A Subscription Business Is Not Just a Paywall; It’s a Complete Marketing Strategy

The pivot to paid has been interesting to watch over the past couple of years. Media companies have recognized that they should actually think about monetizing their relationship with the reader in a direct way.

While I hate the phrase DTC media, the fact that media companies have taken ownership over their monetization for the first time in a long time is good to see. In our wanton pursuit of fast scale, we forgot how important the customer actually is.

But the pivot to paid has been a good one. Publishers are recognizing that we need to own our relationship with the reader. In my conversations, I’ve noticed that people are thinking about this in an intelligent way.

However, there’s still a lot to learn. On Wednesday’s podcast with Bloomberg Media’s Julia Bezier, she explained how important it is to recognize what you are actually launching when you pivot to paid. She said:

We’re not launching a paywall. We’re launching a subscription business. A paywall is a toll booth. Please pay us some money. Great. Can you transact? Amazing. Transaction done. A subscription business means, can you actively continue to recruit and attract new members every month, acquire them. Can you retain the ones you have? Do you have the right email programs set up and push notification set up to make sure subscribers are getting value out of their subscription? We have spent a lot of time and effort in building out what I would call a 360 degree marketing apparatus in support of these efforts.”

This quote from Julia really resonates with me. I’ve spent a lot of time debating with people about what goes into building a subscription business. For too many of them, they think it’s just putting up a simple paywall.

That’s wrong.

I recall having a conversation with one developer and he said, “look, this is really easy. I can integrate with Stripe and we can have a subscription up on the site by the end of the week.”

That misses the entire point. Yes, I can start transacting very easily. Getting someone to put their credit card information is straight forward enough. We’ve been doing that for years now.

But what’s the strategy behind it? How will I operate the business? How can I experiment with stoppage rate, CTAs, pricing, etc.? How will I ensure that they stick around longer than one month? And most importantly, why should they subscribe?

That last question is critically important because too many publishers ignore it. They start the conversation with “we’re going to launch a subscription” rather than first asking the question, “why would our readers pay for what we offer?”

It begs the question… Should every publisher even have a paid strategy?

The answer is solidly no. Not every publisher should have a paid strategy because not every publisher provides enough value to justify charging. It’s a simple fact. Too much content on the internet is derivative.

I posed a question last month that I feel is really important to resurface. Would your readers miss you if your publication disappeared tomorrow? And in it, I said:

In all cases, these publications have differentiated themselves in such a way that what they publish actually matters. They have figured out what their audience actually needs and are then able to provide exactly that. And they do it by creating great content.

Whenever I talk to a publisher thinking about launching a subscription, the first things I ask is: what sets you apart from others in your industry? Most of the time, they don’t have a clear cut answer. They say something about the number of articles they publish or, to sound fancier, the “comprehensiveness of their coverage.”

Anyone that has built a successful subscription product knows that it’s not about the amount of content you put out. Instead, the gauge of a good subscription product is how impactful the content is to the reader irrespective of quantity.

One way to determine whether someone will subscribe is to ask if they can get it anywhere else for free. This has always been The Information’s strategy from the start. The editorial strategy there has always been to cover things that no one else is. If you want that information, you have to pay. When you’re the only game in town—aka a monopoly—you get to charge what you want.

But if you’re just a derivative of other publishers or it’s easy to find versions of what you publish on other sites, it’s unlikely people are going to pay.

Look at your content strategy. Can a potential reader get it anywhere else? If the answer is yes, your subscription strategy is going to struggle. If not, maybe you’re onto something.

Once we answer the question of why would a subscriber actually pay, we can then return to the conversation of managing a subscription business. And again, that’s not throwing up a paywall and then letting it run.

This brings me back to a second point that Julia made in the podcast, which is about the concept of an “active subscriber.”

What I love about active subscribers is it says people on any given day who are subscribed to your publication. That’s new users you acquire day one and users who have not yet churned. Why do I love that metric? Because it’s inclusive of both acquisition and retention. You can add a bunch of users, but if they all churn out after a one month free trial or low paying trial, you are not actually growing your long-term revenue. What active subscribers allows us to do is look at those two levers in terms of acquisition and retention and try to figure out on a month-to-month or quarter-to-quarter basis where we should be putting the most of our efforts to make sure we’re driving the most sustainable business.

Throwing up a paywall in its simplest form is only focusing on the acquisition component of the active subscriber. Yes, you can capture people and get them to give you a credit card. However, it does nothing for experimentation with different offers depending on source traffic, stoppage rates or other variables. But it at least covers part of the acquisition.

However, a paywall does nothing to address the second half of the active subscriber formula, which is retention. How is the publication actively keeping people engaged with the platform in an effort to reduce churn?

That’s a full-time job. For larger media companies, that’s a department’s job. It takes a lot of smart marketing to ensure that users are taking advantage of their subscription. At the core of your subscription strategy is the task of building habit. You are trying to get your subscribers trained on using your site for their informational needs so the thought of unsubscribing doesn’t enter their mind. I never think about cancelling my subscription to The New York Times.

Honestly, the work that goes into keeping people retained is more important than trying to acquire new customers. I had a boss once who said he didn’t like subscription businesses because they were like leaky buckets. He wasn’t wrong. But great retention marketing teams can plug a lot of those holes and make it far less leaky.

To make it personal, this is something Substack writers don’t really understand. So many writers only focus on the new subscriber number. How many new people have signed up this month? You can see that in the tools Substack has available. At its core, the technology is a blog + newsletter with Stripe integrated on the frontend.

But there is really no thought about retention. Substack lets you look at your subscribers and their last activity, but you can’t create a segment of unengaged readers and try to nurture them.

This isn’t a slight on Substack so much as recognition that the technology that they’re building has a lot more to accomplish.

But for every other media company that has more control of its user data, it’s important to recognize that the work does not stop when a user gives you their credit card.

To summarize, the strategy of a subscription business is so much more than getting people to pay. The important work comes before that.

It starts with the question of why someone should pay. It then moves into dual approaches on how you’re going to acquire people and then how you’ll actively engage those readers over months and, ideally, years.

Do that and your strategy will be rewarded with a healthy business. Otherwise, find other ways to monetize. Not everyone needs a subscription.