Key Factors in Subscribing Paywalled Services/Platforms

Part
01
of two
Part
01

Key Factors in Subscribing Paywalled Services/Platforms

Six key factors that make people commit/subscribe to digital services or platforms that have a paywall are convenience, value of service, cost-savings, selection, personalization, and not having to deal with ads.

1. CONVENIENCE

  • Subscribers want to have the convenience of watching/listening anytime and on any device. (S1)
  • According to a survey conducted by Widmeyer Communications for 1,000 US subscriber of digital services, 29% of the respondents ranked convenience as their main reason why they subscribe to services.
  • The auto-renewal ensures that customers do not run out of products or have their service suspended because they forgot to pay a fee. Customers do not have to remember to refill or reorder anything every month. It saves them from the decision-making process for simple and repetitive purchases.
  • By paying a regular fee, the consumer gains access to a product or service which is mass-customized by the use of big data and often includes a surprise element to retain interest.
  • Streaming services mean having the world's complete history of film at your fingertips, providing thousands of options on what to watch and enjoy without leaving the comfort of your home.
  • Netflix is very easy to use as users do not have to set up anything after subscribing. Netflix also allows users to download the content and watch it offline. This means that users can watch it anytime anywhere without the need for internet connections.
  • Spotify offers premium users the ability to upload music into their library on one device and become available on most devices that they own, making it very convenient for users who own multiple devices and the ability to save songs offline in Spotify and listen anytime anywhere without the need for internet connections.

2. VALUE OF SERVICE

  • According to a survey conducted by Widmeyer Communications, 26% of the respondents listed value of service as one of the reasons why they subscribe to services.
  • The Subscription model adds value to customers through bundling, which refers to buying multiple products/services with the price of one.
  • Because of the “passive purchasing process,” subscriptions can sometimes go unnoticed, and customers want to receive communications regularly in a way that adds value to their relationship with the brand. This can be through “promotional messaging or non-transactional content.”
  • The key is to grow the relationship with the customer continuously and is particularly important when nearing the “end of the subscription lifecycle.” Consumers are unlikely to renew their subscription if they have not heard from a brand in a long time.
  • According to a survey conducted by Digitas’ intelligence hub Vera for over 2,000 consumers, 68% of respondents prefer to hear from subscription companies via email, 23% prefer text messages, 17% prefer ads on social media platforms, and 15% prefer TV ads. Only 9% prefer push notifications, 8% do not want to hear from the companies at all after subscribing, and 3% like chatbots. 36% of the respondents also noted that access to free content is one of the reasons why they subscribe.

3. COST-SAVINGS

  • According to a survey conducted by Widmeyer Communications, 21% of the respondents listed cost-savings as one of the reasons why they subscribe to services.
  • Subscriptions often offer the products or services at a flat rate. This enables the customers to stay within their budget by predicting and controlling their spending.
  • According to a survey conducted by Digitas’ intelligence hub Vera, 46% of the respondents listed cost-savings as one of the reasons why they subscribe to services.
  • Sometimes digital services offer savings to their loyal subscribers and customers are more inclined to continue their subscription as they save more money while continuing to use the service.
  • Netflix offers membership plans that target different users, and they can upgrade and downgrade anytime.

4. SELECTION

  • According to a survey conducted by Widmeyer Communications, 12% of the respondents listed selection as one of the reasons why they subscribe to services.
  • Streaming services can now cater to specific audiences, providing a range of genres such as foreign films, independent films, and documentaries.
  • According to a survey conducted by Digitas’ intelligence hub Vera, 49% of the respondents listed large variety/selection as one of the reasons why they subscribe to services.
  • Netflix offers original programs that are only available on their platform.
  • According to a study by Harvard Business Review, offering original content is one of the important ways that streaming services can differentiate their offerings from competitors as subscribers are more likely to continue using their service if they can access more original contents.

5. PERSONALIZATION

  • According to a survey conducted by Widmeyer Communications, 12% of the respondents listed personalization as one of the reasons why they subscribe to services.
  • Many subscription services include personalized recommendations for the subscribers, triggering their curiosity and allowing them to try something new conveniently.
  • By leveraging consumer data, subscription providers can customize their offerings and cater to the needs of an individual subscriber.
  • Customers want brands that recognize and actively work to understand their unique preferences, wants, and needs.
  • Spotify allows premium users to save and create a playlist for any songs.
  • Many streaming music subscriptions offer “on-demand access to tens of millions of tracks and hundreds of thousands of playlists, some of which are customized to the subscriber.”

6. NOT HAVING TO DEAL WITH ADS

  • According to a survey conducted by Digitas’ intelligence hub Vera, 39% of the respondents listed not having to deal with ads as one of the reasons why they subscribe to services.
  • Netflix is commercial-free. This means that when customers find a film or a show they want to watch and click “play,” they can watch it without being interrupted by ads.
  • Spotify offers their services for free but ads will appear now and then and they could disrupt the listening experience of the user. Therefore, most users upgrade their plan to enjoy their experience when using Spotify.
Part
02
of two
Part
02

Subscribing Paywalled Services/Platforms Demographics

While 60% of digital paid service subscribers are women, men are likely to pay more than subscription services. The reasons for consumers of digital video, audio, and news services committing to subscription services include convenience, value for money, personalized services, high-quality experiences, access local news, topical focus content, trust and quality provided, and access to original content.

