I have always encouraged organizations to choose a lane when it comes to pricing. The power of subscriptions is that they are a good way to price when you’re solving the subscriber’s problem on an ongoing basis.

Subscription pricing aligns the goals of the reader with the ongoing goals of the organization. In advertising models, you might say that the readers are the product and the advertisers are the customers.

Doing both concurrently is problematic, because you’re trying to please two groups with different goals.

Advertisers want eyeballs. So the goal is to attract lots of viewers–maybe with a video about Kim Kardashian, or the day’s most sensational breaking news story.

In contrast, audience revenue is generated through content worth paying for. So it’s going to need to be differentiated content, and perceived of as being valuable, like an analysis of the bond market or the final match of a water polo tournament. It may attract a smaller, more committed audience.

As organizations move from ad revenue to subscription revenue, they may produce less, but more focused, content. They may also layer in other features to build deeper, more engaged relationships with their subscribers, such as concierge services, online community or live events.

As organizations move away from ad revenue, or even from revenue based on a single title or issue, and toward subscription, they are also moving away from being product-centric. Instead, they are focusing on the ongoing needs of their customers. They are treating their customers like members, and focusing on the longterm relationship, which results in maximizing customer lifetime value.

I was talking to Greg Piechota, INMA’s Researcher In Residence the other day, and he said something really interesting. He said that the news organizations that are doing the best with advertising revenues are the ones who have invested heavily in subscriptions.

It actually makes sense.

Organizations that are truly member-centric, and who focus on their subscribers’ long-term success, really know the people they serve. They understand their subscribers’ goals and challenges.

Meanwhile, advertisers are increasingly struggling to convert eyeballs into leads or even customers. They are moving away from cost per click (CPC) and toward cost per acquisition (CPA). That makes sense–the “forever promise” advertisers want is not really for people to look at their ads, but rather to connect with people who want to buy from them.

Organizations that know their subscribers well know what products and services their subscribers need and want. They also know how to communicate with their subscribers. They are actually well suited to help the advertisers connect with subscribers who need the things they sell.

You might think subscribers wouldn’t want to be advertised to. No one likes advertising if it’s not something they want or need, or if the information is communicated in a jarring way. No one likes to be told “if you want to see this video or read this article, first you HAVE TO watch this ad”. But for someone looking for a car or accounting services, thoughtfully presented information about different options might even be welcome.

There’s an opportunity to create an ecosystem of content providers, advertisers and subscribers, where the subscription actually provides the focus and insights advertisers crave. Is it possible to create a win/win/win? What do you think?