Commentary

How Publishers Can Optimize Digital Subscription Prices

Sales of vinyl records this year surpassed those for compact discs for the first time since the 1980s, but it's unlikely the same nostalgia for the analog world will restore print to its former dominance.

Publishers shifted to online distribution for years, and a new study suggests they still can boost revenue from digital subscriptions without sacrificing total paid readership.

Digital subscriptions have become more important to publishers, rising from about 12% of total circulation in February 2019 to 17% a year later, according to Mather Economics, whose services include consulting on subscription management.
Unfortunately, revenue hasn't kept pace with that growth in subscription volume, making up only 7% of total revenue among the publishers in Mather's database. With print circulation falling by at least 10% a year, publishers need to ramp up their digital circulation efforts.
In studying the pricing results from four major U.S. publishing companies, Mather found price increases had a weak correlation with lost volume. It tested price increases ranging from 16% to 100% on consumers who had been subscribers for at least six months, and who paid anywhere from $1.68 to $3.99 a week to start.
"In all four cases, the pricing tests proved to be quite successful by proving rate increases on digital subscribers could drive revenue with minimal impact to volume across a range of starting price points and increase levels," according to the report.
After determining they can raise prices, publishers can undertake a variety of strategies to implement the change. The most sophisticated method targets individuals based on their reading habits, as subscribers who visit a publisher's website most often are less sensitive to price changes.
With the coronavirus pandemic keeping many people at home, especially knowledge workers who can set up shop from anywhere, web usage has grown and creates more opportunities for publishers to boost revenue from digital subscriptions.

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