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Bridging the gap between advertising & subscription revenue

Digital readership experienced an extraordinary boost during the pandemic – especially in the early stages when online subscriptions soared by almost 150%. Lockdown consumers were avidly seeking both information and distraction, lapping up the diversity of content on offer, from news to podcasts, courses to exclusive member online meetings with journalists. In contrast, advertising spend plummeted and left the publishers relying on this unpredictable revenue high and dry.

That growth pattern may have normalised in latter months. And while ad spend – in particular digital advertising – has also rebounded, this crisis proved how perilous relying on advertising dollars alone can be. The aftermath leaves a significant challenge for media businesses in 2022.

How can they find the right balance between digital advertising and subscription models? How is the industry going to create a sustainable, long-term revenue model – especially with the shifting privacy landscape and its implications for digital businesses? 

Rupert Knowles (pictured), General Manager, UK, Piano, explores the changing digital landscape and outlines how publishers can adopt new ways of building reader trust that lead to better targeting capabilities and higher overall revenue from both advertising and subscription models, without compromising on data ethics…

Working Together

The pace of digital change during the COVID-19 pandemic has pushed many analogue dinosaurs to the brink and beyond. According to a McKinsey Global Survey, the share of digital or digitally enabled products in company portfolios accelerated by seven years in a matter of months. Publishing has been an amazing example of this shift, and many publishers have acknowledged the value of the subscription revenue stream for the first time. But there is still an internal conflict for many organisations – the traditional stand-off between subscription, advertising and editorial can severely constrain publishers’ abilities to monetise the new digital audience.

Retaining customers and building loyalty requires a new approach. While Google may have extended its use of third-party cookies until 2023, reliance on third-party data will be off the table from next year. Yet, readers actively dislike an irrelevant, unfocused experience. Publishers need to survive and thrive in a logged-in world, and this means being able to answer key questions: Why should a reader share their data? How is the reader experience being curated to inspire loyalty? And how can a publisher derive value from (and provide value to) occasional, registered and subscribed users?

To truly optimise this new customer base will require significant cultural change: Publishers must build collaboration between marketing (subscriptions) and advertising and editorial. In a digital world, all three are inherently part of the same overall customer experience. A reader’s decision to subscribe, to register but not subscribe, or just visit occasionally is influenced by many factors beyond the price. 

Know Your Reader

Every part of the experience needs to work well, from the editorial decisions regarding the position of content in front or behind the paywall to the number of advertisements presented to each reader. Understanding the reader is essential to deliver the customer value that is key to optimising long-term revenue.

As German Publisher, Funke Mediengruppe discovered: 50% of subscribers who churned were doing so because they felt there were too many ads, and most were low quality. The publisher opted to reduce the amount of ad space by 70%, retaining the higher quality – and higher value – ads, and cut this reason for churning by 50% in the process. By keeping the more valuable ad inventory, the overall drop in revenue was minimised – a drop that was immediately offset by readers being happy to pay a 20% higher subscription for a better reading experience.

This publisher has also separated its titles into “reach”, which are ad-financed with a focus on maximising traffic and “quality”, which are financed by reader revenue. Each title’s revenue stream is optimised by implementing cross-departmental cooperation and cross-marketing.

Understanding Customer Value

Data is key to understanding customers’ digital behaviour – and will inform the advertising, registration and subscription strategies required to successfully manage the customer journey from anonymous to known, to paid, to retained.

For example, registered readers are ten times more likely to subscribe than non-registered. People who pay for a trial are more likely to convert to a full subscription than those receiving a free trial. Emails and newsletters are still the highest converting channel. And the way pricing is presented will have a very significant influence on conversion.

By using A/B tests to determine the success of not just different pricing options, but different pricing presentations across hundreds of customer segments, publishers can gain vital insights that will help them create successful customer retention strategies. Moreover, with analytics and data-driven insight, they can enhance overall Customer Lifetime Value by building stronger relationships and delivering greater value through more relevant content targeted to each reader – whether that is articles, emails, newsletters or podcasts. 

