Can publishers still survive without a subscription model?
The South China Morning Post’s (SCMP) decision to return to a subscription model after four years has sent a bold signal to publishers around that world that in-depth and responsible journalism needs to be paid for. According to experts, it also shows that advertising cannot be the only source of revenue.
SCMP's move confirms that subscription is the business model to build upon, no matter how tough that path may seem initially, Prantik Mazumdar, managing partner at Happy Marketer tells The Drum. “If people are willing to subscribe to Netflix, Prime and Spotify for entertainment, and Coursera and Udemy for education, why not pay for quality journalism through subscriptions?” he asks.
Hong Kong-based SCMP reversed its decision in July to take down its paywall, a decision it made after being acquired by Alibaba in 2016. It will roll out a metered paywall for its website and app starting from August. Readers will access some articles for free before they are prompted with a message to subscribe for further unlimited access.
They will also have access to SCMP’s virtual and in-person events. In a nod to the ongoing Covid-19 pandemic, news and information critical to community health and safety will still be freely accessible.
“What helps is that global publishers like The New York Times (NYT) and The Financial Times have undergone these transformations over the last five odd years and are inspiring beacons for the industry," explains Mazumdar.
"They have proven that digital revenue can be higher than traditional print revenues and that revenue from subscriptions can be higher than those from advertising revenues. That is only if the publisher finds the right niche, focuses on product development beyond just news and invests in the first party-driven marketing technology," he adds.
Industry veteran Serm Teck Choon, the co-founder and chief executive officer at Antsomi, agrees, noting that publishers will often switch strategies, meaning the reinstatement of the paywall doesn't necessarily mean failure.
“The SCMP’s return to behind a paywall will definitely send them a signal that implementing a paywall seems like a logical next step for them to follow, while they are facing the decline of the traditional ad revenue and the digital ad revenue is not sufficient to recover the decline,” says the former head of digital products at Malaysia’s Star Media Group.
"I don’t see the removal of SCMP’s paywall after Alibaba’s acquisition as either a success or a failure. The decision was made while SCMP was going through a transformation with many experiments such as [gaming and tech brand] Abacus, while they wanted to stay relevant to users by offering open access. I see that was the duration they reviewed various opportunities for charting the new direction of the company."
Mazumdar believes the scenario of a subscription-only model for the world of publishers is still far away, but he predicts many publishers will join this bandwagon and explore different options in this continuum. For example, free content (ad-supported), free content but behind a registration wall, free content with options to pay-per-use using micropayments through digital wallets, freemium with premium segments behind a paywall and a complete subscription model.
He suspects most of the large global and regional publishers will move closer to the subscription-only model as they would have the deep pockets and investments that would allow them to make this move. Local publishers and the long tail will continue to provide ad-supported free content or content behind a registration wall.
"We must remember that free content, while subject to poor experience due to pop-ups and ads, as well as the possibility for news not to be verified and analysed, is important for our society as it provides information and knowledge to a very large population base that may not be able to access it otherwise," he adds.
Agreeing, Laura Quigley, senior vice president for Asia Pacific at IAS cautions that going straight to a hard paywall is risky for businesses, adding: "Publishers typically have a lot more written content than video but as video grows as a revenue stream and podcasts this too could be an area that publishers could look to monetise."
Serm points out the success of NYT's subscription business has given many publishers hope in moving to the subscription model. However, he says publishers should also be aware that NYT is a global brand that can grow its subscription business on a larger scale. Thus, publishers should really be able to produce relevant and exclusive content for their readers, or else, a subscription model may not be the best move.
"Subscription won’t be the only model for publishers, advertising is still playing a significant role. Meanwhile, publishers are also experimenting with various new business ideas moving forward, such as membership, events, or even online training. It'll be very interesting to observe the outcomes in the next 12-18 months," he says.