How The Minneapolis Star Tribune is driving paid digital growth while holding on to print subscribers

January 30, 2020
Category: Business & Work

The paramount business goal for many newspapers in 2020, metros especially, is building out a paid digital subscription base.

Those starting late are trying to get the exercise rolling, often resorting to deep discounts to boost numbers. Others like The Boston Globe (which has passed the 100,000 mark) are driving for enough revenue to sustain a newsroom — even if print should wither further or disappear.

The much-admired Star Tribune in Minneapolis is in the latter category. Paid digital stands at 90,000. Publisher and CEO Mike Klingensmith told me last summer that he is “all in” for growing digital with a target of at least 150,000 subs by 2025.

But there is a twist. The Star Tribune has a strong print base as well — especially on Sunday — and it plans to keep it that way. A mantra of Klingensmith’s that has become familiar in The Star Tribune’s executive ranks is, “The future is digital, but the here and now is print and digital.”

By way of an exclamation point, The Star Tribune’s Sunday paid print circulation stands at 261,769 — the fifth highest in the country.

For a detailed picture of how The Star Tribune got there, I spoke with Arden Dickey, who just retired after more than 40 years in the business and more than half a decade as a full-time consultant, then The Star Tribune’s vice president for circulation. I also spoke to Steve Yaeger, the company’s longtime head of marketing, who has now added circulation to his portfolio.

The Star Tribune, I found out, does some critical things different from prevailing industry practices.

Its paywall is triggered not by a certain number of articles but rather by a visit-day count — not necessarily the same for every potential subscriber. (The Wall Street Journal has made the same switch I learned last summer).

“This is a way to increase engagement, to not throttle down access too much as a consumer is in that consideration stage, while still being aggressive about converting readers to paying subscribers,” Yaeger said.

The Star Tribune has a typical deep-discount introductory offer — 99 cents. However, it runs for only one month. Then the rate jumps to the full price of $223.08, and that is not negotiable. Nor does The Star Tribune try to retain canceling subscribers with a lowball renewal rate — as Tribune Publishing, for instance, has done.

Print subscribers, either seven-day-a-week or even two-day, get full digital access for free. But Sunday-only print subscribers must pay a premium if they want that. About 20,000 of 94,000 do.

“In this way,” Dickey said, “we incentivize multi-day home delivery, while also realizing a significant revenue stream from those Sunday-only print readers who still wish to read us online during the week.”

The Star Tribune uses a homegrown pricing model that doesn’t discourage print subscriptions. Many papers use Mather Economics or other consultants to create digital and print+digital price structures. Often, as with airfares, this results in very different rates for similar subscribers, with annual prices now rising to the $700 to $900 range for those most likely to pay up.

Dickey said that he respects Matt Lindsay, president of Mather, which has grown quickly with the digital subscription boom. But he and colleagues at The Star Tribune chose a different route. It’s a homemade pricing model, middling expensive at $544.96 for a full year of print and full digital access,  but without many stair-step incremental increases or a sky-high top print rate seemingly pushing readers to digital only.

Dickey, who spent the first half of his career at the Miami Herald, came to be wholly on board with the changing emphasis to digital. “I was around in the heyday (of print only),” he said, “and growing digital is really simpler. You don’t need to deal with subscriber complaints … Minnesota in the winter can be difficult.”

But he retains a measure of loyalty to print’s potential. “A lot of the losses have been self-imposed — geographical reductions … and just plain poor management.”

As a consultant, he saw the worst of both worlds at some metros. They had done nothing with digital subscription revenue, but print was falling fast anyhow.

On Sunday The Star Tribune circulates all through Minnesota and in parts of several adjacent states. Analysis shows even the most remote areas continue to be profitable, Dickey said.

A map of The Star Tribune’s Sunday distribution (Excerpted from The Star Tribune Media Kit)

While The Star Tribune has attained status as an industry leader, Dickey insists “there is no magic to what we are doing.”

Minneapolis and the rest of Minnesota is a great newspaper market, he added, “but I don’t buy that there is something unique about it … There are plenty of other great markets in the U.S. which have not enjoyed the digital subscription growth we have had, nor held onto print subscribers as well as we have.”

Indeed, I would characterize The Star Tribune approach as blocking and tackling, to use a football term. Sitting across from my desk at Poynter with no notes (Dickey spends winters down here), he rattled off statistics on nearly every question I raised.

As I observed in two previous stories about the organization’s management, The Star Tribune way is to have many initiatives going at once and rigorously measure against benchmarks for each. Annual plans each year include a suite of growth goals that will cover (or close to it) the expected decline in print advertising revenue. Now there is a fresh five-year plan in place.

That is not to say that every Star Tribune move is a winner. “We’re always trying things that don’t work!” Yaeger said, offering three examples of what was tried then ditched.

“We’ve ended almost all ‘bonus days,’ the practice of charging subscribers for days of delivery not normally part of their subscription, or products they have to “opt-out” of if they don’t want to be charged,” he said. “The practice is not subscriber-friendly and generates a lot of ill will.

“In digital we’ve accelerated the pace and the rigor of our testing, but of course not everything succeeds. In 2019 we tested a sports-only subscription. Our initial test generated decent consumer interest but didn’t convert at a rate that made it worthwhile. So we’re refining and testing it again.

“Likewise, we tested low-cost digital subscriptions on five college campuses in 2019, with disappointing results. We don’t consider any test a failure, though. We have to identify and target new audiences and test new products, and we’re grateful for everything we learn.”

Along those lines, Yaeger and others became concerned last year with the possibility of “subscription fatigue” — consumers racking up so much spending on entertainment subscriptions like Netflix or Amazon Prime, there is no budget left for local news.

So they commissioned research with an academic partner and the News Media Alliance industry association.

The results, though not tested over a wide sample, were encouraging. Those spending heavily on entertainment were more rather than less inclined to also spend on a local newspaper subscription. Similarly those who were Star Tribune subscribers were more rather than less likely to subscribe to one or more of the national papers. (That tends to shoot down a theory of mine that the huge digital subscription growth at The New York Times and The Washington Post may be partly at the expense of the fading local sector.)

While proud of The Star Tribune’s print resilience and opposed to dropping days of the week for home delivery, Dickey sees the factors fueling that move elsewhere. As print numbers fall, he said, “delivery becomes more and more expensive … Our cost is up to 27 cents (per copy) weekdays and 56 cents Sundays … A driver who used to cover a 10-square-mile area now covers a 20-square mile area. At some point that system is going to break.”

Unstated in our conversation (and in this story) is that The Star Tribune strongly exceeds the norm with a well-staffed newsroom and high-quality editorial mix. That includes slightly out-of-the-box moves in recent years like reviving a faith and religion section and launching a quarterly slick-format magazine.

And the goal-setting is patient. Within a few months, the number of paid digital subscriptions will cross over and exceed the number of weekday paid print subscriptions. But even if the 2025 goals are met, because of the price differential, print subscriptions will still be contributing more revenue.

In summary, Dickey offered not a statement but a statistic. “We grew paid digital 19.5% in 2018, 15.5% in 2019. And we are planning 10% in 2020. That’s about 45% in three years.

Rick Edmonds is Poynter’s media business analyst. He can be reached at redmonds@poynter.org.