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Oct. 16, 2012, 3:05 p.m.
Business Models

Tuesday Q&A: Globe and Mail Publisher Phillip Crawley on the paper’s paywall plans

“The agencies are increasingly bored with looking at simple readership or circulation numbers. They want the kind of behavioral tracking data that they can get from people like Google.”

The Globe and Mail often gets called Canada’s New York Times, because of the paper’s size and reach on the northern side of the 49th parallel. Now the paper is hoping to emulate the Times’ success in getting readers to pay for online access to news.

On Monday, the paper unveiled Globe Unlimited, a digital subscription plan that follows what should be a familiar model now in newspapers: A metered allowance for free stories (10), a monthly all-digital subscription, free access for print subscribers, and a doggie-door for people coming in through social media.

When I spoke with Phillip Crawley, publisher of The Globe and Mail, he characterized most paywalls as “a fairly desperate act” for newspapers that don’t evaluate what content or utility they offer readers. National and business coverage is the cornerstone of The Globe and Mail’s work, Crawley said, and with Globe Unlimited they can deliver the news in more effective, personalized ways.

In our conversation Monday, Crawley also spoke about the need for media companies to gather better data on their users in order to provide better service and improve the quality of advertising. Below is a lightly edited transcript of the conversation.

Justin Ellis: Tell me a little about the research The Globe and Mail did before launching this new digital subscription plan. A lot of newspapers are trying to implement their own model, but they all point to the success of The New York Times. What did you find out about your audience in particular?
Phillip Crawley: Obviously, we’re very aware there are probably hundreds of newspapers now in the U.S.A. and Canada who are trying to make digital paywalls work, and my view is that many of them will not work — because, quite simply, the content that they’ve locked behind the paywall is not going to be compulsive enough to make people want to pay. I think they’re throwing up the paywall as a fairly desperate act, given the failing nature of their business on other fronts.

We have done some research over the last year particularly — this has been under development since summer of last year, — and we conducted quite a lot of reader research. We have a pretty well identified reader group. We know where to go to get some honest opinions from our audience, and we were asking questions in terms of willingness to pay — what it was they might be willing to pay for, what their price sensitivity was, whether they were digital-only users or whether they were people who were print subscribers who might also be interested in a digital delivery system.

A number of large players are currently either about to, or just decided to, go down this route. And I think the success that The New York Times is claiming for its paywall has influenced a lot of people, in the sense they keep coming up with results on a quarterly basis, which indicates some sustained growth. And that’s helping their share price, for sure.

Ellis: You mentioned companies wanting to increase their digital revenues. What’s the state of your digital revenues right now — where they are coming from, what areas specifically you want to see grow, what you want to experiment with? One thing I noticed is you guys are beefing up your business offerings.
Crawley: What we’ve been very conscious of is that the Globe for many people is their go-to source for business news in Canada. We’ve had that reputation for a long time. We’ve had a number of successful websites delivering content — some free, one paid. We’ve had a digital subscription revenue stream for 10 years plus. We have a site called GlobeInvestorGold, which is effectively a high-end investor site. That’s been running for the last decade. People pay a monthly subscription and they get real-time data, they get high-end business content analysis. People who have been our subscribers there are people who are serious investors, both amateur and professional. They use GlobeInvestorGold as a way to track what is happening with their stocks. They put their stock portfolio on the site and it gives them alerts. One of the things we will do once we’ve introduced the paywall next Monday is we’ll strengthen that offering. We’ll provide more insight, more analysis, and bring in material from other sources other than The Globe and Mail.

Over the last couple of years, the increase in the consumption of our content on smartphones, on tablets, has been enormous. We’ve just seen a really big uplift in that. It’s less clear, in some cases, how that is going to convert into serious dollars.

We feel we’re bringing together some high quality content from a variety of sources so that people who are interested in interpreting what’s going on in the market, getting background, more than just the headlines, will be able to find a lot of this in one place. They will be able to organize this content. We’ve got a very good new tool called Dashboard, which will allow you to personalize your screen whether its a desktop or a laptop, a BlackBerry or a smartphone, or an iPad.

So it’s like a newspaper. People pay for the utility of having the newspaper delivered to their doorstep. They’re prepared to pay for that service. And we believe people will also pay if you make the digital content easily accessible on whatever screen they happen to be using at one time, because a lot of our customers have multiple screens, obviously.

Ellis: What impact do you think this will have on online readership? Most newspapers who have done this have said they estimate some sort of drop as a result of the change to the paywall. I’m wondering if you guys have a figure or a percentage in mind, or if you think it won’t effect you.
Crawley: What we’ve seen is that, again, if you quote the example of The New York Times, they claimed that post-paywall traffic has suffered less than 10 percent. As you know, the Times site is porous from a social media point of view — people can access it in a multiplicity of ways. We are obviously going to monitor this very closely.

Digital ad revenue has been an important growth area for us over the last 10 years, but that’s changing very rapidly too. In the last couple of years, the advent of ad networks, of real-time bidding, the way a lot of web inventory is being commoditized — effectively the line rates are being driven down. It has changed the way we look at digital advertising. We had probably 10 years where digital advertising just grew and grew on the back of banner ads and so forth. That’s no longer the case. We need different solutions.

