Five on Friday: Conversions, Unpaid Taxes and Premium Subscribers

Featuring Walmart, OnlyFans, Roku and Reuters

This week’s Five on Friday features subscription conversions, new additions to Roku and unpaid taxes. Yikes! Walmart attempts to launch (another) subscription to compete with rival Amazon Prime, OnlyFans may have to pay up to four years’ worth of unpaid value added taxes, and Roku adds live feeds for premium subscribers. Also, PYMNTS reports that subscription commerce conversions are at their highest point in the last five quarters, and Reuters is finally following their competitors by putting up a paywall, but it will still continue to raise revenue from sponsorships and advertising.

Walmart to Launch (Another) Subscription Service to Compete Against Amazon

Later this month, Walmart will launch Walmart Plus, a paid membership service similar to Amazon Prime, reports Recode. The service will cost $98 a year, about $20 less than Amazon Prime, and will offer same-day delivery on groceries and other products, discounts at Walmart gas stations, and early access to special deals. The service was set to launch earlier this year, but the pandemic caused a shift in the retailer’s plans. Recode also said that Walmart may also launch a Scan & Go service to speed up the check out process, as well as a Walmart Plus credit card.  

While this may sound shiny and new, this is not a new idea – or a new tactic – for Walmart. In June 2019, we reported on Walmart’s unlimited grocery delivery subscription. For $98 a year, or $12.95 a month, Walmart will receive unlimited grocery delivery. Walmart’s Delivery Unlimited service is still available. As of September 2019, the service was available at 1,400 U.S. stores.

Walmart will launch Walmart Plus later this month to compete against Amazon Prime.
Walmart will launch Walmart Plus later this month to compete against Amazon Prime.

Though it has been several years, Walmart has also tried a two-day shipping subscription, ShippingPass. For $50 a year, at launch, 1 million of the retailer’s 8 million products were available for the ShippingPass two-day shipping service. The company still has a free-day day shipping program, as well as a next-day service, but a membership is no longer needed. However, a minimum order fee of $35 applies.

It sounds like Walmart is trying to be creative in its competitive efforts against Amazon, but they aren’t coming up with anything new or that will give them a real edge over Amazon. A $20 price difference is not significant enough to most people to make a switch, especially when they get so much with an Amazon Prime membership, not just free grocery delivery. Walmart needs to choose the right strategy and execute it well to get ahead of Amazon.

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OnlyFans May Have to Pay Up to Four Years in Back Value Added Taxes

OnlyFans, a social media platform known for amateur pornographic content and NSF photos and videos, may find that it owes up to four years in back taxes. The company started in 2016, but only started collecting the value added tax (VAT) in Europe last week from subscribers, reports Sky News. Her Majesty’s Revenue and Customs (HMRC) is in the process of determining what, if any, back taxes will be due. Sky News also reports that a penalty could be assessed up to double the amount due if OnlyFans “was careless or deliberately inaccurate” with its tax returns.

OnlyFans says that 80% of its subscription revenue goes directly to the content creators on its platforms. The company retains the remaining 20% to cover its own costs, including hosting, payment processing and other services. Previously, OnlyFans paid the VAT on its 20% of revenue, not the 80% of revenue that went to content creators.

OnlyFans said that their UK and EU customers are an important part of their customer base, and that any tax obligations that come from the investigation will not have an impact on the continuing operations of the company, says Sky News. This change could, however, impact both content creators and subscribers. Subscribers are now being charged an additional 20% tax. That could cause content creators to lose subscribers, or they may have to lower their subscription fees to keep their subscribers.

Though not referring specifically to OnlyFans, a representative for HRMC said, “We ensure the tax system is fair for all businesses and that companies are paying all the tax that is due, reflecting the value they get from UK users.”

Last week, OnlyFans started charging the required Value Added Tax (VAT). The company may owe up to four years in back taxes.
Last week, OnlyFans started charging the required Value Added Tax (VAT). The company may owe up to four years in back taxes.

Premium Subscribers Can Now Get Live Feeds on The Roku Channel

The Roku Channel has added some new updates for its premium subscribers. The Roku Channel itself is free and offers free movies and TV programming. It also offers access to premium channels, including HBO, Cinemax, Showtime, Starz and EPIX. Premium subscribers will now be able to see any live/linear content from those subscriptions directly on the guide, reports Cord Cutter News. Roku TV viewers who use an HD antenna can now view over-the-air content as well as streaming programming through the Roku Channel.

Roku now offers more than 100 linear channels through its Live TV Channel Guide. This includes the new premium subscription channels, news, sports, movies and TV, music, crime, reality TV and more. Viewers can also access subscription channels like Netflix, authenticated cable and satellite TV, and rent-or-buy channels where viewers can rent or buy TV programs or movies (Amazon Video, FandangoNOW, Google Play and VUDU).

Bonus tip: If you have been watching Netflix’s new Unsolved Mysteries series, you’ll be pleased to know that the original 12 seasons of the show are available on The Roku Channel. And they’re free!

The Roku Channel adds live feeds for premium subscribers.
The Roku Channel adds live fees for premium subscribers. Photo courtesy of The Roku Channel.

Subscription Conversions Are at Highest Point in Last Five Quarters

In PYMNTS’ July 2020 Subscription Commerce Conversion Index report, done in cooperation with Recurly, measures conversion rates and churn. According to the latest report, subscription conversion in the second quarter of 2020 was at the highest point in the last five quarters.

“This measured improvement in merchants’ ability to convert subscribers underpins their willingness to offer features that improve overall user experience. More subscription providers are now offering product ratings and reviews, quick add-to-cart options and password authentication features on their sites than last quarter, for example,” says the report.

Image courtesy of Bigstock Photo

That’s great news for subscription and membership companies, but they can’t rest on their laurels. They need to continue to prove their value to consumers to keep earning their subscription dollars. According to the report, about 167.1 million people currently have a streaming, education and training, digital media or consumer retail product subscription. Of that total, 27.4 million (16.4%) say they are at least somewhat likely to cancel their subscriptions.

PYMTS offered some tips to subscription companies to increase the likelihood they’ll convert and retain their subscribers:

  • Offer features that give subscribers more control over their subscriptions – like the ability to change, cancel or pause their subscriptions
  • Have a fast, user-friendly enrollment process
  • Support different payment options
  • Add or expand a free trial
  • Consider rewards programs and free shipping

Learn more or download the report at PYMNTS.com.

Reuters to Put Up a Paywall Next February

Reuters will put some of its content behind a paywall, starting next February.

News organization Reuters is working on a paywall that will launch in February, according to Media Post. Some sections of content will go behind the paywall, like coverage of energy and sustainability and Breaking Views. In an op-ed piece, Rob Williams of Media Post said this is a good sales strategy for the media company to supplement its advertising sales which are declining industrywide, particularly during the pandemic.

Reuters would join other well-respected media organizations like The New York Times, The Wall Street Journal and the Washington Post, who all have paywalls as one of their revenue streams. In addition to subscription revenue, each of the outlets has its own mix of revenue sources. For example, I receives affiliate revenue from its Wirecutter acquisition and revenue from standalone digital products like NYT Cooking and Crossword. Reuters will also rely on sponsor revenue and digital advertising with the redesign of its home page.

“It’s the right move for Reuters, considering its professional audience will treat subscription fees as another cost of doing business,” said Williams.