Monday morning, the website for a midsized paper in southeastern Pennsylvania became the first to go public with the paid content system of Journalism Online, the startup engineered by Steve Brill, Gordon Crovitz and others.
LancasterOnline, which serves the Intelligencer Journal-Lancaster New Era, began informing people who live outside Lancaster County and read its online obituary listings that visiting the obits page will cost $1.99 a month after they’ve viewed seven pages each month. Annual subscriptions cost $19.99.
Over the past several months, I’ve checked in periodically with the plan’s architect, Ernie Schreiber, who has worked for the paper for 37 years and serves now as editor of LancasterOnline.
Among other things, he has shared stats on his site from Google Analytics and the summary sheets he used to come up with his plan.
“It’s not going to amount to enough to reverse the fortunes of our newsroom, in and of itself,” Schreiber told me. “But it might be a model for the next steps in how we meter other content … And it might pay for a few reporters.”
The plan has several characteristics often associated with successful paid content ventures:
- Its content is valued by discernible audiences and is difficult to obtain easily elsewhere.
- Its payment system is flexible enough to adjust to market response.
- By preserving free access to local customers who are most important to advertisers — and to the news organization itself — it avoids jeopardizing existing revenue streams.
- It shouldn’t drive away casual, out-of-market obit readers, the sort of drive-bys who aren’t especially valuable to most advertisers but can be important to overall traffic.
One area where Lancaster falls short: providing customers with significant new value to persuade them to spend money today for something they got yesterday for free. How many more obit subscriptions might LancasterOnline sell, in other words, if it were to bundle customized obit newsletters as part of its monthly or annual fee?
Answers to such hypotheticals will have to wait; Schreiber says he would want to ask customers what they want rather than presume a market for newsletters.
But Journalism Online’s Crovitz told me in an e-mail exchange last week that Schreiber and his colleagues are “asking exactly the right questions: What journalism do we provide that is differentiated, even unique, that people can’t find elsewhere for free? And what kind of access is worth enough that people will pay for it?”
First of many paid content launches this summer
Crovitz said Lancaster’s launch will be followed by “many other launches over the summer.”
Many will test the paid potential of bigger chunks of content than obits. “The most popular,” he said, “will be metered access to a website as a whole rather than a focus on a particular area of content.”
Schreiber figures more than 100,000 out-of-area visitors are reading obits on the site over the course of a year — and more than 10 percent of them several times each week. He believes enough of them will pay to continue reading them that the site will generate at least $100,000 a year and maybe more.
He acknowledges that some of his scenarios are quite aggressive, especially a best-case conversion rate from free to paid of 75 percent.
Noting that he and his colleagues have also tracked revenue at a 15 percent conversion rate, Schreiber told me via e-mail over the weekend that the “wide range in revenue possibilities makes the point that we really don’t know what to expect, which is what makes this venture exciting.”
Schreiber came up with his metered paid content strategy after looking at site stats nearly a year ago. He noticed something interesting: More than five percent of the 47.4 million pages served over the previous year were obits.
Hedging his bets
“That struck me as a significant enough body of readers and page views that would be worth monetizing,” Schreiber told me. “But if for some reason we drove people away in droves, we’d still have 95 percent of our readership.”
Then Schreiber began to figure out ways to segment the audience to be charged, and to modulate users’ experiences of being charged.
Analyzing where the site’s obit readers were located, he found that 52 percent of the viewers were outside Lancaster County. New York City was the biggest source of that outsider traffic, followed by Harrisburg (the state capital) and, further down the list, Philadelphia and Pittsburgh.
As rigorous as Schreiber tried to be about tying his strategic decisions to actual user behavior, he recognized the imprecision of many of the metrics he was working with. For example, Google defines “unique visitor” as “unduplicated (counted only once) visitors to your website over the course of a specified time period,” but meaningful results are limited by inconsistent use of cookies and changing IP addresses.
To be on the safe side, Schreiber considered several possibilities in the course of running his numbers, including a scenario that assumes the site’s actual obit traffic is just 10 percent of what Google estimates.
