Media Briefing: The case for and against monthly and annual subscriptions in the battle for retention

By Kayleigh Barber

This week’s Media Briefing looks at the pros and cons of publishers using monthly vs. annual subscriptions to improve retention rates.

Monthly vs. annual

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Monthly vs. annual

Publishers’ ability to retain paying subscribers is becoming a bit more of a challenge as churn rates gradually increase. But not all cohorts of readers are at the same level of risk for letting their subscriptions lapse.

While the average churn rate for publishers increased from 3-4% in 2021 to 4-5% in 2022, the retention rates are typically between 25-30% better for annual plans than monthly plans, according to Justin Eisenband, managing director of the Telecom, Media & Technology industry group at FTI Consulting,

Therefore, publishers looking to better secure their recurring revenue businesses should prioritize their annual subscription offerings to readers by upselling existing monthly subscribers or marketing the annual subscription to non-subscribed readers.

“The more focus you have on annual subscriptions, the better your churn rate is going to be,” Eisenband stated. And while this may be the case for the publisher clients that Eisenband oversees, including from The Wall Street Journal, Dotdash Meredith, Gannett and Hearst, other publishers, like Salon, have reported an opposite phenomenon in their subscription businesses.

Charging $100 per year for a subscription, Salon’s annual subscribers will often forget about the purchase made a year ago and will write to Justin Wohl, Salon’s chief revenue officer, to ask for a cancellation and refund.

“[A] higher percentage of people [will] say, ‘Hey, what is this charge,’ when it comes once and it’s a big number, versus getting [charged] $10 a month and [becoming] familiar with seeing it on their bill,” said Wohl.

Here is a case for and against monthly and annual subscriptions in a publishers’ retention strategy.

Annual

For:

Retention rates are higher on average.
- On average, at the end of their first year of subscribing, only 46% of monthly subscribers are left while 74% of annual subscribers remain, according to the Piano Benchmarks Report from 2021.
- The reason being: While monthly subscribers have 12 opportunities to cancel their subscription or experience a lapse in payment per year, annual subscribers only have one.
- Looking specifically at consumer news publications, Eisenband said that annual subscribers have a retention rate of around 65-80% after their first 52-weeks of subscribing, where monthly subscribers retain closer to 50-60%.

Business subscriptions only have to be expensed once per year.
- One of the reasons why Bloomberg Media is prioritizing annual subscriptions this year is because it’s substantially easier for readers who expense their subscriptions with their companies.
- “When you look at our user base, a good portion of our users are using us in a business context, [and] I think that annual subscriptions seem to make a lot of sense. You don’t have to expense it monthly, for example,” said Julia Beizer, …read more
  Source:: Digiday
  
  Author: Aaron