Putting subscription slowdowns in context

Precarious economic conditions are making this a tricky year for publishers. Consumers and businesses have reined in their spending against a backdrop of ongoing inflation, employment uncertainty, and an energy crisis in Europe that looks increasingly likely to cause major repercussions globally.

It should come as little surprise, therefore, that many publishers have seen slowdowns in subscriber growth over the past 12 months. Converting new subscribers has become increasingly challenging as spending habits shift, and some publishers have seen their subscriber bases leveling off – or contracting – as a result.

Slowing subscriber growth cannot be interpreted as direct evidence that subscription models are flawed or running up against their limits, however. It’s no secret that publishers are facing significant revenue headwinds, but those extend well beyond subscriptions to other revenue streams. Context matters, and examining subscription products and businesses in a vacuum makes little sense in an environment where publishers are being forced to fight harder for any dollar they can get their hands on. 

The majority of publishers I speak with continue to report softening demand from advertisers and sponsors, for example, and advertisers are demanding more bang for their buck in terms of campaign performance which is eating away at publishers’ margins. Meanwhile, commerce revenues have suffered as consumers spend more judiciously, and despite showing promise over the past few months, most events businesses have yet to rebound to anywhere near pre-pandemic levels.

In that broader context, flat is the new up as far as some publishers are concerned. Subscriber growth might be slowing, but subscription revenue is proving relatively well-insulated as other revenue streams and business lines slow or become more costly and cumbersome to operate. Some publishers say the availability of recurring subscriber revenue has helped stabilize their businesses during periods when revenue from other sources has proved far more volatile.

I don’t consider myself a subscriptions evangelist by any means, and our role at Toolkits is to help publishers succeed with subscription products and businesses – not to advocate for their adoption. In fact, we frequently advise publishers to steer clear of subscriptions in instances where they simply don’t have the content, audiences or products to support them. 

And as far as the ongoing viability of subscription models is concerned, there are of course longer-term trends and dynamics that publishers are keeping an eye on. As they push beyond their most loyal readers and audience members, incremental conversions inevitably become harder, for example. Meanwhile, I suspect many consumers are committing to a small selection of products after a period of shopping around and trialing a wide range of options at cheap introductory rates. And of course, some publishers have simply failed to deliver content and products worth paying for on an ongoing basis.

Nevertheless, “subscriptions are up” or “subscriptions are down” observations without broader context or meaningful points of reference have limited use. 

Robust data and benchmarking information around subscriptions are frustratingly difficult to come by, and each publisher and audience sees different dynamics to the next. But publishers looking to understand how best to build sustainable long-term businesses should take a nuanced view of how subscription products and businesses are performing in relation to other revenue sources and models.