Strategy built on subscriptions? Good luck... there are already 1.2M fewer of them.
According to data that emerged a few days ago from Lloyds Bank, more than 1.2 million subscriptions have been cancelled since mid-2020. As the cost of living crunch continues to bite, this is a trend we can expect to accelerate as people are forced to make choices about how to balance their household budgets.
A contraction in per-household subscriptions was inevitable: everyone and their dog seems to be launching a ‘+’ streaming service these days, and predictably, all are following the same old ‘subscribe or go away’ playbook.
A few years ago, I wrote a manifesto for content companies that remains as true now as then, and is probably more important than ever. In that article series, I highlighted seven key principles for content companies:
Number 4 is is the one that jumps out here most right now. Media companies are still, for some reason far beyond my reasoning, choosing to only try to charge the very small percentage of people who will subscribe. That number, in some of the world’s ‘success stories’ for paywalls is often sub-5% of their audience. If I said to any other type of company “we're planning to just charge a few percent of your target customers and send the rest away” I'd expect a response along the lines of “have you lost your mind?”.
Overlay today’s pressures on household spend and consumers who were already reluctant to pay for multiple subscriptions will become even more averse to those regular monthly fees. This is all going, inexorably, in one direction: fewer consumers with fewer subscriptions. This is not the time to be relying on subscription revenue from a fraction of your addressable audience.
You don’t need subscribers, you need paying customers.
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Too many brands have flocked to a very blunt ‘subscriber strategy’ – erect a paywall, promote the hell out of what’s on the other side of it and make it as hard as possible to leave.
They've told someone who really wants to experience your service?sometimes?but doesn’t want to pay for it?all the time. And there are millions of those people. Hundreds of millions in fact.
The message here is incredibly simple: develop commercial strategies with more sophistication and nuance to them than ‘commit to us or leave’. Let people pay for what they want to consume, not what you want them to consume. Build habit by being really good. Reward those who will commit to more.
There is not one answer to this problem, but most media companies are acting like there is.
One thing is clear. With an increasing pinch on our purses, there will be continued contraction in the number of people willing to subscribe to anything. If your business model relies on being one of a set of subscriptions that consumers want, and they have no other way to pay you for what you have, you’re heading for some challenging times. It has to be time to face into this challenge properly: if you keep doing the obvious, the obvious will be done to you.
Who’s brave enough to think differently? If history is any judge, it will be too few, too late.