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Oct. 26, 2015, 9:30 a.m.
Business Models

In Utah, hundreds of newspaper readers are paying to kill online ads

Since launching in July, The Salt Lake Tribune’s membership program has attracted about 600 paying customers.

Are people willing to pay for ad-free access to a newspaper website? Evidence from Utah indicates at least some are, but the numbers won’t make anyone think the industry’s business model problems have been solved.

Nearly 600 people have signed up for The Salt Lake Tribune’s membership program since it debuted in late July. For $9.99 per month, readers get access to an advertising-free version of the Tribune’s website and early access to sign up for the paper’s events series. There’s also a $4.99 option that doesn’t get rid of the ads but does let members sign up for the events before the public.

About 90 percent of the Tribune’s members have opted for the higher-priced option, editor and publisher Terry Orme told me. And so far, he said, there’ve been about two dozen cancellations.

The paper’s goal is to sign up 1,000 total members by the end of the year.

“That would propel us into some meaningful revenue,” Orme told me. “Meaningful” has different meanings for different companies, of course; at the current membership breakdown, 1,000 total members would generate around $114,000 a year.

While outlets like NPR have long built their business models around voluntary audience support, other news organizations — from the San Francisco Chronicle to Voice of San Diego — have in recent years turned to membership programs to try and squeeze more money out of their most loyal audience members while offering them some additional benefits.

Declines and uncertainty in the advertising market have led publications to look more to their readers for support. The New York Times earlier this month released a digital plan whereby it hopes to double its digital revenue to $800 million, mostly through digital subscriptions, by 2020.

The Tribune, obviously, isn’t The New York Times, and the membership program and events series isn’t going to totally reinvent its business, but if the paper can gain some traction, Orme said it could help around the edges and secure a handful of positions in the newsroom.

“This is literally a best-case scenario,” he said. “Say we get in the low thousands — 2,000 to 3,000 members. That’s significant revenue for a newsroom like us. If we had $100,000 or $200,000 coming in, that’s two or three or four positions. We’re a long way from that, but we’re inching in that direction.”

The program was launched on a shoestring budget. Orme said the revenue the paper has generated with the membership and events has already covered the costs of setting it up.

The Tribune didn’t add any new staffers to run the membership plan, and it did no serious market research before it started developing the membership system and events program.

“People are okay with forking over this dough every month,” Orme said. “We didn’t know if that would happen or not.”

The Tribune figures there are a couple of factors that are driving interest in the membership offers. The first reason is a simple one: Web advertising is annoying, and people are willing to pay to make the ads disappear.

The Tribune gets about 130,000 unique visitors per month online, Orme said, so if 1,000 or so pay for the ad-free version of the site, less than 1 percent of them won’t be served ads. (Though, presumably, the people who pay for a membership are the paper’s most loyal visitors and visit the site a lot.)

“We conceived this to have a very low impact on the ad sales,” he said.

The other factor contributing to the interest from some readers is the ongoing uncertainty around the Tribune. The paper is owned by Digital First Media, but it’s run through a joint operating agreement with its prime competitor, the Deseret News, which is owned by the Mormon church.

There have been rumors that Digital First is putting the paper up for sale, and in 2013, the Deseret News paid Digital First a lump sum of cash which transferred control of the jointly operated printing facilities to the church-owned paper while also cutting the Tribune’s rights to the joint profits in half.

The Department of Justice is investigating the deal, and a group of concerned readers filed a lawsuit to reverse the transaction. Orme said he thought the membership program was a way for readers to show they support the paper.

“That has resonated through the community, and there are a lot of people out there pulling for us,” he said.

The events have been another way for the paper to interact with the community. The response, however, have been mixed. Certain events drew more than 300 attendees, while others have attracted more disappointing crowds.

Last month, the Tribune held an event at a Salt Lake City sports bar featuring two of the paper’s well known sports columnists previewing the upcoming Utah Jazz season and discussing the No.13-ranked, Utah Utes football team, which lost its first game of the season last weekend. The paper expected a couple hundred attendees, but only 50 showed up.

“It was a good event, the people who came enjoyed it, but we didn’t get the response we wanted,” Orme said, emphasizing that the paper was still experimenting and learning what worked and what didn’t.

The Tribune’s next scheduled event is a wine tasting, and the paper is purposefully limiting the size of the event due to its nature and also to generate some demand. Orme said that enough people sign up, the paper will add some additional dates.

But Orme said the events have been important to help build a connection with readers beyond just the dollars and cents that they and memberships are bringing in.

“There’s value beyond the monetary value,” Orme said. “There’s also a community, readership connection value. I think it’s been really positive to connect with your readers on that sort of level.”

Still, revenue generation is obviously important, and if it was up to Orme, the membership program would be the first step on the way to a paywall. But Digital First thinks differently, and there’s some concern that readers might abandon the Tribune for other local outlets if they have to pay to access their website.

The Tribune’s only current paid digital product is a digital replica of its print newspaper. Digital subscriptions to that are sold separately and aren’t included in the membership plan.

But with the membership program, the paper can get a sense of what kind of response it can get for asking readers for additional payment.

“We ought to be looking at paywall options for our paper,” Orme said. “This is one way of putting our toe in it.”

Photo of Salt Lake City by Garrett used under a Creative Commons License.

POSTED     Oct. 26, 2015, 9:30 a.m.
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