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.

Talk about this post on Facebook.

Advertisements

Two stories in Sunday’s Globe show why local and regional journalism matters

In case you missed it, The Boston Globe published two tremendous pieces of accountability journalism on Sunday:

  • Jenna Russell and Jessica Rinaldi reported on the Hingham Police Department’s massive — and questionable — response to the home of a suicidal young man whose distraught parents had said was suicidal. Despite the parents’ pleas to back off, the police went all-in. And Austin Reeves, 26, ended up dead, most likely by his own hand.
  • The Spotlight Team found that the Veterans Administration hospital in Manchester, New Hampshire, was providing terrible care, with flies in an operating room, blood or rust on surgical instruments, and such poor treatment of veterans with spinal injuries that they ended up permanently disabled even though their conditions could have been corrected by surgery. Two officials have already been removed because of the Globe’s reporting.

I point these out because this is important work that simply wouldn’t otherwise be done at the regional level. The national media — especially The Washington Post and The New York Times — are doing an outstanding job of holding President Trump to account and digging into the Republicans’ various proposal to dismantle the Affordable Care Act. In such an environment, it’s vital that we not overlook what’s happening in our backyard.

Advertising will never pay the bills for journalism to the same extent that it did before rise of the internet. If we’re not willing to pay, we’re going to lose the watchdog function that journalism plays in a democracy. We pay for a number of local and national news sources, including the Globe and the Boston Herald, and I hope that you do, too.

Talk about this post on Facebook.

A few thoughts on the Globe’s digital rate hike

CommonWealth Magazine editor Bruce Mohl reports that The Boston Globe is about to increase its digital-only subscription rate by 74 percent — from $3.99 to $6.93 a week, or about $1 a day.

As I told Bruce for a follow-up, it’s a bold move — maybe too bold. The Globe has had a lot of success with paid digital subscriptions, having sold around 78,000 of them as of last September, according to the Alliance for Audited Media. The AAM does a lot of double- and even triple-counting of digital (the Globe itself claims a more modest 65,000, according to Mohl’s article), but that’s still an impressive number.

I’m sure some subscribers will walk away rather than pay the higher fee, but probably not too many. If you’re paying to read the Globe, it’s most likely because you are a committed Globe reader of long standing. To invoke the old cliché, $1 is considerably less than the cost of a cup of coffee. Still, some will cancel:

Newspaper companies charge for content at their peril. News executives may chafe at giving away their journalism, but members of their audience don’t feel like they’re getting anything for free — not after paying hundreds of dollars a month for broadband, cell service and their various digital devices.

Interestingly, while the Globe itself is becoming more expensive, John Henry and company are also making some big bets on free with sites like Crux, BetaBoston, Boston.com and the forthcoming life-sciences vertical, which will be called Stat according to several employment listings I’ve seen.

I wish the Globe success as its executives try to figure out how to pay for journalism in the 21st century. But at this point I think it would be wiser to focus on building their subscriber base than trying to squeeze more out of their existing customers.

Boston Globe, Boston.com moving farther apart

There’s a bit of non-baseball news at the end of Boston Globe baseball reporter Peter Abraham’s latest:

Finally, a programming note. All our written content will be exclusively in the Globe and on BostonGlobe.com from now on. That includes Nick Cafardo, Dan Shaughnessy, Chris Gasper, Julian Benbow and me. The Extra Bases blog on Boston.com will not have contributions from Globe baseball reporters.

The move is in accord with an announcement recently made by Globe editor Brian McGrory, so it’s not really a surprise — more of a confirmation. With the Globe’s online paywall a lot leakier than it used to be, there’s really no need for cross-platform sharing anymore.

GateHouse Media to install a media gatehouse

Earlier today Media Nation obtained a copy of a message from Sean Burke, president and group publisher of GateHouse Media New England, announcing that GateHouse will experiment with metered paywalls at three of its daily papers — The MetroWest Daily News of Framingham, The Enterprise of Brockton and The Milford Daily News. At a fourth daily, The Herald News of Fall River, the company will try a premium/freemium model.

