News companies are reversing course on hard subscriptions — once seen as a safer alternative to the volatile ad market — in favor of flexible paywalls, membership programs and more ads.

The big picture: A strategy focused mainly on subscriptions requires upfront spending on premium content. That takes time to pay off — and many publishers don't have the cushion for that in the current ad slowdown.

• At the same time, many outlets have learned that simply throwing a paywall up over your previously free content doesn't work either. It throttles ad revenue without capturing enough new subscribers.

Driving the news: Substack, the platform built on the promise of letting creators directly charge their audiences, is experimenting with a new pilot program that helps creators find advertisers and coordinate ad buys, Axios has learned. (More below.)

• TechCrunch is shuttering its subscription service TC+, as it pushes to reorient its coverage around investors and amid layoffs.
• The Washington Post, which has lost roughly 500,000 subscribers since its Trump-era peak, is considering more dynamically priced subscriptions, its new CEO Will Lewis told Semafor.
• Time fully removed its digital paywall last year in favor of reaching a broader audience with more ad-supported content.
• Quartz dropped its paywall last year in favor of a membership model.
• The Atlantic shifted from a blanket paywall to a more dynamic approach early last year.
• Gannett, the U.S.' largest local newspaper company, began reducing the number of articles behind its paywall in late 2022 to boost the company's ad revenue.

Between the lines: While a few major national news outlets, such as the New York Times, Bloomberg and Dow Jones, have had success scaling their subscriber bases, most other news companies have struggled to sustain momentum following the Trump-era subscription news boom.

• "My hunch is that the existing model is creaking," the Post's Lewis told Semafor. "We went from an advertising model to a subscription-based model, and that subscription-based model is now waning and then will enter a more significant period of decline."

Zoom out: Trade outlets have had greater success in subscriptions catered to niche audiences that are primarily professionals.

• But those businesses aren't dependent on general news consumers, who are experiencing a broader level of subscription fatigue in the wake of the pandemic.

What to watch: The subscription slowdown over the past few years has prompted a slew of new models to take shape that still seek direct revenue from readers, but don't prevent news outlets from reaching wide audiences.

• The Guardian, for example, saw record reader revenue from donations in the U.S. last year.

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Substack is experimenting with a new pilot program that helps creators on its platform find advertisers and coordinate ad buys, Axios has learned.

Why it matters: Substack was built on the promise of liberating writers and podcasters from the pressures of the ad business by letting them directly charge their audiences.

• By dabbling with ads, the company is acknowledging the difficulty in scaling that model for everyone.

Details: The pilot program was first noted in a post by journalist and "Blocked and Reported" podcaster Jesse Singal in mid-January.

• Singal wrote that Substack is providing the "Blocked and Reported" podcast "with some support finding advertisers and coordinating ad buys as part of an experimental pilot program."
• Asked to clarify, Singal said, "Our understanding is that they contracted with an outside team to approach potential advertisers like any other ad agency would."
• Substack has been providing the podcasters with new ads to read on their show, Singal said. He has "full veto power" to say no, although they've never had to veto an ad yet.

Between the lines: Substack wouldn't comment on that and said Singal was best positioned to answer any questions about the ad push. But it did confirm the ad experiment in a statement to Axios.

• "In the case of 'Blocked and Reported,' they were interested in testing out the idea that an advertising and a subscription model might be able to coexist without cannibalizing paid subscriptions, which we believe to be the stronger model."

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Engagement with political news and general news is down considerably compared to the last presidential primary election cycle, as Americans continue to funnel their attention toward lighter topics, like sports and entertainment.

Why it matters: Record news interest last presidential election cycle, while bolstered by the onset of the pandemic, helped lead to the highest voter turnout in the 21st century — and near-record numbers among younger voters.

Be smart: In this election cycle, while former President Trump and President Biden still take a considerable share of overall news interest, attention is flowing more to a wider set of storylines outside of the election and hard news.

• The Israel-Hamas war has been the major exception.
• Donald Trump's indictments helped boost cable ratings marginally last year, but the novelty of those cases has worn off heading into the primary.

Details: Fewer people are reading news and political articles this cycle compared to last, according to data from Similarweb.

• Cable news ratings are also down considerably between November 2023 and January 2024 compared to November 2019 through January 2020, although fewer households are paying for cable subscriptions now than four years ago.
• Social media interactions with political debates and town halls have also waned significantly, per data from NewsWhip.

Yes, but: NewsWhip acknowledges that engagement may have shifted from platforms like Instagram, Facebook and X to other platforms, such as TikTok, that are less suitable for links to news sites.

Between the lines: Debates and political town halls are struggling to capture America's attention, pushing networks to pivot.

• The fifth Republican primary debate this month drew just 2.5 million viewers, while Trump's competing town hall averaged 4.3 million viewers, Axios' Erin Doherty notes.
• Ratings for the previous four debates were also down considerably compared to the 2020 primary, thanks largely to Trump's absence on stage.

YouTube TV now has more than 8 million paid subscribers, the company said Tuesday, making it one of the largest TV providers in the country.

Why it matters: YouTube TV is poised to surpass the leading satellite providers soon, and it could have more subscribers than cable rivals in the next few years.

