Subscription Nomads: A Warning
The subscription economy has been on the rise for a while now, but it seems to be facing a new challenge: Subscription Nomads. These are consumers who subscribe to a service, get what they want, and then cancel their subscription and move on to the next service. Let’s highlight this growing problem for digital businesses built on subscriptions.
The concept of the Subscription Nomad actually came to me when I was reading about Netflix. In 2022, not only did 25% of Netflix subscribers say they were going to cancel their subscription, but that 92% of those threatening to actually went ahead and canceled within 30 days of subscribing! Why? Two thirds said increasing subscription costs was one factor, and almost a third said they used other streaming services more.
The problem for streaming is that people want to watch Stranger Things and The Mandalorian and not Netflix, or Disney+. In streaming, consumers care primarily about the content, not the brand and this means that they may be willing to subscribe to be entertained, but then they’re perfectly happy to cancel and walk away.
It’s totally understandable. People aren’t bad - they’re smart and they want their money’s worth. And if they are forced into one model (subscriptions) they follow it until they’ve taken all the benefits they can, then cancel and leave. That’s the Subscription Nomad and, like all nomads, they’re comfortable moving on — from Netflix to Disney+ to HBO to AppleTV+ and back to Netflix.
The irony is that the more an industry tries to create a massive, stable fortress built on subscriptions, the more they turn people into Subscription Nomads and incentivize them to move on once they’ve consumed all the content. It’s obvious when it comes to streaming video, but it’s the same everywhere, even with the news — people only stay with a publisher as long as they feel they can get the maximum value for their money.
But don’t take my word for it. Take a look into the magic mirror that is SXSW 2023 — PCH Insights is projecting that 59% of subscribers will essentially become Subscription Nomads, with another 11% likely to join the ranks, because they’re going to re-assess, actively cancel, or subscribe and switch as needed.
Subscription Nomads are just as big a problem for the digital publishing industry.
Did you know that, in publishing, one-third of all active churn happens in the first 24 hours? So if you thought Netflix had it bad with 23% of subscribers leaving within the first month, how’s publishing doing with 33% of all subscribers gone within one day? Those are your Subscription Nomads right there — they got what they wanted and immediately canceled their subscription and moved on.
And it gets worse. On average, over 40% of subscribers have not even visited the publisher in the last 30 days and are thus most likely to churn because they are not deriving value from their subscription. Those are all potential Subscription Nomads and a disaster waiting to happen.
It’s only going to get even worse. More and more publishers are competing for the same audience, so the fight is getting more fierce. And don’t forget, only 27% of US consumers want to subscribe to news publishing in the first place. That means every publisher is vying for the same small pool of users, and people aren’t going to increase their media budget — they increasingly just reallocate it.
If you force someone to do something, they may well do it, but only until they get what they want. And in this regard, Subscription Nomads are a product of the subscription economy. If all publishers want is to get people to subscribe — and all people want is to enjoy as much content as they can — they will have no choice but to become nomads and walk away to buy someone else’s products.
This movement will only become bigger and only grow faster. By building business fortresses based on subscriptions, publishers aren’t keeping people in, they’re pushing them out. They’re giving their subscribers a reason to call an Uber and drive on to the next fortress.
But this also marks a huge opportunity for giving users what they want without forcing them into subscribing — which would open additional revenue opportunity. We’ll explore how to harness the power of migrating users at the end of this series.
This is a series of articles that explores where creators and publishers are today — and where the media as we know it needs to go in the short term. I’ll provide solutions and concepts for how to change the status quo at the end of the series.
About Cosmin
Cosmin Ene has a wide spectrum of experience in monetization for content providers. For the last 8+ years he has worked with a broad swathe of publishers — from bloggers to local media to national and international publications — including the San Francisco Chronicle, Salon, The Boston Globe, and Der Spiegel. Cosmin also has profound experience generating revenues from contributions for content creators and artists, having worked together with industry luminaries like Nick Knight. Recognizing that people’s digital content consumption habits have fundamentally transformed traditional business models, he advises publishers and content providers on how best to embrace user-centricity in order to remain profitable and to succeed in the 21st century.
