P’s 2019 Global Digital Subscription Snapshot Report gives an overview of publishers who have been successful in growing their digital subscriptions into a significant revenue stream. It reveals how they are doubling down on paywall content and technology as they focus on digital subscriptions as their key revenue driver.

Growing confidence in the paywall model

Condé Nast announced earlier this year that it would move all its titles and content behind a dynamic paywall – and it has been successful with over 167,000 digital-only subscribers.

Its iconic title New Yorker Magazine shows clearly that consumers will pay for high quality and original content. While figures have not been shared, FIPP’s report states, “The company seems to now have enough confidence in their model to put every single one of their brands behind their dynamic paywall.”

Of course, the biggest success story in digital subscriptions is The New York Times. The publisher added 223,000 subscribers in the first quarter of 2019. According to the latest figures, it has over 4.5M subscribers of which 3.5M are digital-only. Its digital revenue crossed $700M in 2018 and is expected to reach $800M in 2020. The Times is now looking at reaching 10M digital subscribers by 2025.

The paywall narrative is positive in Europe as well – German publishers are doing especially well with Zeit recording a 123% growth last year, reaching 100,000 digital subscribers. Others including Süddeutsche Zeitung and Der Spiegel have seen 42% and 50% increase in subscribers. German market leader Axel Springer’s titles WeltPlus and BildPlus together have over 500,000 digital subscribers.

The growing optimism about, and confidence in, the potential of reader revenue models delivered by paywalls, is not restricted to the market leaders highlighted above. According to Reuters, more than half of publishers identified subscriptions as their primary revenue focus for the next year.

FIPP’s 2019 Global Digital Subscription Snapshot Report

As many publishers focus on making digital subscriptions their key revenue driver moving forward, here are the key emerging trends outlined in the FIPP report.

Local sports is becoming a subscription driver

Many publishers have found that local sports coverage attracts passionate and engaged readers. It is emerging as an increasingly lucrative subscription driver. The Athletic is one of the most prominent publishers working in this space. According to the report, it has attracted over 100,000 subscribers.

Topic Hunters are highly interested in one or two certain subjects—such as local politics or local college or high school sports—and this interest was a major motivation for them to subscribe. The most frequently followed topics by Topic Hunters are local politics (53%), national politics (33%), college or high school sports (26%), and business and the economy (21%).

2018 American Press Institute survey, Paths to Subscription: Why recent subscribers chose to pay for news

The Athletic’s success has inspired other publishers including DK Pittsburgh Sports, The Capitol Sports, and Hookem.com. All of them have a strong focus on local teams in a limited number of sports.

According to FIPP, “In doing so, they are feeding moderately sized fanbases with a depth of coverage not available elsewhere, and are building up a dedicated following in the process.”

Those who subscribe to sports news also show a high propensity to renew. Alex Mather, The Athletic’s Co-founder says his publication’s renewal rates are above 90%.

Moreover, local sports coverage is not restricted by geography as interest in a hometown team persists even after someone moves away. For example, according to Digiday, 48% of DK Pittsburgh Sports’ subscriber base lives outside western Pennsylvania.

Even local and regional newspaper groups have started improving local sports coverage as a potential subscription driver. Regional chain McClatchy offers lower-priced unlimited sports subscriptions to draw in subscribers. And recently, The Telegraph UK paywalled their rugby content along with politics and business.

The sports-only cohort is pretty large and they engage at a pretty high rate. But they weren’t ready to commit to the full subscription. We’ve got built-in relationships. And it’s cut, paste, repeat in many of these markets.

Grant Belaire, Head of Digital Audience at McClatchy

Dynamic paywalls are increasingly popular

As publishers restrict the amount of free content, they are using improved paywall technologies to customize their paywalls according to readers’ habits. They are often relying on dynamic or intelligent paywalls powered by artificial intelligence.

These paywalls restrict content according to readers’ behavior. For example, a reader who has shown a preference for a specific topic, say health, will hit a paywall earlier when looking for health articles. 

