9 reasons newspapers are suddenly asking print subscribers to pay for full Web access

After years of searching for a workable paid digital content model, a wave of small and mid-sized newspapers have all hit on the same solution: Ask print subscribers to pay just a little more to get full website access.

The deal incorporates a key feature of the much-watched New York Times metered model, which rolled out in March. Users get a certain number of article views for free -- then they are asked to pay a monthly subscription fee for unlimited use.

However, the New York Times gives print subscribers who register free access to its website as well as to tablet and smart phone versions. The key difference in the emerging consensus model for smaller papers is to add a minimal charge, typically $1 to $2.50 a month, for unlimited access to the website.

Lee Enterprises announced this week that six of its Montana and Wyoming papers would begin charging for digital in this fashion. At Poynter Online, we had the impression that this was a rare, if not unique, strategy.

Quite the contrary, said Brad Dennison, vice president of Interactive for GateHouse Media, by email. His company has been converting several of its 90 dailies per week to this payment system and will have 50 done by the middle of this month. He is also fielding two or three calls a week, Dennison told me in a phone interview, from newspapers or companies contemplating the change.

I also spoke by phone with Steve Brill and Gordon Crovitz, co-founders of Journalism Online and its Press + payment system, which allows many permutations of payment systems. They confirmed that the rate of adoption has snowballed in recent months and that 90 percent of their clients, like GateHouse and Lee, have added the twist of asking print subscribers to pay.

GateHouse CEO Michael Reed (also current chairman of the Newspaper Association of America) told me in a phone interview that the industry made a mistake 10 years ago when the free, ad-supported Web model became the norm.

"We believe that there is value in our local news reports," Reed said, "and subscribers have been paying for it for 100 years." Prevailing practice, he continued, "was as if you had a successful ice cream store and opened another one down the street giving away ice cream for free."

Digital users are also getting some added value since they can access the report from wherever they happen to be, Reed said. But the puzzle has been how to reverse the practice, gradually and with minimal damage to audience and advertising.

That's where a host of details fell into place with early adopters like Morris Communications' Augusta Chronicle, which began to test asking print subscribers to pay separately for digital late last year and early in 2011.

Dennison ticked off a number of reasons the new model makes sense. Brill and Crovitz added several more.

The principle of the thing. First and foremost, Dennison said, the pay system is "an investment in getting the consumer used to paying for our content online." The low price makes that initiation comparatively painless.

Print customers are more likely to pay. Counter-intuitively, loyal readers -- who use both the print paper and the website -- are the best prospects. They constitute about 60 to 65 percent of those accepting the offer to pay for more access, Dennison said.

Online-only readers are less likely to sign up, perhaps partly because of a higher monthly charge and partly because of a readiness to find other digital sources.

The metered model recognizes that users who come from search to a single article or those who visit three to 10 times a month are unlikely to pay (or register). Also a micro-payment system to try to monetize that traffic would be cumbersome.

Skating to where the puck is going to be. "There is a lot changing right before our eyes right now," Dennison said. Specifically, Apple's change of policy several months ago now allows news organizations to offer iPad subscriptions.

As soon as this fall, Dennison predicted, many publishers will be able to offer mix-and-match packages giving the user added options for smart phone and tablet subscriptions.

Heavy work is going on right now at many companies to create what Dennison called "content differentiation" -- that is separate features and selling points for products on each platform.

All the more reason, then, to break in a payment system sooner rather than later and get customers used to a series of up-charges the more versions they take.

If "uniques" decline, so what? The main objection to paid online has always been that traffic would fall drastically and advertising revenues would follow.

First of all, trials are showing that traffic does not decline all that much if at all. At some places, there has been an initial dip, then a bounce back.

Dennison agreed with my suggestion that this follows a longtime print dynamic. Aggrieved readers object strongly to something in the paper (say the Los Angeles Times 2003 election eve exposé of Arnold Schwarzenegger's groping habits). Many call to cancel their subscriptions. After a few months they find themselves missing the report and reinstate it.

