Despite the ongoing drumbeat of reported doom and gloom for the survival of publishing, a new report on the subscription economy says subscription revenue for digital news and information publications increased by 16% in 2020 even in the face of declining advertising revenues. Overall, the study concludes that the subscription economy has grown by nearly 500% in the past decade.
Zuora, an enterprise software company that creates and provides software to launch and manage subscription based services, said in its bi-annual report that major news stories — including the COVID-19 crisis, racial inequality protests and the contentious U.S. presidential election — fueled a boom in subscribers for newspapers, magazines, book publishers, educational content providers and corporate research providers.
In its report Zuora, headquartered in Redwood City, provides as an example that the legacy magazine The Atlantic, founded in 1857, added 36,000 new digital subscribers in four weeks during the pandemic, even as they lifted paywall restrictions on coronavirus coverage. The Atlantic also highlighted its subscription gains last September, saying the publication added 300,000 subscribers compared to the year prior.
“From the COVID-19 pandemic, to Brexit, to protests in response to racial injustice, to a monumental U.S. election, 2020 may go down as one of the most news-breaking years in the existence of digital publishing,” the Zuora report stated. “Meanwhile, public trust in all sources of information reached record lows. Trust levels declined across traditional media, search engines, and social media — by eight, six, and five percentage points, respectively — and many readers turned to alternative information sources.”
The Zuora report included grim statistics on advertising revenues for print and digital publishing. According to PwC’s Media Outlook report, as quoted in the study, global newspaper advertising (print and online) will fall from $49.2 billion in 2019 to $36 billion in 2024, a decline of more than a quarter (27%) over five years. However, the Zuora’s report suggests that growing subscription revenues may help offset the losses.
“Advertising has been languishing for years,” Amy Konary, founder and chair of Zuora’s Subscribed Institute think tank, told TheWrap. “Many ads are designed to prey on consumer self-esteem or use misleading information to make sales; the effectiveness of these ads is declining, and serious concerns have been raised about consumer privacy.”
Konary said digital subscription-based publishers don’t need advertising revenue to survive: “Instead, these companies are thriving on strong customer relationships, created through the delivery on ongoing innovation and value in the form of high-quality, personalized content.”
The study also reported marked growth in media subscriptions, citing Deloitte’s Digital Media Trends Survey. “Before COVID-19, the average U.S. consumer had 12 paid media and entertainment subscriptions. As reported in the same survey, since the pandemic began, 23% of U.S. consumers have added at least one new paid video streaming service.” the report said. “This is evidence of the growing popularity of streaming media. Subscription models help media companies to create subscriber-centric experiences, building ongoing relationships with their subscribers across whatever channels they choose.”
The report also included revenue growth information for telecommunications, manufacturing, business services, health care and education, among other categories.