Post-Gazette’s Premium PG+ Service Profitable But No ‘Holy Grail’

A year into its subscription-based PG+ service, the Pittsburgh Post-Gazette has learned a few things about charging for content online:

  • Profitability is possible, if only modestly so, with incremental online services that control costs.
  • Niche content beats general interest. And sports is the king of the niches, at least in Pittsburgh.
  • The most promising path to the future of newspaper business models begins with the “s” at the end of the word “model.”

The paper launched PG+ Sept. 1, 2009, with content not previously found on the paper’s website, including blogs and chats by sports columnists, an early rough by editorial cartoonist Rob Rogers and a few other features that have since been switched to the free site.

“We didn’t want to just put a pay wall around our website and cross our fingers,” Post-Gazette President Chris Chamberlain told me in a recent phone interview. “We wanted to test the waters of paid content and do it in a way that created new value as opposed to taking it away.”

Revenues exceeding expenses

Access costs $3.99 a month or about $36 a year with an annual subscription. Chamberlain wouldn’t say how many subscriptions have been sold. He said annual revenues have reached six figures but declined to reveal which six.

After launching PG+, Chamberlain said, he expected it would take a year “to know whether we should continue.” Revenue began exceeding expenses in April.

Costs include “three or four” full-time equivalencies as well as “some investment in technology, servers and programming.”

He added: “This is not the end-all, be-all, it’s not the holy grail for the reinvention of our entire business. But the creation of an online paid content product is something we’re proud of.”

The 39-year-old Chamberlain, who has been president of the privately-held Post-Gazette for just over a year, joined the company in June 2008 after two years with the Journal Register Co. and six years working in strategic planning and advertising at the New York Times. He’s an English major with an MBA who worked for an advocacy group in Washington, D.C., pushing transparency in international banking before getting into the media business.

Chamberlain said he and his colleagues knew that sports would figure heavily in PG+, but said the “overwhelming” interest in content related to the Steelers, Pirates and other Pittsburgh sports teams has been bigger than expected. Sports accounts for as much as 90 to 95 percent of PG+ traffic during events such as the NFL draft, he said.

In an interview a year ago with my Poynter colleague Rick Edmonds, Chamberlain said he expected PG+ would change over time, and it has. A redesign in April provided a new look and new functionality, and the staff has shifted content based on traffic.

Chamberlain described Mackenzie Carpenter’s pop culture blog and video feature, Omnivore, as one of his favorite online features, but said it didn’t generate much interest on PG+. So the paper moved it to the free side and attached pre-roll advertising to it. (PG+ has no advertising.)

Chamberlain said PG+ is just part of a multi-pronged digital strategy that also includes niche sites. He noted, for example, that the Post-Gazette’s sports franchise already includes team and fan apps and niche fan sites, with probably more sports products to come.

Sponsored events bringing in new revenue

The Post-Gazette’s push to develop new revenue streams has compelled the company to experiment beyond publishing, as it has moved into areas such as sponsored events with free admission. Those events have included a Post-Gazette “summer camp” featuring classes on fly fishing and cooking, as well as higher-brow discussions of the midterm elections.

The Post-Gazette did not create a new events arm, instead reshaping the mission of its existing marketing department.

“We work with sponsors to find out what they want — and what fits with our own editorial values,” he said of the funding arrangements for the events.

“It’s a new revenue stream,” he added, “often tapping into different dollars [than usually sought by newspapers] — it’s not ad dollars, it’s community marketing dollars.”

Events provide the Post-Gazette with a revenue stream on the flip side of PG+: Instead of serving a small audience with paid content, they pursue big crowds with sponsors picking up the tab.

“When you’re trying to get a high level of engagement in addition to all the public relations around an event, you want to fill a room with a good crowd,” he said.

Although he refused to provide specific numbers, he said revenue from the events business has surpassed PG+, with each fairly modest “relative to our core [newspaper] business.”

He added: “It’s a coincidence that these two lines of business are emerging at the same time for us. What they really represent is an overall diversification of our business model that recognizes that we’re no longer just a newspaper.

“That’s our legacy, that’s our core … but we’re a media company and we have to have a number of models that might be very different from each other in order to stay current with our customers.”

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