Media Briefing: Publishers pump up per-subscriber revenue amid ad revenue declines

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This week’s Media Briefing looks at the top trends to come out of publishers’ Q2 earnings.

  • Digital subscriptions carry Q2
  • The Arena Group sells a majority stake, X caught throttling traffic to competitor sites and more

Digital subscriptions carry Q2

Another round of earnings has come and gone and based on Q2 trends, publishers’ digital subscription businesses were the breadwinners compared to their digital advertising and commerce businesses. So much so that the achievement of having increased the average revenue per user (ARPU) for paid subscribers in Q2 was a top talking point for the chief executives from The New York Times Company, Gannett and News Corp during their earnings calls over the past couple of weeks. 

“In Q2, we achieved our highest ARPU level in two years,” said Gannett’s CEO Mike Reed during the company’s earnings call on August 3, adding that he expects both ARPU and total digital-only subscription revenue to continue an upward trajectory for the remainder of the year. 

But beyond that glimpse of silver lining, most of the publishers reported an ongoing struggle in digital advertising. BuzzFeed, being the only company to disclose commerce revenue specifically, reported that the revenue line was also down in Q2. 

That said, optimism that the tides will turn during the second half of the year was echoed throughout each earnings call, as the C-suite attempts to manifest year-over-year revenue growth by the end of 2023. 

Below are some top trends from publishers’ Q2 earnings calls and what these indicate for the remainder of the year. 

By the numbers: 

  • BuzzFeed’s total Q2 revenues were $77.9 million, down 27% year over year.
  • Dow Jones, a subsidiary of News Corp, reported a year-over-year decrease of 3.3% in total revenue this most recent quarter to $546 million. 
  • Dotdash Meredith’s digital revenue was $212 million, down 10% year over year, while print revenue was down 21% year over year to $207 million. 
  • Gannett’s total revenue for Q2 2023 was $672.4 million, down 10.2% year over year.
  • The Arena Group’s total revenue increased 9% year over year to $58.8 million in Q2. 
  • The New York Times reached $590.9 million in total revenue this most recent quarter, representing an increase of 6.3% year over year.

ARPU is the new favorite metric for measuring digital subscriptions

The New York Times, Gannett and News Corp all boasted their digital subscription successes in the second quarter, with the former two calling out improved ARPU metrics. This growth was attributed to more aggressive pricing, bundle models and reducing new subscriber acquisition costs while improving the retention tactics of already paying readers.

While Gannett’s total digital-only subscriber base decreased 3.5% from 2.02 million at the end of Q1 2023 to 1.95 million by the end of Q2 2023, ARPU increased 7.6% during that same timeframe from $5.90 per subscriber in Q1 to $6.35 in Q2. Total digital-only subscription revenue increased nearly 6% during that same time period, which CFO Doug Horne called a direct result of the “deliberate actions” to prioritize “long-term monetization versus short-term volume” during the earnings call. 

The average revenue per subscriber for the Times reached $9.15 in Q2, an increase of 3.6% year over year and 1.2% quarter over quarter, which evp and CFO William Bardeen primarily attributed to “price increases on tenured single product subscribers,” adding that in Q2, more than 1 million subscribers began paying higher rates for their single-product subscriptions.

By the end of the year, the company plans to have notified at least 1.5 million single-product subscribers of a price increase, which they hope to retain, if not upsell to the bundled subscription product.  

And speaking of the bundle – the Times’ strategy for upselling and retaining subscribers with more category-specific content from properties like Cooking and The Athletic as well as games – more than 3 million people have officially subscribed to the multiproduct offering after adding 280,000 subscribers in Q2 2023. This is nearly double the number of bundle subscribers added in Q2 2022, Bardeen said. 

News Corp, which operates on a fiscal year running July 1 through June 30, reported a decrease of $2 million within its circulation and subscriptions businesses from $434 million in Q4 2022 to $432 million in Q4 2023, due to an added week in 2022. Without the benefit of the added week, this business would have experienced a 1% increase year over year, per the company’s earnings release

Losses from the year in this business were partially offset by the growth of digital-only subscriptions, especially at The Wall Street Journal, which increased 10% year over year and 3% quarter over quarter to 3.4 million digital-only subscriptions in Q4, representing 86% of the publication’s total subscription volume, per the release. Meanwhile, digital-only subscriptions to Dow Jones’ consumer products business reached 4.5 million, up 12% year over year and 4.6% quarter over quarter. 

Digital subscription growth took off during the first six months of 2023, according to Robert Thomson, CEO of News Corp, thanks in part to the company’s efforts to also bundle its products, moving readers along the “pathway” from MarketWatch to WSJ to Barron’s and Investor’s Business Daily, before they finally become customers of the company’s specialist business products. 

Advertising: Bad for some, better for others  

The Arena Group and The New York Times were the outliers when it came to digital advertising revenues in Q2. 

The New York Times’ digital advertising revenues surpassed expectations with a 6.5% increase year over year to $73.8 million. Meanwhile, The Arena Group reported a 19% year-over-year increase of this revenue stream, reaching a total of $29.3 million. 

According to its earnings report, The Arena Group attributed this outlier status to the fact that its programmatic CPMs outperformed industry benchmarks by 41%, citing Operative’s STAQ Benchmarking Data. 

The Times, on the other hand, attributed its growth primarily to its first-party data products being deployed across both its news site and The Athletic, which helped offset continued weakness in podcast advertising.

The other publishers sang a very different tune.   

Gannett’s total digital advertising and marketing services revenue in Q2 fell 11.4% year over year to $204 million. BuzzFeed’s advertising revenue declined a whopping 33% year over year to $35.4 million and its branded content business declined 22% year over year to $31.5 million.  