Dynamic paywalls also enable publishers to quantify their readers’ propensity to subscribe. The Wall Street Journal spent four years developing its intelligent paywall which measures reader activity across 60 variables. These variables include frequency, recency, depth of read, preferred content types and favored devices.

The Journal’s Analytics Manager, John Wiley told the Drum that a dynamic paywall, “Allows you to pick the threshold based on past patterns of engagement. If there is a certain type of reader who will most likely convert on their fourth visit and another type who most likely converts on the seventh, the model will reflect that.”

The 200-year old Swiss newspaper, Neue Zürcher Zeitung (NZZ) has also seen considerable success with dynamic paywalls. According to the publisher, it’s conversion rate grew five-fold over the past year with the help of a dynamic paywall that targeted subscribers when they were high on the propensity to subscribe scale.

If we’re to be successful in paid content, we need to individualize the experience with our product and automate our marketing approach. Based on that hypothesis, this approach will increase engagement, retention and conversion rate.

Steven Neubauer, Managing Director of NZZ

Focus shifting away from social media

Although Facebook continues to be an important marketing channel for many publishers, the FIPP report states, “the dynamic of the relationship with the platform has shifted dramatically in the last year. Research from Reuters has shown that Facebook is rapidly losing favor with publishers, and both reputation and functional considerations drive this.”

The controversies besieging Facebook in the last few years are the main reason for this shifting dynamic, as well as the algorithm changes in 2018 that choked referral traffic for publishers. 

According to the FIPP report, “While referral traffic for news and politics was down just over 30%, in categories like art and entertainment traffic is down as much as 71%, and for music and fashion, it’s down over 60%.”

In order to reduce their dependence on social media, publishers are now using increasingly sophisticated data systems to understand where their subscribers are coming from.

The report mentions, “Using such data, publishers like Le Figaro and Amedia have given Facebook an enormous thumbs down as a source of new subscribers, stating that more than 90% of subscription conversions come from their own platforms.”

Increasing importance of newsletters

Mike Isaac, Technology Reporter at The New York Times, wrote in a recent piece that newsletters “could be a more reliable means of increasing readership for major publishers whose relationships with social networks have soured.” 

Newsletters help build reader engagement and are used as a marketing tool by publishers – they enable publishers to connect with readers who are not subscribers but may become one after sampling content through newsletters. 

NZZ is betting big on newsletters to drive paid subscriptions. It has 21 email newsletters and has seen significantly higher than average email open rates. It has also used reader data from its newsletters to increase subscriber conversions by 80%.

The publisher does not intend to limit its newsletters and is willing to start a new one whenever it identifies a gap in the market. For example, it recently launched a newsletter to attract more female readers—its readership is 65% male.

NZZ is also experimenting with personalized newsletters that help readers stay on top of relevant news they may have missed. Late last year, it launched “My NZZ,” a newsletter that curates a personalized list of articles that a reader missed during the week.

According to NZZ’s Head of Data, Analytics and Market Research, Markus Barmettler, their goal is to “create a smarter, more personal news experience for our subscribers.” 

He wrote in a medium post, “Neue Zürcher Zeitung publishes up to 200 pieces of content every day, from video to audio, to written and visual journalism. The issue is: Our subscribers live busy lives, seeing only 8 of those pieces of content per day on average. We want to make sure they don’t miss the ones most relevant to them.”

NZZ currently has 156,000 subscribers and grew by 4% in 2018. Daniel Ammann, Head of Portfolio Management at NZZ told Digiday, “Newsletters are one of the most important tools to drive registrations.” 

NZZ’s data analytics has found that registered users who signed up for two or more newsletters had the highest conversion rate. The publisher has set itself the target of reaching 200,000 subscribers by 2022 (almost 30% growth in paid readership) and says that newsletters are going to play a crucial role in its strategy.

Looking ahead, Mortiz Hilger, CEO of CeleraOne, which provides paywall technology to publishers, commented, “Continuing the trend of previous years we see a growing demand for paid content solutions, and more and more publishers all over the world establishing successful models. We are very confident that this will continue and we are looking forward to more journalistic products with a paid strategy in the digital era.”