“I did it two ways,” he said. “If those people are really out there, he’s what we might make — and if those numbers are grossly inflated, here’s what we might make.”
Google Analytics does not provide as much detail about individual pages as it does about an entire site, so Schreiber made some rough guesses about how often his target audiences were returning to his obit pages.
His calculations yielded the following annual estimates of out-of-county obit readers (assuming Google Analytics is providing an accurate count):
Four times a week: 17,692
Twice a week: 29,489
Once a week: 42,758
Every other week: 54,733
From those statistics, Schreiber calculated revenue at price points of $1 a month, $3 a month and $10 a year, among others, before settling on $1.99 a month and $19.99 a year.
He also tinkered with how many pages people could view before the fee kicks in, studying the Financial Times’ metered approach in the course of devising his own system. (The screens that inform LancasterOnline readers of the fee are set up a lot like the Financial Times.)
His annual revenue projections range from $100,000 to $500,000, depending on the subscription rate. If the uniques are grossly overstated, he figures the revenue stream might be no more than a tenth of his low end: $10,000 to $50,000 the first year. He says he’ll consider anything between $10,000 and $100,000 to be “a successful demonstration of the metered approach.”
(Schreiber contacted me later Monday to stress that the six-figure projections are purely hypothetical and that the low-end projections are far more realistic. “It seems reasonable that over the course of a year we could sell 500 subscriptions at $20,” he said, which would bring in $10,000.)
One way to frame the challenge: To hit $100,000 in annual revenue, LancasterOnline will need to persuade just over 5,000 of its out-of-area obit readers to cough up $19.99 a year.
The role of obits in a newspaper’s relationship with readers
Schreiber weighed several issues in hatching this plan, including the issues of customer service and commerce raised in last week’s discussion about the policies of Legacy.com and other obit-related services.
The Lancaster newspaper has 95,000 Sunday subscribers and 81,000 daily. It costs $239 for an annual subscription to get the paper seven days a week, and customers who subscribe to any of its print editions — daily, Sunday or combined — will avoid the obit pay meter. So will readers who subscribe to an e-edition that costs $5.15 a month (which also is free to seven-day print subscribers).
Since print readers — primarily local residents — already pay funeral homes to have death notices and obits printed in the paper, Schreiber did not want to charge locals to read the obit pages online.
“Our premise is that when a family through a funeral home pays for an obit, they’re really paying to alert the community [where] the newspaper circulates,” Schreiber said. “No part of that fee is associated with a promise to circulate that obit worldwide.”
Among the objectives of his approach, Schreiber said, is “treating grieving relatives or friends with respect.”
“That is why I like the metered model,” he added in an e-mail follow-up last week. “It allows us to distinguish between two types of audience that obituaries attract, the bereaved and the community-minded. The mourning son who visits our site one time, or a few times, to read the obituary of his mom will not be asked to pay. The former Lancastrian who now lives in Texas and reads the obits a two or three times a week to stay in touch with her hometown will be asked to pay.”
Many readers outside Lancaster will end up paying, he believes, because of the paper’s position as “the prime aggregator of the community’s obituaries.” Even though funeral homes post information about the deaths they handle, Schreiber argued that most people won’t spend the time to “go searching a dozen different [funeral home] sites to read five or six obits.”
A better alternative, in his view, will be paying a couple of bucks a month to read the obits on Lancaster Online.
Crovitz described the Lancaster venture as “exactly [the] kind of experimentation that will lead to successful models for paid access to websites and other digital editions and will define the best practices that the rest of the news industry is so eager to learn about.”
I asked Crovitz to compare current technology with the options he faced setting up The Wall Street Journal’s successful paid content system.
“In contrast to the either-or choice of a decade ago, new e-commerce technology such as the Press+ platform gives publishers many choices, such as the metered approach, in between a completely free model and a blunt pay wall,” he responded.
“The right answer for publishers lies within these two extremes, and we are about to see many experiments to find the right approach for each publisher and each website.”