GateHouse Media, based in suburban Rochester, N.Y., owns more than 100 papers in Eastern Massachusetts, most of them weeklies. The full text of Burke’s message follows.

Gatehouse Mass. dailies going to “metered model”:

To: All GateHouse Media New England Employees
From: Sean Burke
Date: 3/4/2014
Re: The Meters Are Here!

Team,

Today we are pleased to announce that we are under taking a very important and strategic step in the  future of our business by introducing tactics to eliminate unlimited free access to our content.

Sean Burke (via LinkedIn)
Sean Burke (via LinkedIn)

For years now, it’s bothered me that we essentially undervalue the efforts of our hardworking journalists by giving away their content free on our websites. Plus, we do everything we can to drive people to our free content, through social media, promotions and more. On the circulation side the cannibalization of our own best efforts is clear to see: We ask people to pay for our print publications, while increasingly pointing them toward digital, where they can consume most if not all of the print content free.

We have been providing this value to readers and visitors for years, free of charge, and at the detriment of our core business, our paid print publications. As increasing numbers of readers choose digital options to satisfy their news and information needs, the circulation of our newspapers continues to trend downward.

No more. Today begins a paid content strategy on three of our daily newspaper sites:

MetroWestDailyNews.com, MilfordDailyNews.com and Enterprisenews.com. These sites will test what is called a “metered model.” Users will have access to 15 free articles each month. After reaching the limit, they will trigger a prompt that will give them a variety of payment options to allow them to continue to access content. We’re starting the meter high – allowing a higher level of free content – then we will begin to lower it, testing along the way, to find the optimum level. As always, readers can view an unlimited number of exclusive breaking news stories and community features on the home page, as well as enjoying full access to obituaries, section fronts and video.

In Fall River, at The Herald News, we’ll be testing a different model, which we refer to as “freemium/premium.” This model capitalizes upon the differing levels of consumption and engagement by our readers through versioning. We’ll continue to offer plenty of content to our more casual readers, but it will be just the basics of stories. We’ll ask readers who want a richer, more in-depth, interactive, multi-layered, and multimedia experience to join our brands as paid “members.”

In conjunction with this model we will launch a consumer loyalty and membership program, Herald News Perks, which gives “members” access to exclusive deals, contests and events beyond content.

We plan to learn a great deal from our initial venture into paid online content with these models, striving to emerge with refined approaches for what resonates in our many individual markets. Along the way, I invite your feedback on what you think works, what doesn’t and ideas for how we might continue to demonstrate the value of all of our products across all platforms.

Best,
Sean

Beginning of the end for the Globe’s two-site strategy?

320px-Twenty_dollar_billsBoston Globe editor Brian McGrory made a series of announcements earlier today about changes and appointments inside the Globe newsroom. His memo is online at Poynter. The most important news is that the Globe’s digital paywall is being lowered to allow access to 10 free articles a month before non-subscribers are asked to pay.

The spin on McGrory’s announcement is that this represents some sort of 180-degree turn. It doesn’t. It is a significant adjustment, but the Globe has been tweaking the paywall ever since its debut in the fall of 2011. About a year ago, for instance, I wrote a story for the Nieman Journalism Lab that the Globe was tightening up on social sharing in the hopes of persuading more people to pay. Now it’s moving in the other direction. But mid-course corrections have been part of the strategy from the beginning.

Not to get ahead of the story, but I wonder if the Globe’s move toward a much looser paywall might lead to the eventual abandonment of its two-site strategy — the paid BostonGlobe.com site and the free Boston.com. Yes, McGrory also announced some new appointments for Boston.com. But what’s now Boston.com content could be folded into BostonGlobe.com as free, online-only content that supplements the paid material. Newspapers like The New York Times and The Washington Post have large amounts of online-only content but only one site.

