By last summer, The New York Times was well into the metered-model phase of its website, and many midsized and small papers were adopting variations.
But there was a pocket of resistance. Few metros were making the move. They appeared to be worried that they would lose readers for local breaking news to TV sites and for national news to the likes of CNN or MSNBC — or that their content was not compelling enough to attract paying customers with so much free news available on the Web. All that could lead to losses in the one category of advertising that has been growing.
A majority of metros remain holdouts, but the number taking the plunge is growing quickly. The Milwaukee Journal Sentinel launched a “JS Everywhere” pay plan Jan. 4 and reported positive results in an earnings conference call Thursday.
A day earlier, Gannett announced that all of its 81 community papers, including such big-city titles as The Arizona Republic and The Indianapolis Star, will have some form of paid digital by the end of the year.
The Los Angeles Times announced Friday that it will launch digital pay packages March 5.
Other metros that started digital pay plans in 2011 include The Dallas Morning News, The Boston Globe and the Star Tribune of Minneapolis.
Each success, even modest success, breeds a sense that it’s possible to get digital users to pay. And for now, success means making the shift with minimal loss of traffic and advertising while bolstering print circulation, using a variety of bundled subscriptions that reward print subscribers with free or cheap digital.
Longer-term, papers may raise online prices, generating significant additional subscription revenue and positioning themselves to follow readers to smart phones and tablets.
“I’m getting a lot of calls from other editors about what we are doing,” Martin Kaiser, editor of the Journal Sentinel, told me by phone. “I think others will jump in.”
Mimicking one another’s approach
Kaiser said he spoke extensively with Martin Baron of the Globe and other editors to get details of the Journal Sentinel plan right.
One key decision was to start inexpensive and stay that way for awhile. An online-only subscription costs only 99 cents a week. Kaiser said his research suggested that others “started too high or jumped the rate too quickly.” That is also the introductory price for the L.A. Times, although it doubles after four weeks.
A second twist in the plan was to introduce JS Everywhere in phases; a tablet version is scheduled for late April or early May.
“The tablet is the potential game-changer,” Kaiser said, but he wanted to take enough time to build in a search function, comics display and access to sports statistics.
Borrowing from the Globe and Star Tribune, the tablet launch will come with a free-to-subscribers, two-month trial period, sponsored by a single business.
Other elements of the Journal Sentinel launch have become a standard part of paid online plans:
- “We prefer to call it a digital subscription package,” Kaiser said. “Both ‘pay’ and ‘wall’ are unpleasant words.”
- That said, Kaiser and fellow execs were pleased to find in early tests that only 5 percent of users bumped into the wall, which kicks in after 20 free articles, the same number allowed by The New York Times. He conceded that it is hard to determine whether there may be sophisticated users who circumvent the wall, for instance by regularly deleting cookies.
- Digital access (online, e-replica edition and mobile) is free to print subscribers, even Sunday-only subscribers. So the effect can be to bolster, rather than cannibalize print circulation, especially for the ad-rich Sunday edition. (The L.A. Times takes the Sunday promotion a step further — in effect, online-only subscribers pay $2 extra every week not to get the Sunday paper.
In a little less than two months, the online-only offer has 8,800 takers, which is in line with expectations. That works out out to $450,000 in new circulation revenue per year.
After pulling back on print distribution, a cheaper way to gain remote readers
About three-quarters of the online-only subs come from outside the Milwaukee area. Why is that? “Three words,” publisher Betsy Brenner said in last week’s earning call: “Green Bay Packers.” In fact, about 2,000 of the online-only subscribers are transfers from a paid Packers site that was folded into the new offering.
The Packers are an unusually attractive franchise with broad national reach. But many papers have similar opportunities with followers of big-time, collegiate sports. For instance, I learned several years ago while writing about the Ann Arbor News and its conversion to Ann Arbor.com that University of Michigan sports are a huge driver of traffic (and supported a competing website solely about UM athletics).
Kaiser said that he also noticed last year a significant uptick in traffic from other parts of the state as Gov. Scott Walker and legislative Democrats faced off in a protracted budget dispute.
Nearly all regional papers pulled back coverage and print distribution in remote areas during the advertising swoon of 2007 to 2009. Digital may offer a chance to rebuild a paying, out-of-area audience (admittedly not of interest to local advertisers) without the expense of getting a print paper to them.
Both Kaiser and Brenner said that page views have held strong, with some decline to be expected after the Packers, 2011 Super Bowl champions, were beaten early in last season’s playoffs.
While print subs buy a reader free digital, one other twist in the Journal Sentinel strategy was to raise home delivery prices about 15 percent, to more than $400 a year. To date, Brenner said, there has not been significant resistance through canceled subscriptions “and virtually no trading down” from seven-day print delivery to the much cheaper, online-only package.
Coincidentally or not, the Globe and Dallas Morning News are also both proponents of a high-cost/high-quality strategy, believing that print readers are willing to pay more than they traditionally have if that buys access to strong, original content.
Kaiser, who is a recent past president of the American Society of News Editors and a member of Poynter’s National Advisory Board, draws two lessons from the experience.
He is not necessarily a believer in the “original sin” theory that holds that the industry stumbled disastrously by initially allowing free access to online content. “But,” he said, “a dozen years of that made us afraid of what would happen if it wasn’t free.”
Successful pay packages, he said, “are a huge confidence builder.”
The industry, which tends to move as a pack, held back on paywalls for nearly a decade. Now that the ice is broken, I would expect to see many more papers launch bundled subscription plans in 2012. But encouraging early results do not always lead to sustained success. Some of these paywall venturers may pull back if traffic and advertising losses outweigh the benefits.