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May 16, 2011, 11:30 a.m.

Moneyball and paywalls: Lessons on paid content from smaller papers

It’s not that hard to find similarities between baseball and the newspaper industry. On one side you’ve got the New York Yankees: big payroll, extensive resources, and a renowned line-up. On the other you’ve got teams like the Kansas City Royals, who have, well, significantly less in terms.

In newspapers its pretty similar: There’s The New York Times…and there’s The Augusta Chronicle or The Tulsa World, who have to be creative and scrappy in order to keep publishing. What we’re talking about, in a sense, is Moneyball for small- and medium-size market newspapers, and increasingly these newspapers are turning to online subscription models. They may be similar in some ways to those at papers like the Times, but less is known about their plans or how they’re faring.

Now, however, we’ve got some numbers: In a recent study of small and mid-sized newspapers, 46 percent of newspapers with circulation under 25,000 say they are already charging for some online content, compared with only 24 percent of papers with a 25,000+ circ. And of the papers surveyed that don’t charge for content, only 15 percent said they have no future plans for a pay model.

The findings were presented at the Reynolds Journalism Institute at the University of Missouri as part of RJInnovation Week, a series of presentations and discussions on paid content and new business models. The survey was a random sample of the nearly 1,400 daily newspapers in the US, of which most who responded — 77 percent — had circulation under 25,000. One third of publishers said paid subscriptions could account for as much as 20 percent of their digital revenue, while almost 50 percent thought an online pay model wouldn’t have much of an impact.

While those numbers aren’t outright optimistic for the future, they may be more realistic, and reflect a pragmatism that separates small and mid-size papers from larger ones. For these papers, the margin for success is significantly different than their larger counterparts, but the stakes are just as high, if not higher.

Protecting print

One common theme for these papers: The print product pays the bills. And what pays gets protected first.

“There still is value in print, no doubt about that,” said Andy Waters, general manager of The Columbia (Mo.) Daily Tribune, whose RJI panel was comprised of executives from smaller news organizations with online pay models. “We shouldn’t be apologetic about it, we shouldn’t be embarrassed by it.”

The Tribune began charging for online access on Dec. 1 using a metered model that allows users 10 free stories a month. From there readers have a variety of options, including an online-only subscription for $8 a month and 7-day delivery (plus total access to Columbiatribune.com) for $13.97 a month. But here’s the catch: Readers also have the option of a print-only plan at $12.97 a month (or $10.11/month for weekends plus Wednesday). If the Internet’s not your thing, you have the option (and maybe the incentive) to forgo online access. And for home subscribers who want online access? They have to pay a little extra.

Waters said the focus is squarely on the loyal, engaged readers who are willing to pay, and on stopping customers from ditching print for the web. Because of the Tribune’s size (around 17,000 circulation), its staff know they need to capture just a small percentage of that audience online for their plan to work. Ad revenues at the Tribune are up 25 percent over last year, and while he didn’t give concrete numbers for what they’ve made so far, Waters said the revenue generated by online subscriptions would be able to cover, roughly, a few reporting jobs. (The Tribune recently reported having 8,000 digital subscribers, while monthly pageviews, now around 3 million, have fallen from the previous year’s 4-5 million.)

“I’ve said all along, if we didn’t sell one (online) subscription it would be a successful program because we stopped encouraging people from dumping us in print,” Waters said.

Holding the line on circulation and pageviews

One of the early tests for all paywalls is their impact on site traffic, and with smaller papers, again, we’re confronted by the differences in scale. Unlike The New York Times, which courts a national and international audience, smaller papers rely on traffic that — barring big scoops, the occasional Fark/Drudge pick-up, and local stories that draw national attention — is largely regional. That may be why, in the RJI study, a majority of publishers said a paywall would reduce pageviews by only 20 percent, or have no effect at all. And, again, more than 50 percent also said they didn’t expect a paywall to have impact circulation.

At The Augusta Chronicle, which was also early to implement a metered model, pageviews have been increasing, said Alan English, executive editor of The Chronicle. In January 2011, the first month after the paper’s online subscription model went into effect, pageviews increased 2 percent from the previous year. In March that jumped to 11 percent.

What may have helped The Chronicle’s effort was the elastic nature of its paywall (it uses Journalism Online’s Press+): The paper initially offered 100 free stories, and has now dropped that number to 20. English said that flexibility had the effect of conditioning readers to the new system while slowly weaning them from the idea of completely free content. Much like the Columbia Daily Tribune, The Chronicle (around 60,000 circulation) also charges print subscribers for online access, adding $2.95 a month to their tab for digital reading. (It’s $6.95 a month for online-only access.) Ultimately, “we’re making a statement about the content having value and offering more services that have costs associated” with them, English said.

Though the pay scheme saw pushback from some readers, English said The Chronicle wanted to make it clear that all the work it produces has value, whether in print, online, or on their iPad app (which is free for the moment). In rolling out the new subscription models, their pitch, via a marketing campaign, was basically “would you pay the cost of a cup of coffee for a city hall reporter”? English said offering that equivalent and implying a bond between readers and the newspaper helped convert some readers.

The size advantage for small and mid-sized papers may also translate into a tighter connection with their readership, which in turn can help them explain their online subscription models to their readership. Jason Collington, web editor for The Tulsa World, said staff personally dealt with calls from readers about the paywall. For The World, which has a circulation of around 93,000, this is a second attempt at online subscriptions. (They began charging in 2000 and ended in 2005.)

But another factor, one that connects the Tribune, Chronicle, and World, is family ownership. The World has been owned by the Lorton family since 1917; the Tribune has been owned by the Waters family since the 1930s; and the Chronicle is owned by the Morris family. That type of ownership, Collington said, allows for flexibility and a quicker response to changes throughout the newspaper industry.

“As a family paper, there’s not lots of layers to go through,” Collington said. “We’re willing to experiment.”

POSTED     May 16, 2011, 11:30 a.m.
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