Are digital subscription models the answer in the wake of fake news?

The pros and cons of the subscription model in media

This March, the online publishing platform Medium announced a new “membership” model. Subscribers can pay five dollars a month to access exclusive content and an offline viewing option, among other benefits. Some felt the price tag was unjustified: Criticism ranged from colorful similes (“Medium is Soundcloud, pretending it’s Spotify”) to straightforward hot takes (“Ev Williams has lost his goddamn mind”).

While Medium’s attempt at a subscription model is unproven, it’s just one example of modern media’s rapid shift away from advertising and towards subscriptions. Here’s a rundown of how quickly that shift is happening, and what larger implications can be drawn from it.


Subscriptions are overtaking adverts

Since the results of the 2016 US presidential election came in, news services of all stripes have cited record circulation numbers. The New York Times pulled in new subscribers at 20 times the rate they’d hit just a year prior, adding half a million. Their subscription revenue is nearing 60 percent of their total revenue, while their ad revenue (including digital as well as print) dropped to 37 percent of the same. ProPublica, The Atlantic, FT, The Washington Post, the Wall Street Journal and the Boston Globe have also seen substantial subscription boosts.

Media consultants are urging businesses to use subscription models or hybrid models, but never just advertising: “Free is a four-letter word” consultant Bernard Gershon told the Columbia Journalism Review last year. It should be: According to numbers from the Newspaper Association of America, US newspapers earned $47.4 billion in print revenue and $2 billion in digital revenue in 2005. Nine years later, the same papers earned just $16.4 billion in print revenue and just $3.5 billion in digital revenue. During roughly the same period of time, the US’s total national ad spend dipped below one percent of the GDP for the first time in a century. In short, the shift to digital has cratered ad money, and subscriptions are the answer.

Just in the last month, an entire subgenre of media analysis has risen to confirm that subscription models are taking over far more than just journalism. The analysis is led by a Quartz article from freelancer Rosie Spinks, who argues that music services are at the forefront, given Spotify’s impressive 40M paying subscribers out of a 100M-strong user base. New York Times columnist Farhad Manjoo echoed the sentiment, arguing that the uptick in subscriptions represented a tipping point. The internet has shifted away from destroying the economic models that used to support arts and culture, and is now allowing audiences to directly pay creators. The result: Less “overheated clickbait,” more “small acts and subtle niches.” Granted, some pivots to subscriptions aren’t working great — looking at you, YouTube Red — but that hasn’t slowed them down. Even Twitter might be planning a paid subscription service.


Subscription models are more niche by design

Advertisements reward scale, while subscriptions reward engagement and loyalty. A subscription service must offer consistent and well-defined content in order to engender that loyalty.

On the internet, revenue models flow towards the particularly large and the particularly small, as the former has a large base of users and the latter has a tiny overhead. Subscription-based media follows this pattern: On one end are the Washington Posts and the ProPublicas, and on the other end are the one-person operations like Ben Thompson’s Stratechery or Nick Quah’s Hot Pod. Larger publications might not need a niche, but smaller ones do. Hot Pod focuses exclusively on the growing podcast industry, while Stratechery analyzes major tech companies’ business strategies.

Regardless of how niche the content is, subscription media’s audience will be niche by design: They can only exist if they’re paying. As subscriptions take over, expect to see more and more paywalls. To the extent that creators will be directly paid for arts and culture, those exact same arts and cultural touchstones will be invisible to anyone without the discretionary income to afford it.

This is the looming, unsolvable problem behind subscription services. In the 20th century, you could pick up an ad-supported newspaper for a few cents to learn what scandal your local councilmember had found themselves in. In ten years, perhaps you’ll opt out of your local news service’s ten-dollar-a-month daily newsletter, and go the voting booths armed with less knowledge than your slightly wealthier next-door neighbor.


There are a number of factors at play

Subscriptions can support high-quality content. But there is no quality high enough to convince someone to commit to an annual New York Times or Medium subscription when that 60 dollars needs to go towards a weeks’ worth of grocery for one’s children or that month’s electricity bill. Keeping up on news and culture might be important to a society, but it’s not important to many individuals. Worse yet, partisan media, funded by donors with personal interests, will remain free and become default news sources for many.

Is there any hope? Well, yes. Several partial solutions can mitigate the problem.

First, keep in mind that subscription models’ prices can fluctuate. Just as an airplane ticket price is affected by when it is purchased, which website it’s purchased on, whether it’s refundable, and how much leg space a seat offers, so too could media subscriptions be dynamically priced. Everyone gets the news, but at different amounts or speeds. This doesn’t solve the core problem, as those with less money will still receive fewer benefits, but it offers a range of benefits, some of which might supplement the lower paying tiers.

Second, the subscription model is at least sustainable, something that the digital ad model fails at. Public libraries or non-profit charities can pull some of the weight.

Finally, and most promising, there is the fact that even subscription models typically need a free tier. Stratechery and Hot Pod both offer one free column per week in order to draw in more potential customers, which is a strong incentive to produce high-quality, useful content for all. In the subscription-powered world of the future, these free offerings, while limited, should be enough to offer a collective cultural arts and news source.

But could the free tier wind up lower quality overall, perhaps burdened by the advertisement’s older brother, sponsored content? I’ll let Manjoo answer it himself, from a Twitter thread in which Fortune writer Mathew Ingram brought up the same concern this article centers on: “That’s possible.”