Also, as Ken Doctor and other analysts have been arguing for several years now, at small and mid-sized papers and even some metros, a change of 10 to 20 percent in traffic, up or down, is not likely to affect ad rates or volume.

In fact, registering and identifying the loyal print-plus readers may create a new opportunity for targeted or other premium advertising. Analyst Frédéric Filloux argued in one of his Monday Note essays this June that "experience shows advertisers are now paying roughly 30 percent more for readers reached behind a paywall."

Readers get the time they need to adapt. Augusta began allowing as many as 100 free article views per month. As the system of charges has settled in, the threshold has been steadily lowered to 15, probably headed to 10.

A nice little revenue stream. Brill and Crovitz added that asking print subscribers to pay increases the new subscription revenue. That is not a huge difference-maker financially, but these days every little bit helps. Put another way, putting in a paywall and exempting print subscribers leaves available money on the table.

With the much lower monthly rate, there is still a reward for print subscribers for their support of the mother ship -- and thus an incentive to subscribe or continue subscribing.

Conversion rates for heavy online-only users improve too. An unexpected result of varied test offers at several papers, Brill said, is that online-only readers seem to feel the new charge is fairer if print subscribers are asked to pay something. Otherwise they may feel they are being soaked and resist the offer.

Flexibility further down the road. Crovitz added that establishing multi-platform subscriptions will make it easier if newspapers should some day decide to eliminate a day or two of print editions, or in a more extreme scenario produce a printed newspaper only on Sunday.

To all those reasons the plan is proving out, I would add one more. Even for a dollar or two a month, print subscribers who accept the digital offer will count as additional paid circulation. A single person or household would be counted twice for getting separate versions of the paper. Audit Bureau of Circulations spokesperson Kammi Altig told me, it's "just like if you paid to receive two copies of the print paper, you would count twice."

So newspapers which go this route will have a better paid circulation story at a time when the industry's image of decline has become a problem. (ABC, Altig wrote, will introduce a supplementary metric with its March 2012 reports, of unique subscribers, factoring out the double counting).

Skeptics like me have described the industry's grappling with the paid content issue over the last several years as a lot of talk and hardly any action.

The turnaround this year has indeed been extraordinarily quick. Crovitz recalled that a year ago Press + "was still focused on our first launch," which came in September 2010. Now a dozen or two in a week are not uncommon, he and Brill said, mostly newspapers but some broadcast and freestanding sites too. (And competing vendors offering similar payment systems would add to those overall numbers for the industry.)

The pair hope to nail down a few more high-profile takers over the next month and will reveal the total number of adopters after Labor Day, they said.

While metros have been slow to embrace paid online in part because of potential competition on breaking news from strong television sites, that may change Brill said. "We have launched one in Montreal and another in Omaha," he said, with more on the way.

Among the prominent holdouts to date are Gannett and McClatchy  papers and the Washington Post. Gannett sites collectively and the Post each have high enough traffic that reductions would result in a meaningful loss of ad revenue.

I would look for metros to adopt varied approaches, if they do choose to go paid. For them it will not be "one-size-fits-all."

Brill, Crovitz and Dennison all said that the high-profile New York Times launch was a partial catalyst for the shift to paid. GateHouse could use the metered model principle, Dennison said, "without paying $40 million to develop it (internally as the Times did)."

But the Times's news operations are on a scale and its news products offered at a high price that doesn't transfer especially well to a typical paper. The more important factor was the success (and some instructive failures) from early adopters.

"Like a lot of people, we did not necessarily want to be on the bleeding edge," Dennison said, but he and fellow Internet execs "talk among ourselves a lot."

From those conversations, average papers, with an assist from the persistent salesmanship of Brill and Crovitz, hammered out a paid content solution that seems to work for most just fine.


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