This article, by Piano CEO Trevor Kaufman, was originally published on April 30, 2019 as part of the International News Media Association’s “Satisfying Audiences” blog, under the title “Attention, investment in digital subscriptions results in 2000% growth.”
There’s a common perception among media brands considering, or even launching, a digital subscription business.
Many new-to-subscription businesses think conversion will begin with their most loyal users, all subscribing in relatively quick time. Those are the people they’ve already won over, the thinking goes, so why wouldn’t they sign on? After that, though, expectations dwindle. They figure conversions will grind to a near stop as they attempt to bring new people in, trying to encourage loyalty and then finally convincing a small percentage to subscribe.
Basically what everyone anticipates, then, is a steep subscriber acquisition growth curve followed by a plateau.
As a company that works daily with media providers launching all types of subscription and membership products, Piano has closely tracked the results of thousands of subscription websites. So we have an idea of how they, on average, convert.
And it turns out those expectations don’t pan out. But that’s not a bad thing at all.
Building a Subscription Business
In our analysis, media providers don’t experience the steep boost of conversions at the start, but neither do they witness that plateau. What we see, instead, is something else entirely.
We did the math, comparing the first two quarters of business with the last two within a random sampling of customers that have been in market with their digital subscription business between four and nine quarters. Those with just a year behind them, we found, experienced increases of up to 50 percent in their average number of new monthly subscribers. And for those with nine quarters behind them, growth rates reached over 2,000 percent.
It turned out, instead of the climb/plateau trajectory you might expect, then, media companies experienced increased revenue each quarter, continually building their revenue growth.
And why wouldn’t they? As they get further and further into their subscription business, companies get better at what they’re doing. They hire more marketing people, refine their product offerings and more closely align with the newsroom to produce more content that drives loyalty. All of which are very different capabilities than what might have been required of them when they ran a traffic-focused, ad-supported business.
In short, they become subscription businesses. And at the same time, audiences start to recognize them as such, learning more about their offerings and ultimately making the choice to subscribe.
There were some exceptions in our sample — businesses that even showed declines. But those were sites that didn’t evolve their product, didn’t test and learn and instead tried to launch and forget. They are exceptions that prove the rule.
The Power of Starting Now
So what does that mean for media companies just beginning to develop their digital subscription strategy? How do they build a subscription business from scratch?
There’s a saying I sometimes use when I’m talking to organizations at this stage: Sitting in the sidelines is indistinguishable from failure. Making the decision not to jump into the market because you're waiting on an internal strategy review or an IT project means you’re putting off your opportunity to build revenue growth.
The most important moment for any subscription business, then, comes not eight months in, or even eight years along. Rather, it’s Day One itself. The moment of launch. Because only by seeing your product in action can you build the type of numbers you need to thrive.
Once you launch, you can start tracking and actively growing your audience and revenue, testing and experimenting with your offers, and getting to know your user behavior. You can contextualize your results against others in the market, and better develop your team and site experience to beat that benchmark. And you can put all of the right technology in place to optimize your business model. All of which will help you grow those numbers faster and entice both new and loyal users to fall in love with your new product.
All you need to do is look at leaders in digital subscriptions to understand what that kind of success can look like.
When the New York Times started their digital subscription business, they weren’t the experts they are now. The Financial Times took time to figure things out. The Wall Street Journal didn’t win right away either. Neither did they consider entering a new business just as a test. Rather, they set out to become great subscription marketers — and they accomplished that. It might not have happened on the first day, but that’s definitely when it began.
The good thing is, if you start today you have better solutions to choose from and increased expertise and data to build on. Which means you can start succeeding even sooner.
Yet many media providers are still waiting to launch. And in doing so, they’re losing out on opportunities to reach their revenue goals. You do your own math: zero new subscriptions last month plus zero new subscriptions this month equals zero dollars in revenue altogether.
The only way to start that upwards trajectory is to get your subscription product in front of users now.