer unique experiences.
The lesson here? Investing in meaningful innovation to enhance the reader experience is critical to strengthening subscriber relationships. And publishers understand this.
Subscription business models drive growth
Putting readers’ preferences and interests first should be core to any publisher’s subscription strategy for a simple business reason – it pays off. Research shows that publishers taking advantage of a subscription business model are outperforming the Publisher’s Weekly Stock Index sales growth by more than 2x. New research from Digiday of more than 100 media businesses in the US and UK, shows that more than half of them say the biggest contributor to growth will be subscriptions, as revenue diversification beyond advertising ramps up.
With European privacy laws such as GDPR and the forthcoming ePrivacy regulation expected to negatively impact ad revenue, publishers will do well to focus on subscription business models as a way to increase customer loyalty and secure new forms of recurring revenue. A recent study by INMA revealed that acquiring a new customer is up to 25% more expensive than retaining an existing one. This makes it all the more critical for publishers to focus their efforts on strengthening existing subscriber relationships.
Succeeding in the Subscription Economy also means having the business flexibility to try new things and to iterate quickly on offerings as subscriber needs or market conditions change. Operationally speaking, this could range from offering a new service for mobile readers, creating new pricing models, or offering new payment methods.
A great example of a company strategically experimenting with pricing flexibility is The Financial Times. The newspaper dropped its paywall over the Brexit weekend in 2016 for all news related to the referendum, leveraged subscription analytics to test price points and offers in real-time, and saw a 600 percent surge in digital subscription sales (compared to the average weekend).
At the end of the day, successful publishers are ones that understand the evolving needs of their readers. Delivering a personalized, seamless, and flexible content experience is the only way to compete in the new age of publishing. Those who innovate and continually evolve their offerings will ultimately win out, as readers will reward publishers with loyalty and a predictable stream of subscription revenue.
I’m betting that the future of publishing is subscriptions.