Headwinds to macroeconomic advertising is the culprit, according to BuzzFeed’s president Marcela Martin, citing increased competition for both audience time and advertising dollars. She added that the advertising categories of CPG, entertainment and financial services were all soft in Q2, while tech was up an undisclosed amount year over year thanks to a deal with Google for its Google Pixel phone. Martin continued that Q3 will also remain challenged, with performance expecting to be on par with this most recent quarter. 

Dow Jones’ advertising revenues decreased 14% to $100 million in the fourth quarter of its fiscal year, with 18% and 10% declines in print and digital advertising revenues, respectively, per its earnings release. The additional week in 2022 was said to have contributed a $9 million deficit (representing about an 8% difference year over year), but the company also pointed to a softness in advertising spend coming from the technology category as another reason for the dip. Digital advertising accounted for 60% of total advertising revenues in the quarter, up from 58% a year ago. 

Dotdash Meredith’s digital revenue declines of 10% year over year were attributed to declines in premium sold advertising as well as lower programmatic advertising revenue because of lower traffic in the entertainment and finance categories, per its earnings release

Commerce pays if it’s invested in

While it does not disclose commerce revenue specifically, Dotdash Meredith did report “strength in affiliate commerce revenue” in its Q2 earnings. 

The Times’ Bardeen also said that the company exceeded its guidance in the “other revenues” category, which includes affiliate revenue, increasing 16% year over year to $64 million. He specifically called out Wirecutter’s “higher than expected” performance in driving affiliate revenue in contributing to that growth. 

BuzzFeed, meanwhile, reported that commerce and other revenues were down 17% year over year to $11 million, due to the fact that Complex did not hold its metaverse shopping event Complexland this year, according to Martin.

What we’ve heard

“It’s still pretty early. And I feel like we’ve figured out how to bake some good cakes, but we still have to build out the bakery that can scale this and make more content experiences like this widely distributed across our network.”

— Jonah Peretti, BuzzFeed CEO, talking about the publisher’s experience with AI, not its Tasty test kitchen, during the company’s Q2 earnings call

Numbers to know

45%: The amount of CoinDesk’s editorial staff that was laid off as its parent company Digital Currency Group preps to bring on strategic investors. 

$40.9 million: The amount of money that Vice Media owes in back taxes for the acquisition of Refinery29, according to a claim from the Internal Revenue Service.

1 million: The number of total subscriptions that the Telegraph Media Group has reached, achieving the goal it set for the end of 2023, 70% of which are digital subscriptions. 

$100 million: The amount of money that X (formerly known as Twitter) is giving up annually by shutting down its promoted accounts business, also known as “Follower Objective” ads.

What we’ve covered

Publishers push for negotiations with generative AI companies, tout new uses in latest earnings calls:

  • Publishers used their companies’ latest earnings calls to continue discussing the opportunities and challenges around generative AI technology and its impact on media businesses.
  • While some execs expressed concerns of generative AI “fatally undermining journalism and damaging our societies,” others outlined the opportunities they see for the tech. 

See how media execs are talking about AI to their shareholders and what that means here

Digiday’s definitive, if not exhaustive, 2023 artificial intelligence glossary: 

  • While provocative, the media and marketing industries don’t seem to have a standard or definition of AI and what it all entails.
  • To help give some understanding, Digiday compiled a list of some of the key terms in AI that are frequently used in the companies we cover. 

See the glossary here

The case for and against open-source large language models for use in newsrooms:

  • Open-source LLMs allow publishers to download that code and fine-tune the models for specific tasks using their own data.
  • Despite it being free, not all publishers are convinced open-source LLMs are the models they should be using to build generative AI tools for their newsrooms.

See why publishers are or are not considering open-source LLMs in their AI experimentations here

Why two esports journalists are combining their communities for a collective games media venture: 

  • With games media at a crossroads, two journalists who cut their teeth in esports are leveraging their organic connections to the gaming community to kickstart a collectively owned media operation.
  • Combining their newsletters as they move from Substack to a joint Patreon, the goal of Jacob Wolf and Mikhail Klimentov is to gauge readers’ interest in a gaming journalism collective — then, if things go well, to continue to bring more stakeholders into the fold. 

Read more about the newly formed media company here.

What we’re reading

The Arena Group sells a majority stake in a $110 million deal: 

The Arena Group announced during its Q2 earnings call on Monday the sale of a 65% stake in the company to Simplify Inventions, reported Axios. The publisher of Sports Illustrated will receive a $50 million cash investment as well as $60 million of guaranteed ad commitment from brands owned by Simplify over 5 years.  

X is caught throttling traffic referrals to certain competitor sites: 

X owner Elon Musk was called out for throttling (or delaying the load times of links) traffic to sites like Facebook, Instagram, Bluesky and Substack, as well as news sites like The New York Times and Reuters wire service, according to The Washington Post. 

Vice Media blocks stories deemed offensive in Saudi Arabia: 

Following a deal with Saudi government-controlled MBC Group that established a joint venture between Vice Media and the country, the publisher has reportedly started blocking articles that could be possibly considered offensive, according to a report from The Guardian. 

Pop culture X accounts like Pop Crave could be the future of political journalism:  

The mostly anonymous pop culture accounts, Pop Crave and Pop Base, on X and Instagram have been alerting users to breaking news beyond the realm of celebrity and entertainment for years, and in the coming Presidential election, these accounts are in a position to have a significant voice, Vox reports. 

Google adds AI-powered article summaries in its Search Generative Experience: 

Google unveiled new updates to its three-month-old SGE tool, which serves as an AI-powered conversational mode in Google Search, including AI generated summaries, definitions and code, reported TechCrunch. This feature will not summarize paywalled articles, however, and publishers can choose to opt out of this feature.

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