The Globe is actually just launching — we were down in New York a week or so ago — in partnership with The Wall Street Journal, Forbes, and Thomson Reuters, we’re launching an ad network of our own to deal specifically with the issue of how to create quality inventory at a price that isn’t being driven down and down to a dollar. We believe in premium quality, that’s what we believe in terms of our inventory as well. That is also going on at the same time as we want to maintain the kind of traffic levels and growth that we’ve had.

Over the last couple of years, the increase in the consumption of our content on smartphones, on tablets, has been enormous. We’ve just seen a really big uplift in that. It’s less clear, in some cases, how that is going to convert into serious dollars. As you know, digital dollars are in many ways smaller than print dollars. But we do see terrific growth in the consumption patterns of people wanting to consume in this particular way. So we feel we have to recognize that in the way we offer our offerings to the reader.

Ellis: In the new digital subscription plan, if you’re already a full print subscriber you get unlimited access to the online offerings and apps. But weekend-only subscribers will have to pay over the top to get access to the web. Some papers have done that in the U.S. as well. Why have that additional price to pay versus raising the price and combining access with the print subscription? Why differentiate?

Every media company with ambitions for the future, rather than just managing downwards, is looking to improve its ability to both collect, interpret, and use data to help them in the market.

Crawley: We obviously feel if you are a five- or six-day subscriber, you’re already paying a decent price for your subscription to get your paper delivered. So we’re giving those people — and that’s the hardcore of our subscriber base is that five to six days, that’s the majority of them — we’re giving them a free ride effectively into Globe Unlimited.

We’re not doing the same for the person who only buys one or two days a week. We’re asking them to pay $4.99 a month, and we believe that’s a pretty modest extra for getting this. But we’re also mindful of the fact we can bundle print and online together. I’m sure you know The New York Times story: the claim that they have seen an uptake in New York Times Sunday paper subscriptions since they bundled it with their digital offering. People who were previously just digital only have now signed up to take the Sunday paper. So they are seeing a lift in their traditional print sales at the same time they are seeing growth on the digital side.

Our feeling from taking the surveys we’ve done of our readers, there’s a strong loyalty — a lot of our subscribers have been with us for a long time. The majority have a predilection towards having a print version as well as a digital delivery option. So this is not an either/or choice — this is “as well as.” What we see is a willingness to pay when it is made convenient and easy to do, and that you don’t have to have three or four different screens with three or four different setups. Everything works the same if you’ve got the kind of delivery that we are offering.

Ellis: One thing publishers talk about a lot when they create paywalls is authenticating the existing print subscribers — pushing them to connect their print and digital identities for online access. Why is that so important? Is it simply a matter of getting more information on your customers?
Crawley: Every media company with ambitions for the future, rather than just managing downwards, is looking to improve its ability to both collect, interpret, and use data to help them in the market. We will be spending many millions of dollars over the next couple of years on creating the capability, both with people and systems, that will enable us to not only gather the data in a better way, connect the dots together, and then take it back to the clients, the advertisers, the agencies and say, “Here’s the kind of behavioral data that you’re looking for.” The agencies are increasingly bored with looking at simple readership or circulation numbers. They want the kind of behavioral tracking data that they can get from people like Google.

As an industry the newspaper business, the media business, whether you are in TV or newspapers, you need to be able to assemble more intelligent data. That is a big push for us and we will certainly be expecting to have a richer set of data as a result of this.

Ellis: One of the things that differentiates papers like The New York Times and The Wall Street Journal, in terms of their paywalls, is the makeup of their audience. They have broader audiences outside of a city or town — it’s a national audience, and with the Journal a business audience. What’s the makeup of the Globe’s audience?
Crawley: One of our principal advantages is our audience, because we have a position where we reach a lot of the high-income, high-education people in Canada. We’re a national newspaper, we have a national audience, and as a result of that we are attractive to advertisers, because we can deliver an audience of people who have a high household income. We have more people with a household income above $150,000 who have at least one degree. In other words, an affluent, educated audience who are prepared to spend. That’s what’s been appealing to our advertisers.

We believe with the kind of audience we’ve and can reach on a national basis, that if we collect more data on that audience from a digital point of view, a digital behavior point of view, consumption patterns and how people respond to ads — that strengthens our story. We believe this is an important advantage to us by being able to paint a better picture of that audience. We already have lots of data, but we increasingly recognize that what we’ve got to do is bring it all together, synthesize it, interpret it, take it back out to the market.

Ellis: Here in the U.S., papers with paywalls are seeing different levels of success. Gannett is rolling out their paywalls here, and up there the Postmedia group launched digital subscriptions for their papers. With The Globe and Mail joining in now too, what effect do you think it has on readers to look around the media environment and see there are more of these paywalls going up?
Crawley: I think they’re going to come to terms with the fact that if you want quality content, quality content comes because you keep spending money on quality journalism. We’re opening up a bureau in South America, ready for the events that are going to unfold there in the next few years — the World Cup, the Olympics, but also because there is a lot of Canadian business investment in South America, particularly on resources and mining. We think it’s a place we should have a bureau.

We’ve expanded our network of bureaus around the world at a time when lots of other newspapers have been cutting back on their basic newsroom coverage. They’ve cut back on local councils, they’ve cut back on coverage of the arts — they’ve cut back on lots of things, and the readers have noticed. To my point at the beginning, if you go behind a paywall and find really nothing that you can’t find anywhere else, clearly I don’t think you’re going to keep paying for it. You have to be convinced there is something really worth having.

POSTED     Oct. 16, 2012, 3:05 p.m.
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