A song to read by: "Á l'Amour Comme á la Guerre," by Stereo Total
What I’m reading: "Autobiography of Red," by Anne Carson
On Tuesday, when Netflix announced during its quarterly earnings call that it had lost 200,000 subscribers, its first downturn in more than a decade, the admission sent shockwaves through the world of digital media.
On the one hand, marketers champing at the bit to bring commercials to the streaming service were elated. Netflix, for years allergic to even the mere mention of advertising, has quite quickly warmed to the concept, and its executives later told investors that the company has begun the process of building an ad-supported tier. Disney+ is expected to follow suit, if it can find time amidst all the grooming it has to do.
But for others in the media ecosystem, especially publishers, the news was an ill omen. Netflix, a bellwether of consumer willingness to pay for digital subscriptions, had faltered, despite the billions of dollars it devoted to content production and its near-global brand recognition. If it could not convince people to pay for its product, how could publishers?
Even worse, the downturn appears to be a product of factors beyond the control of any company. Historic inflation has forced consumers to trim their expenses, with 36% of Americans electing to cancel a monthly subscription in a bid to save money, according to CNBC. The longer these price hikes persist, the longer this culling will continue.
Meanwhile, the rhythm of daily life has nearly returned to its pre-pandemic normal, a boon for everyone except the entertainmentgentsia. White-collar workers are commuting to and from offices and kids are staying in school, which means all the free time that once abhorred a vacuum has disappeared. The subscription services — from streamers and publishers alike — that once filled the endless hours of pandemic doldrums have served their purpose, and now their watching has ended.
In brave defiance of these realities, every day a new company seems to arrive in town, eager to pitch its new subscription product — whether or not anyone wants it. By all accounts, the poster child of this poor timing might be CNN+, currently the strongest candidate to become the first Quibi of the post-pandemic era. But this widespread inability to read the room will affect publishers as well, meaning Alison Roman might not be the only person in media soon making a dinner out of anchovies.
If the market continues to crowd while demand continues to plummet, only a handful of subscription-based businesses will survive. And, compared to streaming services, publishers have a higher price tag and a narrower appeal, meaning price-conscious consumers will likely ax them first.
This bodes ill for even the most durable subscription products, but it especially spells disaster for the dozens of media companies that offered bargain-bin trial rates to get subscribers in the door. As soon as rates return to normal, those Potemkin subscribers will vanish into the night.
So, as the original Russian influencer used to say, what is to be done?
For guidance, look to The Times. The company has begun bundling, building out robust games, cooking and shopping products, and its blockbuster acquisition of The Athletic will bring further value to its subscription.
And for publishers without $500 million in cash lying around, might I recommend buddying up? Just as the streamers will likely form a Voltron product in the coming years, effectively recreating a cable subscription for the digital age, publishers might soon find themselves joining forces in an effort to perk up their value prop. Some streamers have taken steps to consolidate already.
Take it from the AriZona Iced Tea guidos: If you want loyal customers, give people more stuff for less money.
My crazy suggestion: Group publishers owned by the same company under one subscription. I am sure some nerd accountant could find an error in my math, but I feel like a Condé Nast, Hearst, Dotdash Meredith or Vox Media subscription would accrue more net subscribers, at a higher price point, than the individual publications hawking their wares alone. But I digress.
Or, go the other route and abandon ye paywall, all who enter Quartz. Last week the publisher announced that, while it would continue its membership program, it had given up on gatekeeping its content and was making everything on its website free to access. While the move raised eyebrows from analysts, it could be the first step in the long road back to an advertising-supported model.
And here, in a fittingly backward conclusion, we arrive at the ironic beginning of this entire dilemma. Many publishers only embraced subscription models to shore up their flagging advertising revenues, efforts that were only accelerated by the dark days of the pandemic, when ad spend virtually disappeared.
But now digital advertising is on the cusp of upheaval, as new privacy laws and the internecine feuds of our technological overlords rend asunder the very fabric of the industry. And at the end of it all, publishers quite likely stand to benefit.
So, with the digital advertising dollars set to pour in, why play ascetic in the desert any longer? Tear down those paywalls, open up the programmatic pipes and bathe in the golden lucre of capital. Generating subscription revenue is honest labor, but it roughens the hands.
Now that the advertising gods have once again seen fit to bestow their favor on the pious work of publishers, all of our problems are solved. Why not — what could go wrong?
Some good readin'
— My exclusive on the Quartz paywall. (Adweek)
— A piece I wrote for the Adweek magazine about the future of the alt-weekly industry. (Adweek)
— Must-read from Dean Kissick! (Spike Art)
— Ads everywhere! (New York Times)
— Ecommerce is coming back down to Earth. (Wall Street Journal)
— A fawning, if enjoyably profile of the new executive editor at The Times. (New York Magazine)
Cover image: "The Course of Empires: Destruction," by Thomas Cole