What next for The Telegraph as subscription revenues continue to shrink?

Opinion

The Telegraph looks on course to hit its bold ‘one-million subscriber’ target, but at what cost? And what will happen next?

In moving to a subscription-first strategy in 2018, The Telegraph set a target to boost the ailing newspaper’s commercial fortunes with a target of reaching ‘one million subscribers’ by 2023.

With DMGT now confirming its interest in buying the title, just weeks after the release of glowing profit figures, the Telegraph has now celebrated hitting its one-million target (subject to auditor confirmation, expected in October). This has raised eyebrows in some quarters as to how those numbers stack up — but it’s an achievement nonetheless.

The average subscription rate across the news business, based on most of the conversations I have, tends to hover at around two to five percent of the total audience.

With a total audience of 25 million unique visitors per month (in 2017), the paper would need to convince just four percent of its total audience to subscribe in order to hit that magic one million.

Irrespective of whether you align with The Telegraph‘s values, they had reason to dispense with their traditional conservatism when it came to their growth prospects. It’s a powerful, traditional media brand that employs excellent journalists, and its editorials carry considerable weight.

And as Raymond Snoddy pointed out in his column last week — there is space for such a title in the market; it may also have an ageing audience, as is common with most newspaper brands, but it’s a loyal one.

So, with a focus on building a strong acquisition and retention model, using modern digital tools, you can understand the optimism.

What happened?

In 2020, the paper passed the 500,000 milestone and finished 2021 with 720,000 — in part, I suspect, given the overall growth in subscriptions during the Covid pandemic but incredible progress nonetheless.

Modest growth in 2022 saw this number grow to just 733,731 by the year end, and the latest figures show the numbers grew to 767,833 news subscribers by the end of June 2023 (though it should be noted that this number increases to 974,709 when new acquisitions and spin-off products such as crosswords are included, or drops to 586,288 when digital duplicates and free trialists are omitted from the total).

So is this good or bad?

The business set a bold strategic target and appears to be on course to meet it. This is not easy to achieve in a market where subscriptions are clearly starting to plateau, even if the numbers have been boosted by an acquisition.

Revenue-wise, the Telegraph‘s numbers show that average revenue per reader has dropped by 14% during 2023, presumably as a result of excessive giveaway promotions — currently, the paper is offering a three-month subscription at just £1 per month — and perhaps due to lower revenues per user from the newly-acquired titles.

It’s not yet clear how advertising revenues have been impacted in 2023. Across the entire media sector, income is down, owing to advertisers pulling back on marketing spend in tight economic times and the continued haemorrhage of market share to the social media platforms. Even more pop-ups can’t be the answer; the potential gains are small.

Increasing reader revenue has to be the focus, and here, the Telegraph is on strong ground as it has a product that people are willing to pay for.

The newspaper continues to win plaudits and gain readers, most recently for its coverage of The Coronation and the Matt Hancock WhatsApp scoop, and continues to be profitable.

It will be interesting to see what the next target will be, especially if the paper drops its relentless mission to gain one million subscribers and focuses instead on overall reader revenue.

The numbers suggest that subscriptions would naturally plateau at around the 500,000 — 750,000 mark without the discounting, and I would suggest that average reader profit would skyrocket; with less spend on performance marketing to close short-term sales, and less churn as the new customers you do acquire are acquired at a price they are willing to pay on an ongoing basis.

You’re less likely to see loyal full-price subscribers churn out and re-sign to get the offer again, or be made to feel like fools for their loyalty. Swapping five new ‘give it a go at a pound’ laggard late adopters for one loyal ten-quid-a-month subscriber makes good business sense to me.

And at this point, I, of course, have to mention the idea of adding per-article payment to the mix; we know that pay-as-you-go is effective both as a subscriber-acquisition mode and a way for generating revenue from the 95% of casual visitors who come to the site and may be prepared to pay something but not be ready or willing to sign up for a subscription.

One million subscribers are well within reach, but at what cost? I’m intrigued to see what happens next.

Dominic Young is the founder and CEO of digital news micropayment tool Axate. He was previously a newsbrand executive at News Corp.