Today, I am debunking claims of a great subscription reversal and will report on innovations in AI-powered search that excite me as a consumer — and scare me as a publisher.

If you have questions or suggestions, e-mail me at greg.piechota@inma.org or meet me at the INMA Media Subscriptions Summit next week in New York.

News industry shift towards subscriptions as ad revenue declines

The slump in digital ad revenue prompted major news brands, such as Mail Online, to double down on subscriptions as a revenue stream.

In January, Mail Online launched a freemium paywall targeting its U.K. readers. The Mail runs one of the largest newspaper Web sites in the world, with nearly 200 million monthly users and 400 million monthly visits.

When I visited the Mail’s London newsroom last September, its editor and publisher Danny Groom said he saw the high share of direct visitors (48% per Similarweb) as a sign of their brand preference and loyalty, and this posed an opportunity for a successful subscription.

In the past decade, this U.K.-based mid-market tabloid focused on digital advertising as it expanded internationally and conquered the U.S. market. Last year though, its owner DMGT saw its digital advertising revenue falling 3% year-on-year, per its annual accounts.

Similarly to other Western markets, the U.K. news industry is losing ground in digital advertising. 

• Per AA/WARC estimates, the U.K. ad market grew last year 6%, and the total online display spend grew 13%. 

• But publishers did not see their revenue grow — national U.K. news brands lost nearly 4%, and regional brands lost more than 5%.

History repeats in … pivots: The past economic downturns and ad revenue plunges also saw a rise in subscription models. For example, The New York Times launched its now wildly successful paywall in the aftermath of the 2009 recession.

While a few smaller or niche brands like Quartz, TechCrunch, or Time have abandoned paywalls in the past year due to individual circumstances, claims of a great subscription reversal are unsubstantiated. 

Data and industry research suggest the news industry is already making most of the money from readers, betting its future on it, and is doubling down:

• According to PwC and WAN-IFRA, newspapers globally made US$34 billion from advertising last year but US$49 billion from circulation (both print and digital). 

• While print revenue streams are declining, publishers expect their digital consumer revenues to grow two to five times faster than digital ads over the next three years, depending on the world’s region, per FT Strategies, Google, and an INMA survey.

• Across 33 major markets, the proportion of top online news outlets charging for content has increased substantially, from 26% in 2018 to 41% in 2022, according to my study for INMA.

• In the most recent survey by Oxford’s Reuters Institute, a higher proportion of news executives said subscriptions were important (a rise from 74% in 2020 to 80% in 2024) than advertising (a decline from 81% in 2020 to 72% in 2024).

Untapped market potential: Per INMA Benchmarks, by the end of last year, a median national news brand sold digital-only subscriptions to only 0.9% of households in their market (a median regional brand penetrated 2%).

The national champions often fared better — a success they attributed to investments in journalism, destination branding, and continually improving the user experience: 

• Look at France’s Le Monde and Italy’s Corriere della Sera — each boasted 600,000 digital subscriptions, penetrating 1.9% and 2.3% households in their respective markets. 

• In Slovakia, Dennik N topped 72,000 subscriptions or 3.5% of households!

• Relative to population, these figures are far higher than the market penetration rate achieved even by The New York Times: With 9.7 million digital-only subscribers, the world’s largest news subscription brand penetrated only 0.8% U.S. households.

No wonder The Times publisher A.G. Sulzberger believes the news business is thinking too small. 

• At its peak in the 1970s and 1980s, print newspaper circulation in the U.S. alone topped 63 million. 

• Add Sunday newspapers, magazines, and you can estimate the historical demand at 150 million to 200 million. 

• Per Sulzberger, all digital news subscriptions in the U.S. today add up to just 30 million to 40 million — fewer than the number of subscribers to the video streaming service Paramount+ (63 million).

"I don’t think that our industry can or should accept that we are going to collectively be smaller than an eighth-grade streamer," The Times publisher told Oxford’s Reuters Institute. 

Next week, 250+ subscription innovators will meet at the INMA Media Subscriptions Summit in New York. Click here to join the debate.

The dawn of personalised Web pages powered by AI search

New AI-powered browsers and search engines flip the script on how we find and consume online content. It’s not just about links anymore, nor AI summaries. Arc Search creates bespoke Web sites based on user queries.

Arc Search is an iPhone browser with an embedded search engine developed by The Browser Company in the United States.

