As part of The Globe and Mail’s Sophi team, I have the good fortune to meet publishers from all over the world who share with me their hopes and fears about subscription revenue.
A common source of dread is the spectre of “subscription fatigue” — the idea that consumers will have so many different subscriptions showing up on their credit card bills every month that, as a result, they would be disinclined to pay for news.
I believe subscription fatigue is a myth. Here’s why:
1. Different services serve different needs
We do subscribe to many services. But psychologically, we do not lump them together as “subscriptions.” Instead, we see meal kits as food, filling in the spot on the credit card bill that groceries used to occupy. We see Netflix as entertainment, filling the spot that theatre used to occupy. Similarly, news serves a different need entirely.
Behavioural economist Richard Thaler, who won a Nobel prize in 2017, has documented this as irrational behaviour that he called “mental accounting,” where we don’t treat different buckets of money as entirely fungible. And yet, that is how we operate. I wouldn’t give up my gym membership to accommodate my Spotify habit because they are two separate buckets in my head.
2. We each have a niche
Consumers will also look at the same bucket of money and be willing to spend on more than one service within it. For example, 57% of U.S. households subscribe to more than four streaming services. In fact, monthly customer spending on streaming platforms has nearly doubled since the spring of 2020 — i.e., even after pandemic lockdown restrictions were lifted.
Joshua Benton at the Nieman Lab at Harvard also flags this in the context of news in his thoughtful article about how The New York Times’ acquisition of the Athletic is not really a threat to local news because “different (news) outlets compete on different playing fields” and are not perfect substitutes for each other.
3. We have value
People have always been willing to pay for what they value. This has been true over the course of human history, whether it was a cow or an iPad that they were buying.
The global boom in digital news subscriptions that came with COVID-19 bore this out. We were providing readers with information on a poorly understood, swiftly spreading disease — and they were more than happy to pay us for it.
As news publishers, it is up to us to show readers content that is worth paying for and to make sure we surface content that is truly valuable to them and ask them to pay at the right time. This is, obviously, going to be different for each reader. What I value and am willing to pay for is generally not going to be the same content that my neighbour values.
It is true that it is hard for editors or a reverse-chronology-curated page to serve each reader separately and to show them what they truly value. There is no substitute for Machine Learning and Artificial Intelligence here — an algorithm that can accurately predict which reader will respond to which piece of content and serve it to them at the right time.
And it is true that no metered paywall or freemium model will ever get this right. A system that decides in real-time whether to ask a reader for an e-mail address or a credit card number or to let them read uninterrupted — and which learns from its mistakes if it makes the wrong call — is the best way to optimise this.
We have used both of these technologies at The Globe and Mail, with tremendous impact: We are on track to surpass 200,000 digital subscriptions this year.
Be a utility, rather than a nice-to-have service
Do you ever look at your credit card bill and think about disconnecting your water or electricity because you have so many other expenses?
Paying readers need to repeatedly see content that shows them the value of subscribing. An intelligent algorithm can get this right far better than an editor making educated guesses.
We have seen this at the Globe, where subscriber churn dropped 8% in our last fiscal year from the year earlier.