Extending Content Value

The content presented to each reader will also influence subscription rates. Subscription platforms that include machine learning will provide vital insight into the reader’s response to specific articles. Which articles convert most readers to subscribe? Or to register? Which articles have high numbers of page views but don’t result in any reader action?

Machine learning can be used to deliver content recommendations to readers based on behaviour and known areas of interest. Providing readers with more relevant content will bring them back more often and encourage subscription. And it also gives new value to content – older articles can be presented again to an interested reader. Content is no longer written today, discarded tomorrow; it has far more long-term value.

The use of content recommendations can also nudge readers from short form to longer form content. One publisher, for example, has discovered that its valuable content recommendations are often seven days old and three or four times the length of most articles. Leading digital publishers including the Spectator are also using author matching, tracking if readers have a preference for a certain journalist or journalistic style and recommending their other articles. Science is supporting art to create the profitability that will be key to supporting high-quality journalism.


There are so many opportunities to improve revenue, and create a personalised reader experience and drive up customer engagement. Intelligent use of data combined with a willingness to continually test and learn is transforming the way publishers can interact with the readership. This can only be achieved with complete collaboration across marketing, advertising and editorial. Now is the time to grasp the opportunity, embrace a customer-centric, data-driven model and optimise the new readership.

Subscription economy drives music to new highs in 2021

The global recorded music market grew by 18.5% in 2021, driven by growth in paid subscription streaming, with paid subscription streaming revenues increasing by 21.9% $12.3 billion.

That’s according to according to IFPI, the organisation that represents the recorded music industry worldwide, which says there were 523 million users of paid subscription accounts at the end of 2021.

Total streaming (including both paid subscription and advertising-supported) grew by 24.3% to reach US$16.9 billion, or 65.0% of total global recorded music revenues. In addition to streaming revenues, growth was supported by gains in other areas, including physical formats (+16.1%) and performance rights (+4.0%).

Record companies are working to drive this continuing growth for the broader music ecosystem.  With local teams and expertise around the globe, they invest in local artists and genres and support their development. In high-potential growth markets across Asia, Latin America and Africa, as well as more mature markets, like Europe and North America, labels are putting down deep roots and helping to foster the continued advancement of vibrant and diverse local music ecosystems.

IFPI Chief Executive Frances Moore said: “Around the world, record companies are engaging at a very local level, to support music cultures and bring on the development of emerging music ecosystems – championing local music and creating the opportunities for it to reach a global audience. As more markets mature, they join with and contribute to the rich, globally interconnected music world.

“Consequently, today’s music market is the most competitive in memory. Fans are enjoying more music than ever and in so many different and new ways.  This creates enormous opportunities for artists. Those who choose to partner with a record company, do so to benefit from the support of agile, highly responsive global teams of experts dedicated to helping them achieve creative and commercial success and build their long-term careers.

“As technologies and the online environment continue to evolve and expand, so too do the creative opportunities to share music experiences. From the metaverse, to in-game content, record companies have invested in the people and the technologies to deliver new, highly interactive experiences – adding to the evolving ways for artists to make connections with their fans.”

Growth in the world’s other regions:

Recorded music revenues grew in every region around the world in 2021:

