For decades, arts and culture organizations have deployed — and often cherished — loyalty programs, subscriptions, and memberships. Yet we often hear skepticism about whether subscriptions can still work today, especially with younger audiences.

The Subscription Boom

That’s amid the undeniable fact that subscriptions are booming across the economy. Even before the coronavirus pandemic, more and more businesses were adopting subscription revenue models. By 2021, this “subscription economy” was worth an estimated $650 billion globally; the financial services firm UBS predicted it would grow to $1.5 trillion by 2025. Meanwhile, public markets gave 5-7x times higher valuations for subscription revenue than for episodic or transactional revenue.

What about Arts and Culture Organizations?

Despite these impressive numbers, many arts and culture organizations think of subscriptions as “old school” — something that can’t work in a digital era.

To explore and unpack the conundrum of subscriptions, Robbie Kellman Baxter (best-selling author and celebrated business consultant who coined the term “membership economy") joined Jill Robinson, CEO of TRG Arts, for a conversation about the power of long-term consumer relationships.

Their discussion exposed three important myths many arts and culture organizations are telling themselves about subscriptions . Read on to make sure you’re not falling into these traps — and missing a valuable source of steady revenue.

Click here to watch their full conversation.

Myth #1: “Young People Aren’t Joiners”

“In our sector,” says Robinson, “subscription and membership have both gotten a bad rap because the perception is that those loyalists are old, primarily white, primarily wealthy. And we all know that the future of arts and culture rests on our connecting with our communities who increasingly are diverse and younger.”

Kellman Baxter has seen that same attitude: “A lot of organizations say, ‘Robbie, our loyal members are still loyal. They've been subscribing for 25 years, and they're going to subscribe for another 25 years. Our problem is young people aren't joiners. They don't do things the way that their parents did.’

“Maybe there's a little truth to that. But a lot of times what I see is young people are in fact joiners. They love to subscribe. But they may not believe that your offering is optimized for them.

“I look at newspapers, for example. If you're trying to get older white people to subscribe, you might have slightly different content than if you're trying to introduce a young and diverse audience to newspapers. We found in newspapers that when they put pictures of younger and diverse people into the stories, more young and diverse people subscribed.

“Also,” continues Kellman Baxter, “in the world of professional associations and societies, country clubs — any organization that has enjoyed the benefits of membership for a long time — they’ve probably suffered to some extent from an aging cohort. In other words, when you launched, you brought in a bunch of new members when they were young. They grew up with your organization. They were loyal, and everybody says, ‘Listen to your consumer, take care of your member.’ So a lot of organizations put on blinders and focus with their microscope on their current members, and not use their telescope and look out on who's going to be tomorrow's members.

“They’re not asking, ‘How can we evolve our offering, given all the changes that are possible with technology and what other organizations are doing?’ They focus more and more narrowly on today's members.

“That’s exacerbated in nonprofits where the board is often made up of your super-users — your most engaged members. In many cases, they're not trained board directors; they're super fans. And so they're thinking not about the health of the organization, but rather what they think would be great. They're thinking with their hearts and their own mindset, instead of saying, ‘How do I make sure this organization thrives into the next generation?’”

Don’t believe this lie about subscriptions, Robinson urges. “We have an obligation to be thinking about the right invitation to new and different audiences, and consumers who may value very different things. But it doesn't mean that the subscription or membership isn't the right tactic.”

Myth #2: “Subscriptions Don’t Work Anymore”

“The subscription is a pricing tactic,” reminds Kellman Baxter. “It's just a way of packaging your value. You're saying, ‘If you pay something per month or per year, you get something in exchange per month or per year.’ It's just a pricing tactic. It's not a strategy. I think that’s where people are getting tripped up. It's not bad or good by itself.

“ [Saying subscriptions don’t work for us is] like saying, ‘Email doesn't work for us.’ Email works great for communicating one-on-one with your colleagues. Email can work great as a marketing tool. But saying email doesn't work because a particular email campaign didn't work is kind of crazy.