A number of people I’ve talked with find the two-site strategy confusing. I have a more basic complaint: as a paying subscriber, I don’t think I should have to go to Boston.com for anything, whether it be Red Sox items or lottery numbers. It should all be on the site that I’m paying for.

McGrory’s announcement signals not a revolution but an evolution. It will be interesting to see what comes next.

Update: Gin Dumcius points out that McGrory’s memo says the two sites will remain separate and may even compete with each other. I want to emphasize that I don’t think the end of the two-site strategy is coming any time soon. I just think the machinery has been set in motion so that it might eventually make sense.

The Boston Globe’s paywall is raised a little higher

be02f758328311e2b55612313804a1b1_7This article appeared earlier at the Nieman Journalism Lab.

The flexible paywall that The Boston Globe introduced for its subscription website about a year and a half ago has slowly gotten a little less flexible. Fewer Globe stories are available on the paper’s free Boston.com site, and restrictions have been placed on social sharing.

The reason, according to Globe spokeswoman Ellen Clegg, is that the paper’s executives are still trying to figure out how to get paid online journalism right in a world awash in free news.

“The core of our two-brand strategy,” she told me by email, “involves trying to find the optimal balance between a free, ad-supported model and a premium, consumer-supported model.”

The restrictions were brought home to me recently when I learned that the paper had started limiting social media sharing to only two free links a month — a serious limit on someone like me, who regularly shares links on my blog, on Facebook and on Twitter. As a subscriber, I can share as many links as I like, of course. But non-subscribers can only click on two before getting a message that they cannot pass go.

So let’s run down the changes, shall we?

First, those social-media links. Clegg says that when BostonGlobe.com went live in the fall of 2011, social sharing was limited to five links per month. If so, it wasn’t well publicized. I’ve gone back and looked at some of the coverage, including a piece I wrote for the Nieman Journalism Lab and the Globe’s own FAQ, and can find no mention of a monthly cap.

In any case, Clegg says that in December 2012, that number was cut to two links a month from search and social media — “per device, and per browser.” In other words, eight a month if you want to juggle among Chrome, Safari, Firefox and Internet Explorer (but who wants to do that?), and more if you move back and forth among other screens. “Email sharing,” she adds, “is unlimited.”

Second, when BostonGlobe.com debuted, the editors selected five stories a day that would also run on the free Boston.com site. Most sports stories ran on Boston.com as well. Last April, the number of free news stories was cut from five to four, and some additional sports content was moved behind the paywall.

“This is part of an effort to continually experiment, test and analyze how our readers engage with us digitally,” Clegg says. “We have been trying to find the right balance between the free-sharing culture of the Internet and paid access to premium Globe content. We believe that we can only arrive at that balance through experimentation.”

How well is it working? The Globe’s digital subscription base has risen, but slowly. Currently, Clegg says, the Globe has about 50,000 paid digital subscribers — but that doesn’t mean 50,000 people paying directly for a digital subscription. It’s a figure that includes digital-only subscribers; Sunday-only print subscribers (I’m one of them), who automatically get seven-day digital access; and seven-day print subscribers who access BostonGlobe.com at least once a week.

That’s how digital subscriptions are counted by the Alliance for Audited Media (formerly the Audit Bureau of Circulations), and it’s a pretty expansive definition. As I’ve written before, about half of those counted as Globe digital subscribers get the paper delivered to their doorstep all seven days.

So is the decision by Globe executives to tighten the paywall smart or dumb? It’s hard to say. From the beginning, the idea behind the paid BostonGlobe.com site was to find a way to get regular readers to pay without turning away occasional readers and without hurting the free, advertiser-supported (and just-redesigned) Boston.com site. (Here is how Globe publisher Christopher Mayer explained it to me shortly after plans to build the paywall were announced in the fall of 2010.) Today, Clegg says, Boston.com attracts about 6 million unique visitors a month. Another 1.5 million uniques a month visit BostonGlobe.com, mainly as a result of the site’s free-access features.