  • Asia grew by 16.1%, with its largest market, Japan, seeing growth of 9.3%. Excluding Japan the region experienced a 24.6% climb in revenues. In a continuing trend, Asia also accounted for a significant share of the global physical revenues (49.6%).
  • Australasia experienced growth of 4.1%. Australia (+3.4%) remained a top 10 market globally and New Zealand saw a rise in streaming revenues push the overall market to growth of 8.2%.
  • Revenues in Europe, the second-largest recorded music region in the world, grew by 15.4%, a steep increase on the prior year’s growth rate of 3.2%. The region’s biggest markets all saw double digit percentage growth: UK (+13.2%), Germany (+12.6%) and France (+11.8%).
  • Latin America saw growth of 31.2% – one of the highest growth rates globally. Streaming accounted for 85.9% of the market, one of the highest proportions in any region.
  • Middle East and North Africa – split out as a separate region in the Global Music Report for the first time – experienced growth of 35.0%; the fastest regional growth rate globally. Streaming was a particularly strong driver in the region, with a 95.3% share of the market.
  • Sub-Saharan Africa – also split out for the first time in IFPI’s reporting – saw revenue growth of 9.6% in 2021, largely driven by streaming. Ad-supported was particularly strong in this region, with revenues from this format growing by 56.4%.
  • The USA & Canada region grew by 22.0% in 2021, outpacing the global growth rate. The USA market alone grew by 22.6% and Canadian recorded music revenues grew by 12.6%.

Download the free Global Music Report 2022 – State of the Industry report (English language) here.

Shift to subscriptions increases brand connections

Subscription businesses have grown nearly six times faster than the S&P 500 over the last nine years, driven by an increase in consumer demand for the use of such services.

That’s according to  Zuora’s bi-annual Subscription Economy Index (SEI), which was conducted online by The Harris Poll among 13,626 adults across 12 countries.

It reveals the growing consumer preferences for use of subscription services over the ownership of physical products. Results found within the End of Ownership report include: 

  • Use of subscription services is growing. 78% of international adults currently have subscription services (significantly higher than 71% in 2018), and 75% believe that in the future, people will subscribe to more services and own less physical ‘stuff’. 
  • Subscriptions increase brand connection. Nearly two-thirds of subscribers (64%) feel more connected to companies with whom they have a direct subscription experience versus companies whose products they simply purchase as one-off transactions. 
  • Consumers want to pay for what they use. Nearly three-quarters of international adults (72%) would prefer the ability to pay for what they use, rather than just a flat fee. 
  • Convenience, cost savings, and variety are top subscription benefits. Convenience (42%) tops the list of benefits for subscribing to a product or service instead of owning it, followed by cost savings (35%) and variety (35%, up from 32% in 2018). 

As a result of this burgeoning consumer lifestyle trend, subscription businesses have grown. For the first time since its inception in January 2012, the SEI growth rate reached 437% growth as it analyzed the impact of subscription businesses by sector, comparing subscription businesses in Software as a Service (SaaS), Internet of Things (IoT), Manufacturing, Publishing, Media, Telecommunications, Education, Healthcare and Business Services to their respective S&P 500 Industry benchmarks. 

When looking only at the year 2020 the Subscribed Institute found that:

  • Subscription business revenue outpaced that of their product-based peers. Last year, revenues of subscription companies in the SEI grew 11.6%, while the S&P 500 sales declined -1.6%. In Q4 alone, subscription businesses experienced revenue growth at a rate of 21%, seven times faster than S&P 500 companies’ growth rate of 3%.
  • Revenue per subscriber surpassed the 2019 rate. Subscription businesses in Q4 2020 had an 18% average revenue per user rate, compared to 14% in Q4 2019. The increase indicates that subscription businesses in the SEI are deepening relationships with customers and delivering services that increase in value over time. 
  • Subscription companies in the SEI performed better compared to regional stock markets. In Q1 2020, lockdowns and other safety measures seemed to slow subscription revenue growth (in APAC, revenue even contracted), but when lockdowns returned in Q4, subscription revenue growth accelerated, indicating that subscription companies were effective in adapting their offerings quickly. 

“The time is now for companies to embrace the subscription business model,” said Amy Konary, Founder and Chair of The Subscribed Institute at Zuora. “Our bi-annual Subscription Economy Index suggests that brands can increase value to their customers through the on-going delivery of services when and where they’re needed.” 

Download the Subscription Economy Index and the End of Ownership reports.