Subscription Boxes Are Generating New Revenue

Who doesn’t like swag? In the past, we’ve only gotten these exhibitor and vendor gifts mostly at conferences and trade shows we attend. But, of course, that’s now gone away.
Or has it?
Subscription boxes are the latest publishing trend. FIPP, the international trade group, just did a whole special report on them, complete with case studies. Basically, publishers send subscribers and would-be subscribers physical boxes of cool items. Yes, it’s mostly been consumer up to this point, but it doesn’t really have to be.
The idea has proven an effective one for our homebound times. A month ago, I wrote about a new online show called The Present starring magician Heider Guimaraes, where ticket holders are mailed a box with surprise contents that they are directed not to open until their Zoom show starts.
“How do you reach out of the computer and into the audience?” asked Matt Shakman, artistic director of the Geffen Playhouse in Los Angeles, where the show keeps selling out extensions at hundred-dollar prices. “The idea would be to hold something in your hand and be part of the process.”
Here are some concepts that The Present and subscription boxes are taking advantage of.
We’re home. It’s boring. “For subscribers, subscription boxes provide tangible benefits,” the FIPP Report states. “The experience of opening boxes is like Christmas.” In the past, getting something sent home might be more trouble than it was worth. Now, it’s easy and fun to break up our day.
It brings in revenue. Hearst Group Autos launched R&T Crew (Road & Track) Magazine in January with a subscription box geared to kids. “The first box included a beanie with a designable patch, trading cards featuring different cars, socks with auto graphics and a car kids can put together and paint,” wrote MediaPost. Subscribers receive six boxes for $225/year. Of course, adults like cool stuff, too. Michelle Panzer of Hearst Autos said, “The goal is to find ‘white space’ in the market where you can fill a need that no one else has already identified.”
The boxes can also be digital. “Many publishers now have a range of events, master classes, special talks and other digital goodies that they could package as part of a monthly ‘box,'” the report says. “Is it a money-can’t-buy 30-minute fireside interview with the publishers’ crossword-setter? Or a free ticket to a session” with your favorite writer? Digital “goodies” can also be personalized by seeing what the customer has shown the most interest in.

It shouts sponsorships and advertising. That same swag we get at conferences and trade shows can be used in subscription boxes. We know that vendors and exhibitors still very much need to connect with customers. “We work with sponsors and brand partners to acquire products, and we also go direct to factories to have specific products manufactured for every box,” says David Webb, editor-in-chief of Explore. “Our brand partners are a big part of the box—they appreciate that they can get their materials and products directly into the hands of active users and buyers through us.”

The boxes can even be geared to one event, like The Present. Like the magician Guimarães whose idea it was to send the viewer a package with contents to be revealed as the show unfolded, a publisher’s subscription box can also be geared to an upcoming virtual event. Pardon the pun, but we could think outside of the box on this. Maybe it’s a special clicker or flashlight that a Zoom speaker would ask everyone to use when they have a question. “Let’s light up the Zoomisphere and take a screenshot!” I received a harmonica at an in-person event last year that became part of the show later.
It can be made easy. Subscription box vendors have started. In fact, Explore now has a warehouse and factories on contract. They learned quickly that it’s not easy to do so now they do it for others. “We had to learn everything from the ground up,” Webb said. We packed the first test box in our office, and the next one at a warehouse space. We learned it all on the fly, and used these lessons to be better with the next one.”
Added Panzer: It’s about providing “subscribers with an experience they’re not getting elsewhere.”

‘You Can Pay Us to Turn the Ads Off’; Duolingo’s Story Inspires Revenue Ideas

I was listening to an interview Sunday of Luis von Ahn, CEO and founder of Duolingo, the language-learning company. He said that when asked by his investors about charging people for the service, he would not waver. “We’re never going to charge people.”
But he knew that he would have to figure out ways to monetize it—the popular app is now valued at $1.5 billion—he told NPR’s Guy Raz on How I Built This.

“We were very precious about this,” von Ahn, who is from Guatemala, said. “We cared a lot about the user experience for Duolingo. And first of all, we thought, ‘We’re never going to put ads in here.’ But we had a year of turmoil, and we needed to figure out how we were going to make this sustainable. At some point, enough [employees] got convinced, ‘Okay we’ll put an ad at the end of every lesson.’ Fortunately, that gave us quite a bit of money .

“Soon after that we got a lot of people who didn’t like ads and asked, ‘Hey can I pay you to turn off the ads?’ ‘Okay, how about we launch the subscription service where the main thing is you can pay us to turn off the ads.’ It turned out—and we just didn’t realize this—subscriptions made us a ton more money than the ads. [Subscriptions cost] $9.99 a month. Two years later, 3% of our [40 million] active users pay the subscription.”
I love a couple things about this. One, with human nature you never know. So try things, especially now! Earlier that day, I was talking with a friend about The Washington Post’s coverage of COVID-19 and the protests. In the midst of the conversation, he complained about the half-page vertical ad that often now covers the print front of the Post. I admit that I also grimace when ripping it off in the morning, but it’s now a fun ritual. I am positive that, like Duolingo, my friend would pay extra for his Post not to have that.
The second thing is that von Ahn stuck to his principles about a free product but then sought to monetize it. Similarly, COVID-19 resource pages have become an incredible place of information for readers on many SIPA member websites. And I would guess that all of these are free. But they are also leading to monetization. Stephanie Williford, CEO of EB Medicine, said at SIPA 2020 yesterday that they were initially going to keep their COVID-19 content behind a paywall. But after much negative feedback, they made it free and got a lot of positive responses.
One main article there has received 340,000 views, when a typical popular article might get 10,000. Although they made the mistake of not collecting emails early on, they have seen a bump of around 9% in subscriptions. “We usually see a slowdown in the summer, but the feedback has been overwhelmingly positive” and that has translated into subscriptions, she said.
In that same SIPA 2020 session, Dan Fink, managing director of Money-Media, said that “we don’t generally use much free content in our marketing. There are groups that we target, and if they register, they get a free trial. What we’ve done during the pandemic is send out more content to more people, so we’re getting more trial signups than normal.”
They’ve also extended the length of those trials, given our challenging times. “Plus, if there’s an opportunity for a corporate license sale, we might extend the trial even more to 3 months or longer. We’re hoping that companies want to stay informed and get vital news in this extraordinary time. So we’re building demand and habit that we can harness down the road. Hopefully, as they develop a habit for reading our news, it will be more difficult to turn us off.”
Von Ahn also believes that it’s about the customer. “Our first operating principle is ‘learners first,’ and you will hear that phrase guiding our decisions,” he wrote on the Duolingo blog in April. “[We] focus relentlessly on making our product better. The majority of our staff works on this. Everyone, from the interns to the executives, has the ability to contribute ideas that make an impact for millions of learners.”
Customer. Product. Ideas. Impact. Good words to do business by.