1. This morning I dictated: “What’s news in the U.K.?” and touched the button “Browse for me.”

2. Arc Search scanned BBC, Sky, The Guardian, and some other Web sites.

3. It showed a personalised Web page that summarised the headlines and down the page — the key points of the top stories.

The feature “Browse for me” has become an early users’ favourite: “epic,” “brought back the magic into search,” “future of browsing.” 

Why it matters: This leap signifies a move towards highly customised experience, tailored not just to what you're looking for but also how you like it presented. 

Many tech companies innovate with generative search experiences: 

• Microsoft Copilot, Perplexity AI, and others browse multiple sites and summarise results, but their interface is more similar to a chat than browsing the Web.

• Microsoft Bing user also needs to click for a Copilot’s answer; in default, she gets a traditional list of links.

• Google is experimenting with combining the two — an AI-generated summary and links — although it patented last fall a bolder experience: the summary is served by default, and the user needs to click to expand the links.

• At the premiere of his new chatbot Gemini, Google CEO Sundar Pichai told Wired that he wanted to push “the boundaries of what’s possible.” 

What will Google do: What he decides matters most, as Google enjoyed 91% share in the search market worldwide in January, per StatCounter. Microsoft’s Bing had 3% share. Startups like Perplexity and Arc Search hid in the Other browsers’ share of 0.05%.

Search is a top referrer for online traffic to news Web sites worldwide. According to Chartbeat, depending on the world’s region, between 17% and 41% of all pageviews on news sites in 4Q 2023 came from search — and primarily from Google.

Google estimated an AI-generated answer cost 10 times more than a standard keyword search, and that was slowing down the release. But the costs are falling, and the user demand and competitors’ innovations pressure the leader.

• Sending less traffic to Web sites might put at risk $31 billion in revenue that Google made in 2023 from its ad network on publishers’ Web sites. 

• But Google might wish to prioritise protecting US$175 billion that it made from its search engine, per company reports. 

The chain reaction: Last June, I estimated the risks for publishers from the AI search revolution, expecting a couple of years for these risks to materialise due to high costs, concerns around accuracy of AI answers, and unknown demand. 

A year later, concerns around accuracy haven’t disappeared, but surveys showed that consumers wanted AI search. Tech companies noticed. Per the Information, after observing how people used ChatGPT, OpenAI decided to develop its own Web search product.

Here’s how a chain reaction unfolds across the digital ecosystem, with cascading effects on all stakeholders.

• Consumers want personalised content, and most get their news through aggregators already. Thanks to advances in Generative AI, the vision of personal media is finally technically feasible. 

• This inspires innovation in the value chain — device manufacturers, operating system providers, Web browsers, search engines, and AI developers. 

• Many tech companies already are vertically integrated, e.g., Apple, Google, and Microsoft do all or most of the jobs in the value chain. They can deliver what consumers want. 

• More integration is likely: AI developers and Web browsers want to become search engines (OpenAI, Arc Search) so they can differentiate and disrupt slower or less innovative incumbents.

• All these companies aggregate audiences and content. For them, publishers are complements, and most online content is a commodity. 

Implications for the media industry: The tech companies have enough market power to impose rules on publishers today. AI is making the Big Tech’s grip on the media even stronger, wrote Oxford researchers Felix Simon and Luisa Isaza-Ibarra in a new report.

The AI and search companies can sign licensing deals with selected publishers, but they don’t need deals with all of them. Some publishers — e.g., branded media, public, state-owned, or non-profit — might not mind getting scrapped or summarised, as it’s irrelevant to their funding model.

Decreased direct traffic and ad revenue, alongside the pressure on subscription funnels, necessitate a strategic rethink of publishers that need a sustainable revenue model to fund themselves.

Publishers might consider defensive actions like blocking AI and search bots, or pivoting to closed platforms and proprietary apps to protect their work and revenue streams. 

They might also fight for their copyrights in courts or ask regulators and lawmakers for protection against the market failure and abuse, as Daily Maverick CEO Styli Charalambous suggested in his opinion piece for INMA. 

What is the future of online publishing in the age of AI? What risks and opportunities do you see? E-mail me at greg.piechota@inma.org.

About this newsletter

Today’s newsletter is written by Grzegorz “Greg” Piechota, INMA’s researcher-in-residence and lead for the Readers First Initiative. In his newsletters, Greg shares original research, analysis, and best practices in growing reader revenue.

E-mail Greg at greg.piechota@inma.org, message him on Slack, or meet in person at the INMA Media Subscriptions Summit in New York in February.

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