Why newspaper subscriptions are on the rise

So much for the death of the newspaper industry. A recent Nielsen Scarborough study found that more than 169 million U.S. adults now read newspapers every month, in print, online or mobile. That’s almost 70 percent of the population.   

The New York Times picked up 130,000 new subscribers last November — 10 times their average monthly growth rate. Subscriptions at The Wall Street Journal spiked 300 percent, the LA Times went up 61 percent and Vanity Fair picked up 13,000 new subscriptions in one day. The now-profitable Washington Post is hiring 60 new writers. NPR recently said that Big Newspapers Are Booming.”

Sure, those papers can thank the incoming president for some of their new business, but this isn’t just a political story. All sorts of reader-supported publishers are enjoying a resurgence.

In the technology industry, for example, Jessica Lessin’s sharp, pointed (and subscription-only) The Information now has the second largest team of tech reporters in Silicon Valley. Ben Thompson has several thousand readers who are happy to pay him $100 a year for his excellent Stratechery newsletter.

Why are readers and publishers alike embracing paid subscriptions for content services over ad-based business models? There are several reasons, but the dismal state of online advertising is a big one.

People hate ads. More than 80 million Americans will use ad blockers this year, costing digital media companies around $10 billion in revenue. And despite all the media industry talk about relevant “native advertising,” most of us are still drowning in pop-ups.

It says a lot about advertising that many publishers are pitching its complete absence as a way of incentivizing paid subscriptions. Even Google is doing it — take a look at YouTube Red. Ads have all sorts of other insidious effects, like turning content providers into clickbait factories. Ex-Politico president Jim VandeHei calls it the “crap trap.”

Given that ads are terrible, and that ad revenue is notoriously inconsistent, what else is going on?

Ev Williams recently touched on this when he announced the staff shakeup at Medium: “We had started scaling up the teams to sell and support products that were, at best, incremental improvements on the ad-driven publishing model, not the transformative model we were aiming for. To continue on this trajectory put us at risk  — even if we were successful, business-wise — of becoming an extension of a broken system.” Not surprisingly, Ev recently announced that Medium will be launching a consumer subscription product this summer.

Given that ads are terrible, and that ad revenue is notoriously inconsistent, what else is going on?

At the same time that publishers are giving the broken ad system a hard look, there’s a whole new generation of consumers who are comfortable subscribing for services — Spotify, Netflix, food boxes, productivity apps — as long as they stay timely, relevant and focused. A quarter of millennials now read newspapers on a regular basis.

“The number of people with access to the Internet is huge and lots of niches are underserved right now because they’re not broad enough for advertisers to care about,” says Ben Thompson.

All successful subscription services, from Adobe to Dollar Shave Club to the Weekly Standard, can take advantage of predictable recurring revenue to stay razor-focused on their audiences, create distinctive new features (The New York Times now has a sizeable revenue stream just from its crossword app) and avoid the commodification crap trap.

As Jessica Lessin says:I still believe it’s much safer to build a business that doesn’t need any advertising to survive. Doing so forces you to focus 100% on your value to your readers. It’s the only way to make sure that what the news publishers deliver to readers in the future is smarter, more informed and more relevant than in the past.”

Sure, advertising is never going to go away, but as subscription services become the norm, readers and publishers alike are starting to appreciate the dividends of a direct consumer relationship. The behavioral insight that comes with membership plans and paywalls helps newspapers move away from empty calories like slideshow page views toward more valuable engagement metrics like time spent.

Making advertising a secondary — though still vital — revenue source is the most important strategic goal for most news publishers,” says Ken Doctor of Newsonomics. “Reader revenue, if backed by sufficient high-quality content and good digital products, proves far more stable than advertising.”

Of course, the newspaper industry still faces headwinds as it shifts from a print ad model to one largely driven by digital subscriptions, but today’s consumers are increasingly comfortable with supporting smart services of all kinds. And that’s good news for a healthy, independent press.