Are Cheap Subscriptions Okay After All?
By: Jacob Cohen Donnelly
Last December, I wrote about Daily Mail launching a paywall on a tiny percentage of its content—1% at the time. And I said:
If I have to make a prediction, in two years, we’ll be looking at MailOnline’s attempt at introducing a subscription business as a failure. I don’t believe the editorial strategy is linked to the business model.
We’re only 10 months into the publication’s experiment, so it’s possible that it still fails. But we’re beginning to get some data that shows that, perhaps, it’s working after all. According to Press Gazette:
Daily Mail editor-in-chief Ted Verity said: “The success of Mail+ is proof that readers are happy to pay for the kind of high-quality journalism the Mail has long been famous for.
“To hit 100,000 subscribers so quickly is a fantastic achievement and a huge testament to the brilliance of our journalists and the Mail+ team.
And if we do some math, 100,000 subscribers paying £1.99 is equal to £199,000 in revenue per month or $256,000. That’s a little over a $3 million run rate, which is not nothing. It’s also not all that much money. In 2023, Daily Mail’s owner, DMG Media generated £997 million in revenue, or $1.2 billion at the time. The consumer division accounted for about 63% of that or ~$763 million.
That means Daily Mail’s digital subscription is generating 0.39% of the consumer division’s revenue. On one hand, entirely unimpressive. On the other, it’s 10 months in. By the end of 2025—when I anticipated this being a totally failed exercise—this business could account for more than a couple of percentage points of revenue.
On the surface, that looks comically low. But there are a few things worth digging into here.
One is that Daily Mail is beginning to make tactical changes in how much of the content goes behind the paywall. When it launched, it gated 10 to 15 articles a day, which was only 1% of its daily publication. Now it’s up to 30 articles, which is 2%. It’s incremental, but a key driver of subscriptions is how often a reader actually sees the paywall. Move more behind the wall and you have a better chance of converting someone.
Another is that it begs the question: is a cheap subscription okay? I’ve always taken the stance that a cheap subscription as a way to get someone hooked is a bad strategy because the second you try to increase the price, you’re going to see a ton of churn take place. And Daily Mail will see that too since it’s planning to increase the price to £6.99 a month after the user’s first year expires.
There are two answers to this.
First, the question implies that there is a clearly defined cheap vs. normal price subscription. Determining what something should cost is as much a science as it is an art. Is £1.99 actually cheap for a product like this or is it a fair price?
Second, how rigid will Daily Mail be about that £6.99 price after the first year expires? If it opts to retain as many subscribers as possible rather than maximizing the full price, the introductory price may not matter.
For example, let’s assume that 50% of its audience decides it won’t pay £6.99. That means after the first year, it’ll lose 50,000 subscribers (for simple math). What it also means is that the other 50% wind up paying £6.99, which is just about £350,000 per month—up from £199,000.
But rather than churning the other 50%, what if you let them continue paying £1.99? Or, instead of a 3.5x increase in subscription price, you increase it to £2.49 per month. For those remaining 50,000, you’re now generating £124,500 per month—which still works out to over £1.5 million in revenue.
Combine those together and you’re looking at £5.7 million in subscription revenue on those 100,000 subscribers versus the current £2.4 million. Not bad. Still tiny in the grand scheme of things, but it is only 10 months in. And honestly, it may not get anyone to pay £6.99. But can it get everyone to pay £2.99? Or £3.99?
The number doesn’t really matter because Daily Mail is solving for a critical problem many publishers have.
As platforms start to pull back on the amount of traffic they send to publishers, increasing the LTV of your readers becomes incredibly important. As Daily Mail sees its traffic constrict, could we see it incrementally get tighter with the paywall to continue increasing those numbers? Theoretically, a £1.99 subscription is going to generate significantly more revenue from a reader than the nauseating ad experience ever could.
And so, we return to the above question: is a cheap subscription okay?
Imagine you’re the New York Post or The Sun, which we wrote about last week when covering News Corp’s earnings. New York Post, for example, has seen its traffic cut in half over the last nearly two years. It continues to trend down. At what point would it be better to be a smaller publication generating multiple dollars per month from readers than seeing the ad business continue to shrink?
Look at CNN, which introduced its subscription last month. It gets 150 million monthly users and is charging $3.99 for the subscription. If it converts 1% of its audience, that’s nearly $6 million in monthly revenue. Is that good enough?
There are two arguments here. One that I’ve heard is that there are only so many people willing to pay for content and so, the subscription should be priced much higher since those people aren’t as price sensitive. The argument makes sense, but what if the bigger issue is that the vast majority of people haven’t found the kind of content they want to pay for?
The other argument is that putting too much behind a paywall will inevitably hurt the advertising business. This is a very real concern. However, if traffic continues cratering for these publications, the ad business will suffer anyway. Better to disrupt yourself than be disrupted by someone else.
Who knows if Daily Mail will ever reach a point where it’s generating a meaningful percentage of its revenue from subscriptions. But hitting 100,000 subscribers—and likely generating a higher ARPU from those subs—isn’t something to look down on. But we’ll see how things are after the first price increase.