DEMOGRAPHICS OF DIGITAL SUBSCRIPTION SERVICES

  • According to Statista, the types of services that Americans subscribe include over-the-top/video-on-demand, shopping, audio, print media, professional services, lifestyle, financial services, health and wellness, learning services, dating services, and others. The most subscribed services are over-the-top/video-on-demand (76%) shopping (62%), and audio (37%) [Screenshot].
  • The subscription e-commerce market has increased by over 100% a year over the last five years.
  • The most popular subscription services for online shopping are Dollar Shave Club, Blue Apron, and Birchbox, while the popular media-based subscriptions are Amazon Prime, Netflix, Hulu, Spotify, and Class Pass.
  • Gender: 60% of digital paid service subscribers are women. However, men are likely to pay more than subscription services.
  • Age: The majority of e-commerce subscribers are 25-44 years old. According to the American Press Institute, 4 out of 10 adult subscribers for digital news subscription services are aged 35 and below. According to Business of Apps, the median age of paid subscribers for Netflix falls in the 35-44 age bracket.
  • Location: The majority of e-commerce subscribers live in urban areas, especially in the Northeastern part of the United States. 77% of digital audio services users are living in urban areas.
  • Income: The majority of e-commerce subscribers have an annual income of $50,000 to $100,000. The majority of digital audio services users falls under the top 25% of household income groups.
  • Education: The education level of subscribers for over-the-top/video-on-demand services ranges from high school graduates to degree holders.

WHY CONSUMERS COMMIT/SUBSCRIBE TO THESE SERVICES/PLATFORMS

  • The main reasons for subscribers who pay for a curation-based subscription are convenience, value for money, personalized services, and high-quality experiences.
  • The main reasons for digital news subscribers include access local news (30%), convenience (15%), topical focus content (12%), and trust and quality provided (9%).
  • 96% of Netflix subscribers cited access to original content as the primary reason for subscribing.

Sources
Sources

From Part 02
Quotes
  • "The median age of Netflix users now seems to fall in the 35-44 bracket, whereas in the 2015 study, youth dominated, giving a median in the 25-34 bracket. The proportion of Netflix users fell as you went up in age bracket in the 2015 study. "
  • " The CNBC All-American Economic Survey 2018 found that 57% of Americans use a paid streaming service. Netflix dominates, with a market share of 51%, with Amazon Prime in second with 33%."
  • "Netflix users tend to be younger, with just under 50% under the age of 35. Only a third of Amazon Prime subscribers fit into this age bracket. In terms of gender, Netflix skews slightly female, while Amazon enjoys something approaching parity."
  • "Netflix’s appeal is not limited to those with a certain level of educational attainment. There’s nearly a perfect match between the educational levels of Netflix users and the overall US population."
Quotes
  • "They are motivated more by a desire to support the news organization’s mission. About two-thirds of them who use Facebook use it several times a day (compared with half of older subscribers), and many say that discovering a news source through social media was a key factor in deciding to pay for it."
  • "While there are a host of reasons, the No. 1 cited (by more than 4 in 10 subscribers) was that the publication they pay for excels at covering certain topics about which they particularly care. More than 4 in 10 also cite the fact that friends and family subscribe to the same product. M"
  • "More than a third of people say they originally subscribed in response to a discount or promotion. In print, people also are moved heavily to subscribe to get coupons that save them money, something that has untapped implications in digital."
  • "Fully 37 percent of the youngest adults, 18 to 34 years old, subscribe to news. The two youngest age cohorts who pay (18-34 and 35-49) also behave differently than older subscribers. "
Quotes
  • "The statistic shows data on the use of paid digital subscription services in the United States as of March 2016, by type. During the survey, two percent of respondents stated they paid for dating services at that point in time."
Quotes
  • "This latest study may be the largest study ever undertaken of people who have recently subscribed to newspapers. It surveyed people who subscribed in the last three months to 90 local newspapers across the country."
  • "In this report, we identify nine distinct “paths to subscriptions”—the motives and conditions that together lead a person to subscribe. Some people are looking for coverage of a particular passion topic."
  • "Digital subscribers in this study tend to be younger, male, and more educated than print readers. Digital readers are more often attracted by good coverage of a particular topic than are print readers (38 percent vs. 25 percent), and by noticing especially useful or interesting content (47 percent vs. 36 percent)."
  • " Half of digital subscribers are triggered to subscribe by hitting a paywall meter, and they are more likely than print readers to be motivated by a desire to support local journalism (38 percent vs. 29 percent)."
Quotes
  • "As for content, 96% of streaming audiences watch the various services' original content. (For more than half of streaming customers, original content is the primary reason they initially subscribed to streaming services)."
Quotes
  • "E-commerce subscribers are most likely to be 25 to 44 years old, to have incomes from $50,000 to $100,000, and live in urban environments in the Northeastern U.S."
  • "15% of online shoppers have subscribed to an e-commerce service over the past year, with 46% of respondents subscribed to an online streaming-media service including NetFlix. Subscription-box services that deliver products regularly include Blue Apron, Dollar Shave Club, Ipsy and Stitch Fix. Subscription-based media includes Amazon Prime Video, ClassPass, Hulu, Netflix, Spotify, and others."
  • "Women account for 60% of subscriptions, and men are more likely to have three or more active subscriptions. The median number of subscriptions an active subscriber has is two, and nearly 35% have three or more. "
  • "55% of all subscriptions are curation-based, making this category the most dominant in the 2018 subscription economy. Curation-based subscriptions’ dominance reflects online customers’ demand for a continued series of personalized, high-quality experiences."