“There are theme parks that have subscriptions; there are car washes that have subscriptions. There are NBA season ticket holders; the NBA also has a digital subscription league pass. There are subscriptions that tie in other benefits, like the ability to connect with fellow fans, the ability to see backstage. There are lots of ways of creating value.

“If you have a longtime subscription, and it's not working, I would advise you try to understand what the problem is.

• Is it that your existing members are canceling, they don't want to subscribe anymore?
• And if so, is that because they've used up the product — it's not new anymore?
• Is it because they found a better solution? ‘ I'm now subscribing elsewhere or now accessing content elsewhere’?
• Or is it because something earlier in the cycle — they joined and never felt welcome?
• Is it that they joined, and they couldn't quite figure out how to tap into the value? ‘I paid for all these tickets, but I never made it to the shows. And now I feel bad about myself, because I wasted it’?

“Understanding and pinpointing exactly where the problems are and then solving those one at a time is a really useful exercise. Because remember, subscription is just a tactic. It's one way of building a predictable and ongoing relationship with somebody who wants an ongoing relationship with your organization.

“What's important is your membership mindset. Who are you there to serve for the long term? And how are you optimizing the experiences that you offer to achieve that goal for those people?”

Myth #3: “One Size Fits All”

“Some of your members are joining because they want to support you,” says Kellman Baxter. “They believe in your organization whether or not they attend your events; whether or not they take advantage of the subscription features. There are other people who say, ‘I’m here for my front row seat. I'm here to go backstage. I'm here for the special events and the free champagne.’ Understanding the differences and who you're optimizing for is really, really important.

“Meanwhile, lots of organizations have student memberships. Doing it well is not just taking the same membership and saying ‘now it's half price for students’, but actually having different benefits. Students are in a very different life stage than a 65-year-old person who has more discretionary money and time.

“I recommend organizations take a step back. Look at the types of members you want more of. And ask, What do they want from us? Why did they come to us in the first place? What is the journey they're on? Are they trying to be more cultured? Are they trying to give back? Are they trying to educate their children? What’s the reason they came in the first place?

“Then build a program from there. Ask, How can we create more touchpoints and solve a bigger part of their problem? It may be with season tickets. It may be with some kind of currency you create, chips that allow you to attend certain events that have different prices. But start with, ‘What are they trying to do? Why does somebody come in the first place? Where do they go? And how do we anticipate that journey and provide a membership that supports it?’”

What arts and cultural organizations should do next.

Here are three ways to assess your subscription problem or consider ways of building one.

Listen to what your audience is saying.

Audiences must be engaged in dialogue now more than ever. Yes - use tools like the Net Promoter System or a traditional survey to collect feedback. But consider adding on community engagement programming as a subscriber benefit (or as an enhancement to a performance) focused on sparking deep, meaningful person-to-person conversations. When you get feedback, don’t just collect it. Build an internal response process with that information and follow up with the audience member one-on-one. Doing so will develop a relationship with those who attend and spark interest from younger people to join in as well.

Invite them back and ask them for more.

Once you have that new-to-you subscriber, make sure to follow up with them immediately following their first subscription attendance. Thank them for attending and subscribing. In other words, don’t let annual renewal time be the only time that you are communicating directly with subscribers. Make sure that as you are scheduling follow-up communications, you are coordinating with the fundraising team at your organization. Doing so will create synergy between departments and start building the pathway to an ongoing relationship with potential new subscribers.

Assess your current packaging and design for increased engagement.

Adapting a subscriber base to reflect a broader cross-section of your community requires looking at what you offer with an understanding of your community demographics. An excellent way to understand your packaging is to look at aggregate subscriber households, admissions, AND revenue trends over the last 5 years. Looking only at revenue can mask declines in households and admissions: subscribers are people, so the metrics you consider need to reflect that. Also, make sure that your packages have meaningful benefits associated with them - like renewable seats or date of attendance flexibility.