I know that since I learned about the two-links-per-month limit, I’ve been looking for the equivalent content in Boston.com’s news blogs or elsewhere. I tend to shy away from BostonHerald.com unless I’m writing specifically about the Herald, since much of its content moves into the paper’s paid archives after two weeks. But there are plenty of other sources of free local news, even if it’s not always of the same quality as the Globe’s.

I’m inclined to cut the Globe some slack as Mayer, editor Brian McGrory and company grope their way into the future. But the new rules have already nudged me away from Globe content, and I’m a paying customer. That can’t be a good thing.

News of the weird: Hyperlink edition

Via Jay Rosen, a story that is almost too weird to be true: Irish newspapers are claiming that no one has a right to link to their content without paying for it. And they have a price list.

Readers show increasing willingness to pick up the tab

New York Times figures include International Herald Tribune. Boston Globe figures include Worcester Telegram & Gazette and Boston.com. Courtesy of Paul McMorrow.

Advertiser-supported journalism isn’t going away, but it’s not going to recover, either. The forces aligned against it are just too overwhelming. Classifieds aren’t coming back. Print is dying. And online advertisers are staying away from news sites even as Internet ads overall continue to grow, as this Reuters report by Jennifer Saba shows.

Which is why the New York Times Co.’s progress in tilting the revenue equation away from advertising and toward readers is so important. Joe Coscarelli of New York magazine writes that circulation revenue at the company’s Big Three newspapers — the Times, the International Herald Tribune and the Boston Globe — is rising faster than ad revenue is falling.

(Coscarelli doesn’t say so, but his Globe numbers are almost certainly for the New England Newspaper Group — the Globe, the Worcester Telegram & Gazette and Boston.com. The Times Co. does not break out those numbers separately.)

Here are the details. In the second quarter of this year, which ended on June 30, the Times Co. lost $88.1 million. Advertising, both in print and online, fell 6.6 percent, to $220 million. But circulation revenue rose 8.3 percent, to $233 million. News-business analyst Ken Doctor tells Coscarelli that the Times Co. may be the first major newspaper company to pull in more money from circulation than from advertising.

The newspaper business had long earned some 80 percent of its revenues from ads. It was often said that the news was free, with readers asked to pay only for printing and delivery. The question facing the industry is whether there are enough readers who value newspapers to pay much more for print than they used to, and to pay anything at all for online access.

The Times and the Globe both have smart, flexible digital-subscription systems that are being closely watched by newspaper executives. (The Telegram & Gazette has a paywall as well, though I’m not familiar enough with it to offer an assessment.) But the Times has been much more successful than the Globe in selling digital subscriptions — 509,000 for the Times and the IHT in the second quarter, compared to about 23,000 for the Globe, according to Chris Reidy of the Globe.

The caution flag for the Globe is that the Times is an utterly unique product — for all its flaws, it is surely the highest-quality, most comprehensive news source in the United States. And it may be the one news source people are willing to pay for.

The Globe is an excellent regional paper, but it’s unlikely that online subscriptions will ever be more than a small part of its revenue stream. Globe executives themselves seem wary of pushing the paywall too hard, as they continue to offer quite a bit of Globe content on the free Boston.com site. Indeed, the chart above, put together by Paul McMorrow of CommonWealth Magazine, shows that circulation revenue as a percentage of overall revenues actually dipped slightly in the second quarter at the New England Media Group.

In other words, the latest numbers are great news for the Times. For everyone else, they are something to aspire to, with no guarantee of success.

Coughing up (or not) for online content

I have been in the throes of rewriting my book the past few weeks, which is why blogging has been sporadic. But let me pause to offer a reading suggestion — Howard Owens’ 10 arguments against paywalls for online news, published yesterday by the Columbia Journalism Review.

Particularly good is No. 9: “Paywalls don’t address the fundamental issues facing newspapers.”

Although I’m not as resolutely opposed to paywalls as Owens, he lays out the arguments against them intelligently and forcefully.