It seems in this current age that all forms of consumption now come with a subscription model. From the audio-visual delights of Spotify and Netflix, to the written word via news media platforms, the subscription fee has emerged as a unifying framework through which we access information and entertainment. Consumers have now come to expect curation and customisation delivered at the tap of a finger.
“For better or for worse, at least for right now, subscription models are defining the future of media and entertainment,” said Dr. David Tully, Head of Media at Middlesex University Dubai.
Loyalty programmes have proliferated across several industries as businesses recognise the power of fostering continuous relationships based on personalised experiences. This signals a shift away from the quantity-focused approach to content to one that is characterised by the fall of traditional advertising as a primary revenue stream and prioritises curated, on-demand content.
Thanks to advanced data analytics and AI, platforms intimately comprehend usage patterns, intuitively predicting future interests. Streaming juggernauts like Netflix pioneered this model, redefining expectations of access and interactivity.
“Streaming stands out as the most convenient means to access content. In my role as a film history educator, I hold value in Blu-rays and DVDs, considering them the best – often the only – avenue to access obscure and older content,” said Dr. Tully.
“Although their image quality is also vastly superior, sourcing these discs in 2024 has become challenging due to a significant decline in demand, reducing their production rate and making them expensive. We’ve become accustomed to having everything at the tip of our fingertips, not having to get up to insert our media manually into the screen.”
Streaming subscription providers dictate content access and can add or remove content without notice. With technology in its current state, “streaming is not the future but already the norm, and until the next technological leap comes into play, it will remain so,” according to Dr. Tully.
But when it comes to generating income from technology, subscriptions have emerged as the most reliable method.
“Subscriptions are the best way for companies to profit from the emerging behaviour of online consumerism that stems from technology, and that includes news sources. I believe it is as simple as that,” he added.
Yet the transformation extends beyond the realm of entertainment. News media, too, has embraced the subscription model as a means of ensuring financial sustainability against a backdrop of short attention spans and diversifying distribution channels.
“With the rise of digital platforms and the increasing demand for personalised and on-demand content, subscriptions provide a sustainable revenue stream for companies,” said Roland Debbane, Consulting Director at data and AI consulting firm Artefact.
Echoing his sentiment, Dr. Tully believes the shift to subscription-driven business models was “inevitable.”
Evolving consumer habits
The New York Times’ pioneering paywall strategy, launched in 2011, demonstrated this model’s viability though the rest of the industry remained hesitant for years due to concerns over subscriber conversion and catering to as wide an audience as possible, because more eyeballs meant higher revenue.
However, as consumer habits evolve in favour of curation over overload, quality over quantity, and loyalty over fleeting impressions, subscription platforms appropriate both behavioural data and revenue logic to uphold committed relationships that nurture continued consumption in this on-demand age.
As a result, digital subscriptions now account for almost half of total revenue of major news agencies like The New York Times. “This model allows for a more direct and continuous relationship with consumers, fostering loyalty and enabling better data-driven decision-making,” said Debbane.
Around 80 percent of businesses using subscription models use data to personalise customer experiences, leading to improved engagement and retention, a recent report suggests.
However, he cautions that attributing this massive shift in consumer demand to Netflix would be “overly simplistic.”
“The industry-wide adoption of subscriptions is driven by a broader recognition of changing consumer expectations and the desire for convenient, on-demand access to content,” he said.
News subscriptions thrive in digital age
News companies adopting a paywall strategy is a “logical response” to the shift in the media landscape, he believes. “While not universal, it reflects the growing acknowledgement that businesses that produce quality journalism require sustainable funding. This trend is likely to continue as audiences recognise the value of reliable, well-researched news content.”
This strategy has offered media companies a range of benefits including a steady and predictable revenue stream, greater consumer loyalty, access to more comprehensive data on consumer behaviour and engagement, and allows for a more personalised experience.
Dr. Tully believes that businesses operating in the news and entertainment sectors should consider adopting a subscription model. “There’s really no significant alternative for profitability. They must either make money or go out of business.”
“Everyone is streaming, and it is easier to pay a flat fee per month than to charge item-per-item, be that a song, a movie or an article. It may not be cheaper, in fact it often isn’t, however as is human nature, people will opt for the easier route,” he explained.
For news companies specifically, this move is a particularly lucrative one.
“The advantage a news subscription service has over an entertainment service is that news is constantly changing, and the demand will always be there for new product,” said Dr. Tully.
“People may get sick of vintage movies they’ve already seen, but a news outlet doesn’t have to worry quite so much about changing audience tastes.”
However, this strategy might not be the right choice for certain platforms where content is already becoming commoditised. This includes social media platforms, search engines, weather forecasts, and stock market data – information that consumers are accustomed to accessing for free which are supported by alternative revenue streams like advertising.
“Ad-supported models might still be relevant for platforms focusing on user-generated content, where a large user base is essential for revenue generation,” Debbane explained. “Niche industries with highly sporadic or one-time use content may find subscription models less fitting.”
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