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Will paid content work? Two cautionary tales from 2004

Given the recent secret memos and TIME cover stories, the topic of “paid content” has once again grabbed the spotlight, offering at least a slim hope of revenue redemption to some newspaper people — largely on the print side, but with some notable digital advocates as well.

For those of us who went down these paths previously, there’s definitely a bit of Groundhog Day to the increased media thumb-sucking, but at least this time some of the people doing that thumb-sucking are in better positions to make actual change. At the very least, ideas are bouncing around and occasionally creating new synapses. (At the very worst, of course, we’re polishing the glassware behind the bar on Deck Three of the pride of the White Star Line.)

But can we learn anything from paid content attempts in the past? After all, this has been tried at varying levels before. Until The New York Times opens the books on its mothballed Times Select service, which kept certain content — mainly columnists and archives — behind the pay wall, these two examples, from 2003-2005, will have to serve as examples:

Los Angeles Times CalendarLive

In 2003, latimes.com put its popular CalendarLive section behind a pay wall in order to generate revenue online and stimulate print subscriptions. CalendarLive mixed arts and pop culture reviews with events listings. Access to the section was $4.95  a month or $39.95 a year. Print subscribers could access the site for free.

In the first six months of the paid program, about 15,000 print subscribers registered and 3,674 online-only registrants ponied up the cover charge. Total take, about $63,000.

During that same period, visits to the site dropped from 1.4 million a month to 540,000 a month, a 61% drop. And most of those visits were from visitors who turned away at the wall.

Even worse, total visitors to the site — people who read and interacted with content — plunged from a high of 729,000 in July 2003, the month before the wall went up, to about 19,000 total registered visitors. That’s a drop of 97% in actual audience.

As one independent critic, David Poland, said at the time:

“It is a huge gift to The New York Times, which immediately becomes the unchallenged No. 1 newspaper in movie coverage on a national basis…my little voice about movies is suddenly louder than this massive paper…The L.A. Times is replaceable.”

At the time, there was no analysis released of effect of the program on either print subscriptions or total online advertising revenues.

The pay wall came down with little fanfare in May, 2005, about 21 months after launch. If it was a success, there was never a press release heralding that fact.

Albuquerque Journal

In 2003-4, it would have been difficult to read about “paid content” and newspapers without hearing about the experiment at The Albuquerque Journal. As The Journal’s Donn Friedman put it at the time:

Since we closed off our site to all but paying subscribers two years ago, 35,000 print newspaper subscribers have signed up to use the site. Almost 2,000 people are now paying either $8 per month or $60 per year for online-only subscriptions. That’s more than $100,000 in truly new revenues generated by subscriptions…

And now I have found a different mantra: What I do has value. What we all do has value. We spend our days and nights pulling together a top quality, useful service. Like anything else you consume, you should pay for your local newspaper, whether you get it on your doorstep or online.

On the face of it, that sounded great. But if, as some industry analysts like Vin Crosbie did, you poked a bit at the numbers, there was a different conclusion lurking:

Paid access unfortunately has become a dogmatic, rather than a scientifically studied, topic. Publishers often make decisions about it based not upon evidence and knowledge but upon prejudicial beliefs. They prejudge that because consumers demonstrably pay for a newspaper’s content in print editions, consumers should then pay for that content online. Or they prejudge that their newspaper’s work doesn’t have value online unless people pay for it online. Like all prejudices, these beliefs about paid content are dangerous for the newspaper industry…

If the Journal is earning $100K or $250K or even $500K by selling advertisers its now smaller but paying audience, even adding the $100K in online subscription revenue to that probably means this site is earning half or less than an equal-sized newspaper’s free site with a coherent advertising & marketing plan.

So where are they today? Is the paid model still alive in Albuquerque? And what effect has that had on their audience?

Using 2008 numbers, The Albuquerque Journal is a 105,000 circulation daily. I looked at it compared to the Mobile Press-Register, with 99,000 circulation, The Allentown Morning Call, with 109,000 circulation, and the Syracuse Post-Standard, with 110,000 circulation.

I used a query to Google for inbound links to all these sites as a proxy for how good a job each is doing of living in the online world. These are the number of inbound links to each newspaper’s web site, as measured on February 9, 2009:

  • Mobile Press-Register: 638,000
  • Allentown Morning Call: 782,000
  • Syracuse Post-Standard: 470,000
  • Albuquerque Journal: 60,300

Clearly, the wall seems to be hurting search ranking. Market penetration though, as measured by Scarborough, isn’t quite as grim (though the 2008 online numbers include the now-shuttered Albuquerque Tribune, which contributed significantly online, according to Alexa):

  • Mobile Press-Register: 7%
  • Allentown Morning Call: 2% (Allentown is considered a Philadelphia market)
  • Syracuse Post-Standard: 15%
  • Albuquerque Journal: 5%

So it’s a mixed bag. But what about the wall itself? On a page entitled “Why we charge,” there’s still this:

For five years (1995-2000), it was our pleasure to make the Albuquerque Journal’s entire online news site available at no cost. But, beginning Aug. 1, 2001, unrestricted access, except for the archives, will be available only to people who register as subscribers of the newspaper or who register as paid members of ABQjournal.com.

