Imagine you operate a once-profitable business that has recently fallen on hard times. Revenue is down. Way down. Then, suddenly, there’s a newfound interest in your product. Demand is up. You have an opportunity to bring back some of that lost revenue. So you look at your prices and decide … to give away your product for free.
How’s that for a business strategy?
And yet that’s what most U.S. newspapers are doing during the coronavirus crisis. When the pandemic hit, we adjusted or eliminated paywalls to make our coronavirus coverage free. You can read it online, whether you’re a paid subscriber or not.
It’s a noble thing to do. News organizations have a unique public service role in the communities they cover.
It also makes no sense.
Newspapers throughout the country knee-jerked when the virus hit. With only a few exceptions — the Los Angeles Times and The Boston Globe, most notably — the paywalls that allowed only subscribers to access content were dropped. That changed a little this week when McClatchy, publisher of The Miami Herald and The Kansas City Star and the nation’s second-largest newspaper group, decided to wall off only certain coronavirus stories. Breaking stories affecting health and safety will still be available, free to all.
It’s a step in the right direction, but McClatchy — and the rest of the industry — should go all the way. Put the paywalls back up. We never should have taken them down.
The newspaper industry seems to think that public service can’t coexist with revenue. That’s a mistake — at a time when the beleaguered industry can’t afford to make one. We do provide an important public service, but why can’t a public service business be, well, in business?
Food is essential, but grocery stores aren’t giving it away.
Clothing? Not free. Not even at Goodwill.
Police are being paid during the crisis. So are garbage collectors. There are no freebies at the pharmacy.
These are all essential to the community at a time of crisis, yet no one expects these goods and services to be free. What are newspapers afraid of? Our products have value. People pay for things of value.
Sure, health care providers aren’t turning away the needy. But that was a thriving industry before the pandemic hit, and it’ll have the opportunity to recoup losses by raising rates when the crisis subsides. The newspaper industry, already damaged before the crisis, has far fewer options to raise revenue later.
There’s a belief among some industry leaders that the good feelings generated by a caring newspaper during times of crisis will yield paid subscriptions in the future. But there’s no research to support that. In fact, experiences during recent Florida hurricanes — when many newspapers made their online coverage free to all — suggests there’s little loyalty once the paywall goes back up.
Unlike a loss-leader in retailing — in which a store takes a loss on one product to lure customers, knowing from experience and research that enough customers will buy other things to make the venture profitable — there’s no data to support the free-content-now-and-they’ll-subscribe-later strategy. It’s just an idea.
In fact, it may even be harmful: We hope the community will develop a journalism habit that’ll continue when we start charging for access again, but we may be instead reinforcing the habit that news should be free.
There’s no doubt that newspapers need the revenue online subscriptions can bring. Newspapers have collectively lost more than 70% of their ad dollars since 2006, according to Ken Doctor of Nieman Lab. Some estimates are that half of the remaining revenue dried up during the brief period since the coronavirus hit. As a result, Gannett, publisher of USA Today and the nation’s largest newspaper chain, is effecting furloughs and pay cuts. So is Lee Enterprises, the fourth-largest chain. Alternative weeklies, reliant for their ad dollars on now-shuttered restaurants and entertainment venues — are devastated.
The Gannett and Lee cutbacks were announced in a single week at the end of March, while the coronavirus crisis was still young. Where will the industry be at the end of April?
The federal government, already planning to aid industries damaged by the pandemic, could be a source of help. But why would that require our products to be free when there’s no similar requirement for other goods and services? No one expects a free cruise if the government saves that industry.
And whom are we really helping? Anyone who can afford an internet connection and a device with which to access content can also afford a newspaper’s digital subscription. It’s not expensive. What is it about a newspaper that suggests it must be free while the internet service provider necessary to read it is not?
Indigent people who don’t have either Internet access or devices? A paywall would thwart them if they use free internet access at libraries and other public places. Guess what? The libraries are closed.
Yes, that’s harsh. Reality sometimes is.
And what’s this about our public service obligation, anyway? Information about a dire pandemic is vital. But so is news of a major storm that’s brewing. So, come to think of it, are details about a serial killer menacing the neighborhood. So, too, is that item buried deep in the site about a health code violation at a restaurant you’re thinking of trying. And so on. The pandemic may be more meaningful, but it’s only a matter of degree. If newspapers, tasked with serving the public, shouldn’t charge now, the logical extrapolation is that we should never charge.
Where would that leave journalism? Before the internet, a typical newspaper got 75 to 80% of its revenue from advertising. In the digital era, the Facebooks and Googles have siphoned the lion’s share of that. The future is in subscriber revenue. Except that we shouldn’t charge for subscriptions because we’re a public servant with content too important to be walled off.
Something in that equation has to give.
Journalists have always disliked paywalls. I experienced that as The Denver Post’s online editor in the early 2000s and later as vice president for digital content at its parent company, MediaNews Group. We journalists create powerful, useful content and we want it to reach as many people as possible. That’s what drives us. It’s noble. Paywalls, however, stand in the way. So they don’t feel right.
But they are right. Coverage of the coronavirus crisis has been exceptional, from large news organizations to small. If we want to continue to do that — if we want to ensure the public can get credible information and isn’t reliant on government press conferences and social-media crackpots — we have to behave like grocery stores, pharmacies and the rest. We’re a business.
Yes, we’re also a public service. We have obligations to the communities we cover. But we can’t fulfill those obligations if we don’t exist.
Howard Saltz is Knight Innovator-in-Residence in the journalism faculty at Florida International University in Miami. He is the former publisher and editor-in-chief of the South Florida Sun Sentinel in Fort Lauderdale, and the former vice president for digital content at MediaNews Group in Denver. He can be reached at HSaltz@fiu.edu or via www.HowardSaltz.com.