Changing of the Tides: The Rise of the Subscription-based Revenue Model, and what it means for your Brand or Business

We are currently living in the era of disruptive innovation. Though this phrase has been attributed to the success of various businesses, people and ideas over the past decade, the idea of disruption has been around for a very long time. And, in some cases, the roots for current disruption have been hiding in plain sight.

Take for example the rise of media companies switching to subscription-based business models from advertising-based models. The idea of subscribing to a form of media, or any product or service, for that matter, is not a new concept. However, magazines and publishing groups across the globe are now using this age-old business model to re-energize their content, engage on a more intimate level with their audiences, and, ultimately, generate recurring revenue.

Subscription-based business model

In our client fields, trade and consumer publications alike are shifting their business structures to better accommodate readers looking for more streamlined, focused content that goes directly to their inboxes or doorsteps. Exclusivity, too, plays a part in assessing the value and the intellectual or social equity that comes with having selected, tailored content for a small fee each month – everyone likes being the smartest person in a room, and paying each month for exclusive content assists them carry this equity with them wherever they go.

It makes all the sense in the world why we have evolved our content delivery preferences to adapt to the current subscription-based world in which we live. After all, millions of people wake up each morning and cook breakfast using groceries they received from Blue Apron or Amazon Fresh; catch up on their preferred cable news programs using Hulu; drive to work with their favorite podcast or music from Spotify; get to work and check out emails from specific industry-based newsletter memberships; and finish the day with streaming-giant Netflix. Sound familiar?

Subscription-based services and media are simply ingrained in our daily lives at this point, and it has been very well documented. Stories about the topic have been examined and re-examined by business and tech publications across the globe, but many of them have failed to address some key questions:

What will this transition imply for brands and businesses still hoping to achieve the benefits of more traditional means of advertising and editorial publicity?

At Eberly & Collard Public Relations, a full-service marketing agency, we continue to advise our clients through strategic ad buys. We are also constantly on the lookout for sound editorial opportunities with publications sold on newsstands and published for free (for the reader, at least) online. Though there has been messaging from top business and tech publications that the failure and demise of advertising is imminent, we would not entirely agree with that sentiment; rather, we expect many publications in the near future to adjust to a hybrid-type model, offering free content with ads and subscription-based content. We also think this formula could be highly beneficial for many types of businesses.

Subscription-based business model

Trends in business tend to be fast spreading, and they often trickle down, so to speak, into other sectors and markets. There are a few subscription-based business model examples that prove this point, like Spotify’s business model. If you would like, you can download the Spotify app for free on your phone, tablet, laptop, etc., and stream music that plays ads every three to four songs. However, you can also create a Spotify Premium subscription account, pay a fee every month, and listen to as much music as you want with zero ads. Not to mention, with Spotify Premium, the user has certain abilities to create exclusive playlists, have tailored music selections generated by Spotify, and more.

You may ask why we are explaining how Spotify works. This revenue model, for businesses whose primary product is content, has found its way to several publications we work with every day. These are publications for which we secure our client’s editorial coverage and buy ads. So, what do we think when one of the most popular and highly regarded consumer interiors publications, Architectural Digest (AD), creates a secondary, subscription-based site, AD PRO?

For starters, we think this is an excellent move by Architectural Digest. And, for our current and future clients in the interior design and residential design products space, what better way to deliver streamlined, exclusive news to a trade audience via AD PRO? Similarly, one can utilize Architectural Digest in tandem with AD PRO to allow consumers to take a look at your newest projects or products by grabbing a print copy of the magazine, with ads, on newsstands. Not to mention, good, subscription-based content from AD PRO can inadvertently generate better content for Architectural Digest and attract new readers to purchase print and read online for free.

The reason being? Subscriptions create a better product. With AD PRO, the editors at Architectural Digest are delivering exclusive, streamlined content and resources without too much outside influence from advertisers. The effect is quality, interesting and insightful content for those who subscribe.

AD PRO’s classification and merit creates an advantageous effect for every Architectural Digest stakeholder, including the advertisers’ content. By paying the yearly or monthly subscription for AD PRO, you are allowing the editors to create high-quality, high-level content at an elevated frequency and accessibility. This, in turn, translates to an increase in the quality of Architectural Digest’s solid content, whether that be free content online, or print content consumers can purchase on newsstands.

Subscription-based business model

Okay, but how does this apply to my business?

Subscription-based content can lead to increased brand trust for your business. It is known that earned, editorial content is trusted at a higher level than advertising content. While this is certainly no revelation of ours, earned media from subscription-based articles comes with a level of trust even higher than traditional editorial coverage. As we mentioned, with subscription-based content providers, you will not necessarily need to worry about competing with advertisers for editorial coverage and space. So, because of this notion, readers have become more inclined to trust stories and news from publications who have switched to, or created, a subscription-based revenue model.

If you are a smaller brand or business with an effective, but small, advertising budget, this transition from advertising-based revenue evens the playing field for securing editorial coverage as well. When vying for page space with a subscription-based publication/website, you will not have to compete with companies who gain editorial traction via large ad buys.

So, how can I begin to take advantage of subscription-based publications or newsletters in my respective industry?

More and more traditional media outlets are making a full or partial transition to the subscription-based revenue model each day. With advertising budgets shrinking as of recent, some publications will need to switch to this model out of necessity. But, the so-called “content machine” is always churning, so despite a lack of ad dollars, do not interpret this shift as publications’ output decreasing.

Publications that can gracefully and successfully make the transition from ad-based revenue will still be hungry for content, and there may even more opportunities for your brand or business to secure editorial coverage. If navigated correctly, this transition, or combination, at least, could end up unlocking endless opportunities for your brand or business to gain exposure and trust alike.

So, start thinking today about how you can leverage this new media landscape to achieve greater exposure to your target audiences. After all, we are living in the “Age of Specialization,” and in many ways the new wave of subscription-based content further cements the notion that more specific, content targeting is one of the most valuable assets a business can have.

If you’d like to learn more about how we’re evolving our advertising strategies to adapt to the rise subscription-based business models in media, and how this game plan could change the ways in which your content is received by target audiences, contact us today.

ECPR Team

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