Previously, we described how fostering organisational alignment and creating a culture of cross-functional collaboration can help publishers unlock the full potential of their digital subscription model. To continue on this topic, this article covers the third component of the seven-lever digital subscription framework: the print/digital relationship.
For many publishers, print circulation has become the single biggest revenue stream as print advertising continues to see major declines. For many publishers in North America, declining print volumes have been largely offset by increasing price on print subscriptions, but price increases cannot be sustained in perpetuity. Falling volumes will continue to put pressure on margins for the print business.
Consequently, publishers must consider the sustainability of the print business and begin preparing for how to best transition the current print business into a digital-centric one.
When evaluating the print/digital relationship, there are a few key questions that publishers should ask themselves:
- How does our print audience engage with digital products?
- Would we rather acquire a new print customer or a new digital subscriber today?
- What is the print vs. digital pricing strategy?
We’ll begin to explore some of these questions below.
How does our print audience engage with digital products?
Proactively managing the digital migration of print subscribers can allow publishers to maximise both short-term cash and long-term digital consumer market potential. However, this is often a challenge as these print subscribers have developed the habit of reading the print newspaper every morning and are often less likely to utilise digital news products.
Therefore, it is important to engage your print audience with digital products such as the e-edition and e-mail newsletters. These products, while digital, will have a familiar edition-based experience for the print subscriber while creating a bridge to becoming a fully activated digital subscriber.
So, how do publishers start to build digital engagement among stubborn print readers? Here are some strategies other publishers have used:
- Promote digital-only content in the print edition to encourage digital engagement.
- Automatically opt print subscribers in to newsletters and the e-edition publication.
- Create digital credentials for all print subscribers and run activation campaigns.
- Leverage edition-based newsletters that provide a self-contained reading experience likely to be enjoyed by typical print readers.
In addition to those strategies outlined above, some publishers have reduced a day of print frequency (i.e. digital-only Monday). Many publishers who employ this strategy for the purpose of reducing cost have seen the positive externality of increased digital engagement by their print audiences.
Many print subscribers are stubborn. Only as a last resort will they turn to digital. Removing a day of print can push those stubborn print subscribers to finally activate and engage in digital.
Would we rather acquire a new print customer or a new digital subscriber today?
Just a few years ago, most publishers could confidently answer that they preferred a print subscriber over a digital one. Not only do print subscribers pay more than digital subscribers, but building and maintaining print subscriber bases helped support print advertising revenue, which had previously been the single most important revenue stream for most publishers.
Today, that equation is rapidly changing. Print advertising was massively impacted by COVID-19, with the average publisher seeing 30% year-over-year revenue declines in 2020. Many publishers are seeing circulation volume declines in excess of 10% each year, causing fixed production and distribution costs to be spread across a smaller volume base. These factors significantly impact how publishers should think about the profitability of a print subscriber, particularly in comparison to digital subscribers, which generally are higher margin.
For many publishers, a print subscriber still remains more profitable and has higher contribution margin than a digital subscriber, but acquisition strategy in a subscription model cannot only consider profitability today. It must also consider profitability over the long-term.
If trends continue, will a print subscriber be more profitable than a digital subscriber next year? Or in two years? Publishers must consider the long term and model out the profitability over multiple years to inform acquisition strategy and marketing resource allocation today.
What is the print vs. digital pricing strategy?
Since the introduction of digital subscriptions, there has been a large discrepancy between the pricing of print and digital subscriptions. For most publishers, the content is largely the same in print as it is in digital, yet publishers have been hesitant to ask subscribers to pay just as much for digital as they do for print.
Forward-looking publishers are beginning to narrow that gap. In the last couple of years, monthly digital subscription average revenue per user (ARPU) is nearing US$10 for metro publishers in the United States, and best-in-class publishers have exceeded US$15 per month. Narrowing the gap in print vs. digital pricing is critical as publishers will be considering reduction in print frequency over the next few years.
Publishers today face the challenge of running profitable print businesses while at the same time planning for a digital future. Difficult decisions must be made around strategic focus and resourcing. But, publishers must take steps today to begin that digital transformation and prepare for the likely inevitable future of an all-digital world for news.
Considering the relationship between print and digital in terms of subscriber engagement, pricing, and profitability will enable your organisation to become more ready for a digital future.