With the recent annoucement that Bloomberg has moved behind a metered paywall, I am starting to wonder at which point these subscription businesses start to combine and consolidate?
One gets the feeling we are passing the early stage of the digital subscription era and may soon, if not already, be moving into the digital subscription consolidation era.
Currently, subscriptions fall into categories or buckets. Each category has several contenders. For example:
- Video – Netflix, Amazon Prime Video, Hulu, HBO, Disney (still to come), Showmax etc
- Music – Spotify, Apple Music, Amazon Music, Google/YouTube Music
- Audio – Audible (and podcasts)
- Education – Pluralsight, Lynda, Udacity, Udemy, MOOCs, The Great Courses etc
- News – The New York Times, Financial Times, The Wall Street Journal, Bloomberg, The Guardian (donation based)
- News niches – For example, in tech you have subscription newsletters such as Stratechery, Above Avalon and a few others.
The challenge for the contenders is that not all categories are equal and ultimately, all subscriptions are competing for share of pocket. Some categories likely have space for a few subscriptions, while others have space for only one or two.
A cutomer could foreseeably have space for 3 or 4 video services if you can/want to bear the cost. Since the content on the different
channels subscriptions is highly differentiated and typically have block-buster halo titles which are exclusive (i.e. Game of Thrones, Stranger Things, The Grand Tour etc) – there is more chance that people could justify a few video subscriptions. One could see the market settling into a pattern such as: Netflix as the de facto subscription, Amazon Prime Video in the second spot since it comes bundled with Prime and then possibly a slot or two for HBO or Disney since they have the blockbuster, must-see content. Beyond that, niches may emerge to cater to specific interests such as anime or horror films. Even as I write this however, I suspect that 3 or 4 is likely too many. Maybe it will settle at only 1 or two?
(It should be noted that the video space could be augmented by a purchase/rental model like iTunes – there are situations where someone may not want to subscribe monthly when they only want to watch one or two movies/titles once-off.)
In music, there can be only one. I doubt there are many people willing to pay for multiple music services (since the content is mostly identical – give or take a few “exclusives”), unless it was particularly niche – for example Primephonic for classical music. However, if you are a classical music fan, you may still only pay for one – the classical one! Music services do not have the same dynamics as the video subscriptions. If anything, the music subscriptions seem to be moving towards consolidation with a video service which may indicate many people do not want multiple subscriptions – they only want one for all their needs (TV bundle anyone?). For example, the Spotify/Hulu bundle as well as Apple’s coming video entry which may or may not be bundled with Apple Music. From that perspective you could see a customer having their direct Netflix subscription for video, their Amazon Prime Video because it comes with Prime and then possibly Hulu because it is bundled with Spotify. As such, a customer has access to multiple video
channels subscriptions while not necessarily paying directly for 3 video subscriptions.
Similar to music, I think subscribers will only have space for one provider in the audiobook space (that is to say – if they even listen to audiobooks!). While there is currently a surge in the podcast industry, to date, podcasts are free and advertising supported. To my knowledge, there are not (yet?) subscription-specific podcasts. (The structure of the podcast industry seems most akin to the TV industry – in that they have networks hosting a variety of content in their stable, all supported by advertising)
When it comes to education, this depends heavily on what someone’s interests or needs might be and whether that person values ongoing education. If they do value direct education, the next big question is whether they like to learn via video? In my own case, I think there will be more shifting or churn from one provider to another based on your specific work or education needs at the time. Similar to the video category (and it should be said – all these education sites are heavily focused on video), most providers are subscription based, while there is still a space for players like Udemy which sell individual courses (usually through sale pricing and 2 for 1 deals). This works nicely for my needs as I have a specific interest in programming (Pluralsight) and where I cannot find a topic on that platform, I can supplement it with a course or two from Udemy that deals with that specific topic. What is interesting to note here, is that popular teachers on Udemy are able to launch their own subscription based businesses off the back of the popularity/success on Udemy.
Then it comes to news. If we look back on the “old model” of paper-based subscriptions, people tended to subscribe to one or two newspapers. Typically their local paper and then possibly another national or even international paper. On top of that, someone may subscribe to a handful of magazines (maybe). I get the feeling there will be a similar trend for the news bucket. While subscription numbers will likely be good for the big brand names, this is not a business model many publications will be able to follow – especially because the customer’s budget is spread between all of these services regardless of category. Keep in mind, these same people are already paying for their other existing subscriptions in other categories. I might read Bloomberg articles quite frequently, however, I would not pay $39,99 a month for their content. As such, I am not their customer and that is OK for me, and OK for them. 120 articles a year (10 free articles a month) is likely more than enough for my own reading habits. The difficulty is that news cycles are not regular, news happens as it happens and thus 10 articles a month means little as a result. Someone may end up wanting to read more than 10articles in a particular month and then that same person may not read any at articles from the publication at all for months on end depending on where else they get their news (more on this below). While these big brand news outlets typically cover all areas, over time they are going to have to specialise in order so that customers can justify the cost of the subscription – especially if they have numerous subscriptions. Customers will not want to see the same stories and content rehashed across publications. The interesting thing will be to see how these focuses and niches start to play out between the big names.
Then you get the specialised news and commentary. These publications are usually focused on a particular niche or a particular view/commentary on a niche. It is likely, that attention will be directed by these niches towards certain of the larger big name brands. For example, a tech publisher may direct traffic to particular sources based on their own subscription or reading habits. These publications usually act as filters or editorial on the news or what someone needs to know in their particular niche. In the tech space, one can get quite far in terms of knowing what events of importance are happening by following Stratechery (subscription) and a handful of (free) websites such as Daring Fireball. This means that possible subscriptions may be based on the subscription habits of your own upstream subscriptions – for example, if Ben Thompson subscribes to publications X, Y, Z and frequently links to them – it is likely that his own readership may be moulded by his own subscriptions over time. How these moulds are set will be based on how the larger subscriptions themselves focus on or cover niches. In essence, there will be a doubling down on niches.
This is all a long-winded way of saying, as much as niche and digital subscriptions are unbundling the news/media bundle – this unbundling is inevitably leading to a re-bundling a little farther down the line.