The big picture: Digital "skinny bundles" like YouTube TV and Hulu with Live TV, which had 4.6 million subscribers as of September, haven't attracted enough subscribers yet to offset the decline in cable and satellite customers, and experts don't expect that they ever will.

What to watch: As YouTube invests more in television, onlookers will be watching whether it's willing to dish out more for live sports and premium content.

• YouTube's first season distributing the NFL's lucrative Sunday Ticket package reportedly helped drive over 1 million subscriptions to the service last year.

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Spotify said today that it lost less money than it was anticipating in the final quarter of 2023 and it made more than double in operating profit compared with Q3, barring one-time restructuring charges associated with sweeping layoffs it announced in December.

Why it matters: For years, investors punished the audio giant for expensive investments in podcasting and a bloated staff that ate into its margins.

• Now, its stock is starting to crawl back toward its pandemic-era highs, a signal Wall Street likes the progress it's making on margins.
• The firm posted its first quarterly operating profit since 2021 in the third quarter of last year and its first positive net income since the first quarter of 2022.

Details: For the fourth quarter, the Stockholm-based firm grew its monthly active user count by 28 million to over 600 million. It grew its premium subscribers by 31 million to 236 million.

• Both monthly active users and premium subscribers came in ahead of Spotify's guidance to Wall Street by about 1 million.
• The company's gross profit margins last quarter came in at 26.7%, slightly ahead of expectations and up from 26.4% in the third quarter.
• Long term, the company has said that it hopes to get its gross profit margins to land between 30%–35%.

The big picture: Spotify's strategy has shifted from paying lots of money for exclusive podcasts toward owning the distribution and monetization rights to shows across its platform and others.

• Last week, the company announced a new multiyear deal to distribute "The Joe Rogan Experience" podcast exclusively, while still allowing the show to be available on other platforms, including Apple, Amazon and YouTube.
• Rogan's deal could be worth up to $250 million over the multiyear period, the Wall Street Journal reported.

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All eyes will be on Disney this week as the Mouse House reports its quarterly earnings after the bell tomorrow while facing its biggest activist fight in decades, Axios Tim Baysinger writes.

Why it matters: The activist battle is putting huge pressure on CEO Bob Iger to address several issues, including Disney's path to streaming profitability, ESPN's future and Iger's successor.

State of play: Battle lines have been drawn between Disney and Trian Partners ahead of April's annual shareholder meeting.

• Trian Partners, which is trying to put its co-founder Nelson Peltz and former Disney CFO Jay Rasulo on the company's board, came out against current board members Michael Froman and Maria Elena Lagomasino.
• Disney called out Peltz's lack of experience and pointed out that Rasulo has been out of the loop.

Be smart: Trian isn't the only activist investor involved. Disney has in its camp ValueAct and its CEO Mason Morfit, who is a close ally of Iger's. Trian is buttressed by ex-Marvel chair Ike Perlmutter as well as hard-charging activist Ancora.

• Blackwells, meanwhile, has waged a campaign against Trian and Ancora while nominating three of its own directors for Disney's board.

💭 My thought bubble: One of Disney's biggest problems in the past year has been its creative slump, particularly in its animation studio. Activists are paying little attention to that issue.

Go deeper: Sign up for Axios Pro Media Deals authored by Tim Baysinger and Kerry Flynn.

Nearly 17 million people tuned into the Grammys Sunday on CBS, up 34% from the 12.4 million that watched last year.

Why it matters: The show was the most-watched Grammy Awards since 2020.

• Taylor Swift's surprise new album release tease, combined with several new award show firsts, made for a buzzy event.

The big picture: Award show ratings have begun to rebound from their pandemic-era lows.

• The Golden Globes drew 10 million viewers last month, up 50% from 2023. The Sunday showing on CBS likely helped boost ratings after last year's Tuesday event saw its lowest-ever ratings on NBC.
• The Oscars and the Grammys rose 8% and 30% year-over-year, respectively, in 2023. The Oscars will take place on March 10 this year.
• Tony Award viewership saw a modest boost last year compared to 2022, but remains low.

Yes, but: The Emmys saw all-time low ratings in January after being postponed from September due to the writers and actors strikes.

Be smart: The pandemic era not only created production challenges for award shows but also prompted more Hollywood A-listers to make political statements, isolating some viewers.

What to watch: Award shows are increasingly turning to streaming as they fight dwindling TV audiences.

Beauty and health food brands are buying ad spots for the Super Bowl on Sunday, reflecting the NFL's growing popularity among women, Axios' Kelly Tyko and I write.

• Why it matters: Taylor Swift helped drive an unprecedented ratings bump for the NFL this season. Now consumer brands want a piece of the action.

💄 A wider and younger audience is attracting new brands to the big game.

• e.l.f. Cosmetics reunited the cast of Suits — the most streamed show last year — for its first national Super Bowl commercial.
• NYX Professional Makeup said its ad will "tackle the traditionally male-dominated football industry with Cardi B and powerful women at the forefront."
• Dove returns to the Super Bowl for the first time since 2006.

🍺 Reality check: Football fans should still expect plenty of junk food and beverage ads. Coors Light, Budweiser and Michelob Ultra are all back.

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