One of the things that’s defined the last decade in the tech and media worlds is the rise of content subscriptions. We’re talking everything from news paywalls to substack to streaming services to premium versions of your favorite social apps. But has this gone overboard? Are we seeing a backlash?
Before answering those questions, what’s behind the rise in subscriptions? There are several but the overarching reason we’ve examined is revenue diversification. As the advertising environment is increasingly challenged (e.g., privacy, economy, oversupply), subscription revenue can cover the gap.
Meanwhile, we’re also seeing the residual effects of the cord-cutting movement of the past 15 years. As the cable bundle is abandoned in favor of a la carte apps, there’s a sort of re-bundling where consumers cobble together a customized Netflix/Max/Prime/Hulu/Peacock/YouTubeTV entertainment Voltron.
But though this approach offers choice and customization – versus 200 cable channels you don’t care about – it can get expensive. The all-in cost of all those streaming apps listed above can approach or even exceed the dreaded cable bill that incited the cord-cutting movement in the first place.
The Pendulum
That brings us back to the potential backlash underway. We’re seeing evidence that the pendulum could be building momentum in the other direction. For example, though diversification makes sense on paper, consumers have spoken… and only wealthy individuals seem to prefer paid content over ad support.
This mostly comes down to cost, amplified in times of high interest rates and inflation. But it’s also a practical headache to manage separate fees and billing cycles for all those paid social apps, streaming apps, and premium news subscriptions. Paid apps have emerged just to manage your paid apps.
Add it all together and media companies are beginning to ingest some softened demand signals and pare back a bit. For example, TechCrunch just killed its TC+ subscription product. This comes down to not just disappointing adoption but a classic cost-benefit analysis, with a dash of opportunity cost.
In other words, paid subscriptions are capital intensive, pulling resources away from ad-supported content. To put that into ad-economy terms, audiences are much larger without a paywall, and therefore monetizable through ad support. So you have to choose either path, as one can weaken the other.
Examining the Evidence
Of course, there are exceptions. We’ve seen subscription models thrive among premium products. In other words, subscriptions and commodities don’t mix. And most of the digital mediasphere is commoditized. Notable exceptions include the Wall Street Journal, the Economist, and the New Yorker.
On the other side of the coin, where is evidence of a subscription reckoning playing out? As we’ve started to detect this trend, our radar has been up, so we’ve collected a few examples (thanks Axios for several examples). We’ll leave you with that list, and continue watching to see if this is a trend or a blip…
- TechCrunch is killing TC+ as noted, refocusing on ad-supported content with maximum eyeballs.
- Time removed its digital paywall altogether, in favor of larger audiences to monetize through ads.
- The Washington Post is considering tiered subscriptions to accommodate a range of personas.
- The Atlantic (though it’s premium as noted) is likewise shifting to a tiered subscription model.
- Several streaming apps including Netflix and Disney+ have launched cheaper tiers with ads.
- Spotify has killed paywalls for some podcasts in favor of maximum listeners and ad monetization.
- Gannett has kept its paywall up but lessened the quantity of articles that sit behind it.
- The Chicago Sun-Times dropped its online paywall.
- Quartz also dropped its paywall last year.
- Substack is piloting a new program that helps creators find and manage advertisers.
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More to come as this list develops…
