Why paid digital is the only strategy left for our beleaguered newspapers

Photo (cc) 2008 by Dan Kennedy.

Previously published at WGBHNews.org.

There was a time not too many years ago when nearly every newspaper except The Wall Street Journal made its journalism freely available online. This was not entirely crazy. At the dawn of the commercial web, newspaper executives were optimistic that free news would prove lucrative thanks to multimedia advertising and the dramatically lower cost of digital distribution compared to print. As The New York Times naively put it in 1996 when announcing the debut of its website, “With its entry on the Web, The Times is hoping to become a primary information provider in the computer age and to cut costs for newsprint, delivery and labor.”

The limits of that strategy became apparent starting about 10 years ago. Because of its very ubiquity, digital advertising lost its value, bringing in pennies — at best — compared to print. Far worse, Google and Facebook, neither of which existed when newspaper websites first popped into existence, now scoop up more than 60 percent of digital ad revenues. In response, newspapers began charging for digital content. Today, the idea that reader revenue is the future has taken on the aura of received wisdom.

Yet there remain questions about how much news organizations can charge for their journalism as well as how many subscriptions a typical internet user is willing to pay for. Last week, Lucia Moses of Digiday explored the issue at some length. And though there have been some winners, with the Times and The Washington Post leading the way, they are likely to be outnumbered by the losers. Moses quoted Vivian Schiller, a former executive with the Times and NPR, who offered this pessimistic assessment:

A lot of people are going, “Reader revenue, it’s working for The New York Times, it’s working for specialty publications; that’s our path.” I’m afraid for most news publishers, it’s going to end in tears.

In 2013, I began working on my book “The Return of the Moguls,” which was published by ForeEdge this week. My original idea was that a new generation of wealthy newspaper owners — Amazon chief executive Jeff Bezos at the Post, financier (and Red Sox principal owner) John Henry at The Boston Globe, and entrepreneur Aaron Kushner at the Orange County Register — might figure out innovative ways of running newspapers and thus chart a path for the rest of their beleaguered industry. Over time, though, an additional plot line came into focus: all of them faced the challenge of how to move forward at the very moment when the old idea of free, web-based journalism was coming to an end.

Each of the three moguls approached the problem differently. Bezos, by far the most successful, repositioned what had been a large regional newspaper as a national digital news organization, going head to head with the Times. Bezos bundled the Post with Amazon and pursued a massive online audience with the goal of converting some small percentage of all that drive-by traffic into paying customers. Today, the Post reports more than one million paid digital subscribers and claims it has been profitable for the past two years.

Henry has pursued a number of different ideas at the Globe, some of which have worked out better than others. But Henry’s most elemental idea — that readers should pay for news — has also been his most successful. Despite charging the unusually high fee of $30 a month for digital subscriptions, the Globe is on track to pass the 100,000 mark during the first half of this year. If Globe executives can figure out how to double that, then the paper will be on its way to financial sustainability.

Meanwhile, the Globe’s print edition is being repositioned as a niche luxury product. As Don Seiffert of the Boston Business Journal reported Tuesday, the non-discounted price of home delivery is being raised to $25.90 a week. For that kind of money, Henry had better hope that the paper’s well-publicized printing and delivery woes are a thing of the past. The Globe’s digital and print fees are now both the highest of any general-interest newspaper, national or regional. It will be fascinating to see if Henry’s gamble pays off. (Update, March 9: In a comment posted to the Globe’s subscribers-only Facebook group, the Globe denied that it was contemplating a price hike of that magnitude: “There are no plans to raise our prices by 80% as reported by the BBJ.” Seiffert defends his reporting here.)

The third mogul, Kushner, is long gone, having stepped down in early 2015, several months before the Register slid into bankruptcy. Unfortunately for his newspaper, he had two main ideas, one good, one disastrous. The good: improve the print edition and make sure people were paying full rate for the paper’s journalism. A print-first approach certainly wasn’t forward-looking, but there’s no reason it couldn’t have worked for at least a few years. The problem was that Kushner added about 150 full-time journalists to his newsroom of 180 and then set about buying and launching additional newspapers in the hopes that advertising and circulation revenues would somehow magically materialize. Today the Register is owned by Digital First Media, the cost-slashing corporate chain that recently won the right to buy the Boston Herald.

Not everyone is pursuing paid digital. A few megasites like BuzzFeed and HuffPost have succeeded by attracting huge amounts of traffic while keeping the size of their staffs to a minimum. Craig Silverman, BuzzFeed’s media editor, shared Moses’ Digiday article on Twitter while adding his own warning:

News organizations that rely on digital subscriptions must also compete with high-quality news sources, both national and local, that are free and are likely to remain that way — such as PBS, NPR, and their affiliates on television, radio and online.

Yet, for newspaper owners, there really isn’t much choice other than to ask readers to pay. The bright hopes that were expressed a quarter century ago have given way to realism. There is no one left to cover the costs of journalism except us. And if not enough of us are willing, then newspapers — still the most effective vehicle for holding government and other large institutions accountable — will continue to shrink and fade away.

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