A quick scan of abqjournal.com, though, shows that the wall has gotten fairly well aerated, including many blogs and multimedia features wide-open to the web, and even a pass-through model, much like that used on Salon.com, which allows anyone free access after viewing a simple sponsored ad. Try as I might, I could not find a hard wall without some kind of workaround offered.

Which is not to say that this semi-openness is a bad thing, just that it would be unjustified to consider abqjournal.com as being 100% in the “paid” camp in 2009, despite what the site says. I’ve reached out to Donn Friedman to ask him how the model has evolved. If any local market has lessons to impart, it would be The Albuquerque Journal after five years behind some manner of pay wall. Questions I’d ask:

  • How and when did the hybrid paid model emerge?
  • From 2003 to 2007 (flush years throughout the industry), what were ad revenues at abqjournal.com?
  • In those same years, what was the growth rate for audience and page views?
  • Do you consider the paid model a success for your needs?
  • What lessons should a local newspaper considering a paid online model take from your experience?

What other high-profile paid content initiatives from the first wave are you aware of? Please consider sharing what you know in the comments.

UPDATE: Michael Kinsley weighs in on paid content, based on his experience with charging for Slate:

We were quite self-righteous about the alleged principle that “content” should not be free. The word itself was an insult — as if we were just making Jell-O salad in order to sell Tupperware.

The experiment lasted about a year. Still, every so often the dream of getting people to pay recurs. It’s recurring now because of the newspaper crisis: they have been hemorrhaging subscribers and advertisers for their paper editions, even as they give away their contents online.

                                   
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  • Noah Lichtman

    Online news distribution has become a war of attrition to attract readers. Despite enormous online readership, nearly all free sites are losing money, yet they don’t charge for content for fear of losing readers to another free site.

    These isolated efforts to charge for content haven’t worked because they have been, well, isolated – when there is a free alternative, people will flock to it.

    But in a war of attrition, there are no winners. The advertising-supported model has had enough time to develop, and I think it’s clear that one thing online consumers like even less than paying for content is wasting time when being forced to sit through a video ad. That fact, combined with the plethora of advertising and marketing options now available in this country means that it is unlikely online sites will enjoy the premium advertising payments like newspapers in the good old days, making it nearly impossible for online sites alone to support these news outlets without a significant and further reduction in content.

    Obviously there are antitrust implications, but the industry would be better off if they collectively moved (at or near the same time) to an online subscription model with micropayments for individual stories, etc.

    The situation is sadly ironic. Take a fan of the New York Times who reads the content online. This person wants to support the continued existence of the Times, but the only option that adds real value to the company is a paid print subscriber. A single web visitor adds marginal utility to the company compared to a single print subscriber. So to support the Times’ continued existence, one might subscribe to the paper edition even if she only reads the content online.

    Now, I ask, where is the sense in this model?

  • http://www.timwindsor.com/ Tim Windsor

    Noah,

    Acting as a cartel, as you’re suggesting may have worked at some point in the past, but as Howard Owens pointed out earlier today on Twitter, a cartel “won’t help San Diego Union-Tribune, Watertown Times, Batavia Daily News, (or) any other local paper with local competition.”

    In other words, if my local paper goes paid tomorrow, there are at least four television stations with web sites that would be happy to take its turn-away traffic.

    Perhaps if local papers also withdrew from the AP, this could dry up the sources of content for local competitors (largely rewrites of paper stories moved on the wire), but even that – as radical a move as it is – would not patch all the holes.

    I wonder, though, if there’s an opportunity to tap into that person you mention above who wants to support a paper, but has no real outlet. Would a semi-annual membership drive in the NPR model help to supplement more traditional ad revenues?

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  • http://abqjournal.com Donn Friedman

    Please contact me. The Journal has had a hybrid model since 2003. It is all about creating a preception of value for our journalists’s work and retaining paid, print readers not about creating a Great Wall of separation for the rest of the hyperlinking world.

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  • http://mepubtech.blogspot.com/ Michael Edson

    I always thought the WSJ had a great model – at least for student subscriptions. Of course their content and brand are very unique in the marketplace, which helps gain online subscriptions.

    As an MBA student, I inquired about a WSJ student subscription. I was told that if I wanted it, I could get the print newspaper *for free* with an online subscription. Furthermore, it was cheaper to get this online subscription (with free Journal) than to simply get a print subscription. So why not? I found myself reading the print WSJ at the kitchen table as much as at my laptop.

    The interesting thing is that the pricing was fully aligned to the value perception. Online was valuable. Print was not, or much less so (for students at least).

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