April 9, 2012

Media Trends: After Years Of Consumer Stiff-Arming, Paid Content Models Now Starting To Flourish as Newspapers More Earnestly Erect Pay Walls In Hunt For New Revenue — Luring Subscribers In With Limited Free Content

Newspapers are returning to a business strategy that served them well in the heyday of street-corner newsboys shouting the front-page news — they're enticing people with a little free online content before asking them to pay up. After years of offering news for free, a growing number of newspapers around the country have launched so-called metered pay walls, which give readers a few free stories online before requiring them to sign up for a digital subscription. About 300 newspapers have adopted such plans, which usually give subscribers some mix of Web, smartphone and tablet computer access. "A lot of our customers are telling us, 'that's fair,'" said Rob Gursha, vice president of consumer marketing at the Star Tribune, a 300,000-circulation daily in Minneapolis. In November, the newspaper began charging people as much as $1.99 a week for online access to an unlimited number of story views a month. Nearly 20,000 readers have signed up, an AP news release reports. For newspapers like the Star Tribune, it's a second chance at digital success. As the Internet gained in popularity in the 1990s, newspapers decided to give away news on their websites while continuing to charge readers for print editions. By keeping online editions free, publishers hoped to gain enough readers to attract Web advertising. But as readers flocked to free news on websites, many of them canceled their print subscriptions. And online advertising hasn't generated enough revenue to make up for the combined declines in print subscriptions and print advertising.

Fewer than a quarter of the nation's 1,350 daily newspapers charge for online access so far, but industry executives are increasingly optimistic pay walls can boost digital revenue. Newspapers take different approaches and have different price structures. Some set a limit on the number of stories and some on the number of page views. But there's little doubt executives are hoping pay walls will spur a turnaround in the industry, reports the news release by AP writer by Ryan Nakashima,

As publishers and media executives gathered in Washington last week at the Newspaper Association of America's annual meeting, the question of how to increase digital revenue was front and center. Attendees took part in panel discussions and lectures such as "New Revenue Models and Strategies" and "Reaching Young Readers: Digital Tips From the Digitally Savvy." They traded notes on how to develop applications for tablet computers and smartphones. And they talked about ways to derive new forms of revenue from tablets and e-readers such as the iPad and Kindle.

On their own, online pay walls won't make up for the print advertising revenue the industry has lost the past decade. Rick Edmonds, a media business analyst with The Poynter Institute in St. Petersburg, says calling 2012 a turning point for newspapers and digital revenue is a "little strong." But, he says, pay walls are one of many salves for easing the industry's pain. Already, they have helped shore up circulation of weekend newspapers because many weekend subscriptions come with online access included. That's important because the Sunday edition is the most profitable for most newspapers.

Gannett Co., publisher of USA Today, said in February that it would expand its online pay walls from six test markets to all 80 of its small-market newspapers by the end of the year. The company is limiting free access to five to 15 stories a month depending on the market, and offering free digital access with at least a Sunday print subscription. At the same time, Gannett is raising single-copy prices — sometimes by doubling them — and raising subscription prices by as much as a third for its printed newspapers. Combined with the digital push, the company expects its changes to add $100 million in annual profit.