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Aug. 17, 2015, 1:23 p.m.
Business Models

Six weeks into its micropayment strategy, The Winnipeg Free Press preps for a “slow building process”

About 1,300 readers are paying 27 cents a story. “It’s going to take time for people to recognize that they can enter into this agreement with us to read now and pay later and willingly refund.”

Fair or not, Winnipeggers have a reputation for being frugal. So when the hometown Winnipeg Free Press introduced a paywall this spring that included a micropayment system that let readers request a refund for any article, some were worried that readers would ask for their money back after reading every story.

“That is true — we are thrifty here in Winnipeg,” Christian Panson, the Free Press’ vice president for digital content and audience revenue, said. “Without exaggeration, everyone who I’ve spoken with and presented this idea to them, and the concept of allowing our readers to refund whatever they wanted, they said it will all be refunded, 99 percent of your articles will be refunded. That hasn’t happened at all.”

In fact, the exact opposite is happening — after about six weeks of the paywall being in effect, the refund rate is less than 1 percent. And for Panson, that’s a sign that the Free Press still needs to educate many of its readers on how exactly the system works. So far, about 1,300 people have taken them up on the pay-as-you-go model. (The paper did not report how many articles those users had paid for or how much revenue they’d generated.)

“It’s going to take time for people to recognize that they can enter into this agreement with us to read now and pay later and willingly refund,” he said. “Like most breaking news sites, or metro newspapers, there’s a lot of stories on our site that might be a paragraph, because the story hasn’t really evolved beyond that. We don’t want people making purchase decisions — we want them to read that one-paragraph story and go ahead and hit the refund button because it’s way too short.”

The Free Press became the first North American newspaper to launch a micropayment system when it debuted the new paywall, along with a redesigned website in May, and the low refund rate underscores the challenges the paper is facing as it tries to introduce its readership to a brand new payment structure.

Digital access to the Free Press is included in a print subscription. Readers can also pay $16.99 ($12.95 U.S.) per month for unlimited online access. And for commitment-phobes, there’s also the option of paying by the story, at 27 cents (21 cents U.S.) a pop. Users can access two articles per month for free before they’re prompted to create an account and enter a payment method. A widget atop the Free Press’ site shows pay-as-you-go users how much they’ve spent reading each article. They’re then charged monthly for the total of how much they’ve consumed.

The paper announced the paywall structure in February, and began encouraging readers to register with the site to ease the transition. After the May launch, the Free Press gave readers a one-month free trial of the site. (It actually staggered when the free trials ended as not to overwhelm its customer service staff, meaning some people got a longer trial than others.) It’s still offering new users a 30-day free trial.

The Free Press now has about 150,000 registered users. Of those, about 1,300 readers are paying on per-article basis, Free Press publisher Bob Cox said on a conference call Monday reporting the paper’s second-quarter earnings.

Ultimately, Panson said the paper’s goal is to have 30 or 40 percent of its subscriber base be micropayment subscribers. But he noted that the paper doesn’t have any other examples to benchmark itself against to know what its expectations should be: “We don’t have any other markets to look at.”

About 2,200 users have signed up for monthly digital subscriptions, Cox said. That’s about halfway to the Free Press’ goal of signing up 5,000 subscribers, according to Panson, estimating that at the current rate it’ll take about another seven or eight months to get there. Another 21,000 print subscribers have signed up for digital access.

“We anticipated an initial bump and then a slow building process. And that’s pretty much in line with what we had anticipated,” Cox said. “Our targets are much more ambitious than 2,200 all-access people. We still hope to link as many of our print subscribers as possible. There is a substantial body of print subscribers who are not yet linked up to receive all-access digital, even though they qualify for it at no extra charge. It’s a lot of detailed work and a lot of following up with individuals who’ve registered with us to get them signed up to pay. So it’s a bit of slogging, but it’s what we expected.”

Despite its push to get readers to sign up for the new system, the Free Press’ web traffic has plummeted since it introduced the paywall. Traffic is down about 30 percent, though Panson said they expected a 45 percent slide. He cautioned, however, that the paper could still see a dip in the number of visitors as readers continue to adapt to the paywall system.

“Right now it’s early, and I expect that we’ll lose more,” he said.

Though the Free Press planned for a reduction in its web traffic, the paper was still concerned about how it would affect its digital advertising. As of now, the impact has been minimal. The Free Press’ online ad inventory is typically only about 50 percent sold, so “we could technically lose 50 percent of our traffic and still serve every ad that we sold last year,” Panson said.

The Free Press’ parent company, FP Newspapers Limited Partnership, reported its second-quarter earnings on Monday. FPLP, which owns the Free Press and a handful of other local newspapers, reported second-quarter print advertising revenue of $14.6 million ($11.1 million U.S.), a 12.7 percent decrease compared to the second quarter of 2014. The company’s digital revenue actually increased by $100,000 from the second quarter of 2014 to $1.03 million, due primarily to an increase of web ads.

Though FPLP’s digital revenue did increase by 5.9 percent percent in the first quarter, the actual amount is still just a fraction of what print advertising brings in, despite recent declines. This is common at papers everywhere, and it’s why newspapers, the Free Press included, are looking toward their readers to make up for the loss in advertising.

The New York Times, for example, announced that it had hit 1 million digital subscribers. The Times introduced its metered paywall in 2011, but only a small percentage of the Times’ online readership is actually paying directly for digital content — less than 2 percent of the Times’ roughly 60 million unique visitors per month. (Some of those digital readers are paying print readers, of course.)

Metro newspapers, like the Free Press, are facing the same situation, though on a much smaller scale. According to a 2013 University of Missouri study, 70 percent of daily newspapers charge for online access. And while the Times has a global readership, the Free Press and similar papers aren’t likely to attract readers from outside of their regions.

Though it has a core readership group still willing to pay for print or digital subscriptions, the Free Press introduced the micropayment system to try and monetize those readers who visit regularly but wouldn’t consider paying for a monthly digital subscription.

“Our audience has come to us and said: Why are you charging us for content when nobody else in the country does? And we’ve had to say that we’re the last newspaper in Canada to erect a paywall, but that’s because the other newspapers have 10 [free] articles per month and these people don’t realize it,” Panson said. “They never hit 10 articles per month if they’re reading The Globe and Mail or the Calgary Herald, and they never get asked to pay or get asked to login. So their perception was that it was free.”

Still, the paper recognizes that it will take time to change user behavior and increase its traffic. So as part of its redesign, the Free Press has made efforts to boost its reader engagement in an attempt to partially offset the lost traffic.

Logged-in users now see stories tailored for them on the homepage, and the site will hide stories users have already read. The new responsive site also has a continuous scroll to offer up new stories to readers. It seems to have worked, Panson said, noting that stories that are recommended to users were clicked on 46 percent more often than non-recommended stories, and that users reading recommended stories spent 214 percent more time on those pages.

“We’re trying to take our pretty big content pool — it’s not The New York Times or The Guardian sized, but for a metro paper we produce quite a bit of content — and we’re trying to deliver that to the audience, so the audience sees we have this rich amount of content,” he said.

Photo by Herb Neufeld used under a Creative Commons license.

POSTED     Aug. 17, 2015, 1:23 p.m.
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