Does the rise of the subscription media model signal the end of ad-supported journalism?
Nothing like that.
But big-name news outlets like Bloomberg are finding subscriptions to be a more stable source of income than advertising, says Julia Beazer, Bloomberg’s chief digital officer.
“We owe a debt of gratitude to multiple revenue streams for the sustainability of our business,” he said. Advertising is a line of income. “But with a more premium edge, subscribing to Bloomberg Media is a more sustainable business for us.”
Since Bloomberg launched PayPal three-and-a-half years ago, the company has grown its subscriber base to about 170,000 – about 100,000 of whom only signed up in 2021, Beazer said.
This was enough to increase the publisher’s subscription revenue by 58% in 2021 compared to 2020. (If you’re wondering why a 143% increase in subscriptions translates to a 58% increase in subscription revenue, the main reason is that subscription prices fluctuate. For example, new customers pay a discounted price for their first full year.)
Revenue from subscriptions is now a nine-figure business for Bloomberg, according to Beazer.
The subscription model doubles with priorities driven by a focus on journalism, Beazer says.
“The subscription business is about connecting with your customers and knowing who you’re serving, and it’s easy to keep your head down no matter where you sit in the organization,” he said.
In other words, business people know customers or loyalty members best. Marketers will believe that a news organization can understand its customers and reach them with the right messages.
Bloomberg uses a metered paywall model, so users can read a few free articles each month before being forced to sign up for a subscription.
About two years ago, Bloomberg introduced dynamic technology that adjusted payroll parameters, such as how many free articles a user could read each month, depending on the behavior of an individual user. It uses a first-party cookie to track site behavior in contrast to 20 different behavioral features, then group users into similar viewers and adjust the payroll experience accordingly.
“Depending on how long the wall changes for each user, we think that certain users may want to sample the content before making the final conversion,” Beazer said.
Bloomberg does not block content on a content-type basis. It does not currently fully fund any of its video-on-demand content and is unlikely to move forward, Beazer said. Bloomberg also operates free newsletters and free news streaming services on social media platforms. All free content is the key to Bloomberg’s subscription prospecting pool strategy while saving a tempting-enough offer on the other side of the payroll.
Increased epidemic-driven subscriptions
Recent years have been a boom time for the news subscription business. Donald Trump’s presidency, the 2020 election and the number of COVID-19 epidemic subscriptions have increased.
And according to Zoura’s latest subscription economy index (SEI), subscriber-based media businesses participating in the report saw average revenue growth of 11.7% in 2021. This compares with the four-year compounded annual growth rate (CAGR) of the subscription-based media sector (10.9%).
“People went and found premium news at a time when they really needed it, and they’re stuck with it,” Beazer said.
It remains to be seen whether these trends will be more effective for news publishers. And overall, the proportion of people paying for news subscriptions is still low. In a Reuters 2021 Digital News report, only 21% of US-based respondents said they paid for a subscription to at least one news source. It represents a ceiling for growth or low depending on your outlook.
But Bloomberg is convinced that subscriptions are a good bet for long-term stability.
“When you start a subscription business, it’s not about short-term gains, but about building a deep and lasting relationship with your audience, and it takes time,” Beazer said. “This is a significant, year-round investment that we are committed to.”