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Home » “Generative AI could hinder subscription efforts”: Toolkits Subscription Snapshot Q2 2023 | What’s New in Publishing

“Generative AI could hinder subscription efforts”: Toolkits Subscription Snapshot Q2 2023 | What’s New in Publishing

Toolkits’ latest Subscriptions Snapshot shows that whilst publishers are approaching the second quarter with cautious optimism, headwinds are emerging as consumers tighten their belts and, in some instances, look to renegotiate better subscription terms. The outlook is further clouded by the impact of AI and U.S. click-to-cancel legislation.

Toolkits, the subscription insights consultancy, has released its latest Subscriptions Snapshot which shows that while many publishers feel stable in terms of their subscription foundations, few expect to see conditions improve significantly until the fourth quarter of 2023.

The report’s authors single out retention as a particular challenge as consumers pare down expenses and, in some cases, opportunistically look for better subscription terms. For publishers to counteract this, the report notes that, “retention initiatives are now kicking into overdrive” and “a focus on subscriber retention is increasingly becoming an existential requirement rather than a strategic choice.”

Some publishers have deprioritized growth initiatives almost entirely, and are redirecting resources and attention to maintaining their existing subscriber bases. Subscriber revenue is acting as an essential stabilizing force for many businesses.

Toolkits Subscription Publishing Snapshot Q2 2023

Against this backdrop, Toolkits expects the second quarter to be shaped by a number of key themes, notably:

  1. Greater emphasis on subscriptions as a primary revenue driver.
  2. Retention efforts will intensify.
  3. Generative AI could hinder subscription efforts.
  4. Looming click-to-cancel requirements will cause headaches for some publishers.
  5. More publishers will experiment with cross-promotions and “bundle” offers.

Publishers will be forced to be more flexible around the products and features they’re offering, the
payment terms and commitments they expect from subscribers, and to offer subscribers greater
control over when and how they’re charged.

Toolkits Subscription Publishing Snapshot Q2 2023

Artificial intelligence storm clouds gather

The report notes that the sudden arrival of generative artificial intelligence technology has caught publishers flat footed, with publishers scrambling to protect their content from being used by chatbots and AI-driven tools.

AI now appears likely to meaningfully disrupt the relationship between publishers and their
audiences – particularly as it relates to content-based subscription products.

Toolkits Subscription Publishing Snapshot Q2 2023

The report adds that most publishers subscription products are based on the exclusivity of the content, but if AI is able to access (and even expand on) the same information, “convincing audiences to pay publishers directly could become more challenging.”

It remains unclear if and how AI tools are currently reaching beyond paywalls to gain access to
subscriber-only content, but concerns are mounting. A growing number of publishers now
believe their paywalled information is showing up directly in responses generated by AI tools,
and are demanding greater clarity from Google, Microsoft, OpenAI, etc.

Toolkits Subscription Publishing Snapshot Q2 2023

The authors conclude, “Content security will therefore be top of mind for many subscription publishers in the months ahead as they attempt to gain tighter control over how their content is being accessed and used – and to ensure their subscription efforts and business models are not being undermined entirely.”

Click-to-cancel threats

The report also focuses on the U.S. market noting that click-to-cancel mechanisms could become a nailed-on legal requirement for publishers serving the market. The proposed legislation aims to make it as easy to cancel subscriptions as it is to subscribe, with any workarounds stymied by a clause that insists publishers must enable click-to-cancel “in the same number of steps” as they encountered when subscribing.

If adopted this summer, the report’s authors note that, “new Federal Trade Commission rules will require many publishers to make significant changes to their products and retention” and “possible spikes in churn could dent subscription revenues meaningfully”.

For some publishers, adding click-to-cancel functionality will require significant alterations to websites, apps, and backend systems. Internal processes and retention approaches — many of which have been carefully optimized over the course of years — will need to be rejiggered.

Toolkits Subscription Publishing Snapshot Q2 2023

To download Toolkits Subscription Publisher Snapshot Q2 2023 Report, click here.

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