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Reuters Digital News Report: Reader Revenue growth stalls but opportunity remains for growth

Reuters Institute research shows while growth has stalled that more than a third of audiences would be willing to pay.

28th June 2024

While reader revenue growth has stalled by some measures, more than a third of those surveyed by the Reuters Institute are willing to pay. Photo by Rupixen.

In our upcoming State of Mobile Publishing report, publishers told us they expect reader revenue – subscriptions and memberships – to be the largest source of revenue growth in the coming year. However, the most recent Reuters Institute Digital News Report found growth in news subscriptions has stalled over the past three years with only 17% saying that they had paid for news in the past year. Moreover, a majority of people, 57%, across the 20 countries surveyed are unwilling to pay anything.

Their research also reinforced the winner-takes-most phenomenon they had found in recent reports, where large players like the New York Times, Le Monde, El Pais and Helsingen Sanomat are capturing a significant share of the subscription market.

On first blush, the findings seem pretty depressing. However, the study also found untapped audiences are willing to pay something for news, and publishers are getting increasingly sophisticated in optimising the revenue they earn from subscribers and non-subscribers. Publishers with long-standing subscription strategies converted their most loyal and engaged audiences to paying customers long ago. Still, new A2K and product diversification strategies are delivering higher ARPU and additional revenue streams to publishers.

Variations in willingness to pay and discounted rates

The top line from the Reuters report is that the percentage of people who have paid for digital news, whether on its own or part of a bundle, across the 20 countries has stalled at 17% over the last three years. However, as anyone familiar with the report will know, there is a wide variation in willingness to pay across these 20 countries, from 40% for Norwegians down to a paltry 8% of audiences in the UK.

The Digital News Report added another layer of detail this year by asking respondents how much they paid for their subscriptions and comparing the price they paid with the full cost of those subscriptions. They found in Poland (78%) and Canada (54%) a majority of those who paid were paying a discounted rate, and in many countries like the US (46%) and UK (42%), significant amounts of audiences were paying discounted rates. Researchers found that in countries where subscriptions were relatively inexpensive such as Italy (35%), Portugal (34%) and Spain (26%), smaller proportions of subscribers received discounted rates. The researchers also compared the media news subscription price with a Netflix or Spotify subscription in the country, providing a useful benchmark. The researchers are right that the topline numbers of the percentage of readers who have paid for news “obscure the number of people on trials or special offers, or the rate of churn”.

The duration of trials may also affect the percentage of people paying full price. In Sweden, only 28% of audiences were paying less than full price, while in the US 46% were. In Sweden, three-month trials are the norm, but major subscription brands including the New York Times, the Washington Post and the Wall Street Journal offer a year trial at steep discounts.

The long trial period gives publishers ample time to build habits with their new readers, the researchers found that some readers only bought the subscription based on price and never engaged with the content. Research from INMA has found that publishers need to encourage readers to engage with their content at least four times a month. If they do, they are 50% less likely to cancel.

Room for reader revenue growth

While overall reader revenue growth might have stalled, Reuters Institute researchers found an untapped audience exists. Across the 20 markets they studied, 57% of those surveyed said they would not pay anything for news. However, they also found what price points consumers would pay across these markets, whether less than a pound, euro or dollar or between two to five or six to 10 pounds, euros or dollars a month. For most countries, the sweet spot is two to five. At that price point, a volume product could deliver meaningful revenue to a publisher.

INMA’s Greg Piechota saw a glass that is more than half full in an analysis highlighting the opportunity publishers have. While 17% say they currently pay, the research also found that 36% would consider paying in the future. Overall, that is a 3.5x growth potential. He highlights that the opportunity is even greater in some countries. For instance, in the UK, which currently has a low level of payment, the data of the report highlights an opportunity in the UK for paying audiences to increase from 8% to 37%, and he says that transactional data paints a much rosier picture than the online polling done for the Digital News Report.

Let readers know what’s at stake

It reminded us of recent local research in Chicago which found that 51% of people thought no one should pay for journalism. The same study found that 71% of those surveyed “don’t know that the news business is in crisis”, with 54% thinking that they are doing “somewhat well” financially and 17% believing that news organisations are doing very well.

While no one wants the public to pay out of pity, there is value in communicating the stakes for some local publishers. In Los Angeles, LA Taco, an indy outlet covering the local food scene, announced in April that it would have to furlough its entire staff due to a lack of memberships. They hadn’t wanted to run membership drives, but when staff turned to social media to announce the dire situation, readers responded. Since the crisis in April, they have more than tripled the number of members to 3,500, saving the outlet and staffers’ jobs.

Before things reach a crisis point, publishers large and small have many other options.

A2K strategies are delivering new ways to monetise more lightly engaged audiences. Multiple paths to registration capture first-party data, which can support higher ad yields and provide avenues to market events and merchandise to known audiences.
Bundles are a proven way to increase ARPU, with positive examples at national and regional publishers, including Bonnier and Schibsted.
Membership has proven a powerful way for mission-driven publications to achieve sustainability or for commercial publishers to add a premium tier for superfans.

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