Can Local Publishers Successfully Charge for Online?

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As many legacy newsrooms struggle to understand the Web as a medium for content dissemination, some have also spent much of the last few years searching for a pricing model for the traditionally free space. The Web has all but eradicated barriers to entry, meaning more competitors for newspapers and easier access to alternative sources of content for consumers. But with the print advertising market more than halved since 2005 and the digital ad market dominated by larger players such as Google and Facebook, most agree legacy publishers need to find a new source of revenue, but where?

After Web 1.0’s open source ethos spurred many publishers to give their content away for free online, many are now experimenting with paywalls of various types to monetize online. But what kinds of publications are most likely to see success?

Business publications like The Wall Street Journal and Financial Times have successfully charged for online content for years, but whether local newspapers, with competition from TV news, radio stations and sometimes hyperlocal blogs, can charge for general coverage of a community is another story. The New York Times, more of a national/international newspaper, implemented its soft, metered charges for online access in March 2011, and many smaller, local newspapers have since adopted similar models.

For local newspapers, the value proposition is simple — their publishers and editors say they believe their newspapers offer in-depth news content not available elsewhere, ranging from coverage of city council meetings and high school sports teams to wedding announcements and obituaries. That content, the argument goes, is expensive to produce, yet online users are mostly getting it for free.

One of the loudest paywall advocates out there might be John Winn Miller, publisher of the Concord Monitor, a daily newspaper covering New Hampshire’s capital city with a total weekday circulation around 17,000 and Sunday circulation near 18,000. The Monitor constructed its own meter in May 2011, offering readers 10 free articles per month before a $9.99 monthly charge for unlimited Web access. Unsurprisingly, the site’s pageviews dropped almost immediately, but the paper’s digital-only revenue is up almost 50 percent this year, and home delivery revenue has increased about 10 percent.

“The bottom line is: it was a great move,” Miller told Street Fight.

At the Tulsa World, which covers Oklahoma’s second largest city with a daily print circulation around 93,000, similar metered charges were instituted in April 2011, with monthly fees between $14.99 and $16.99 for non-print subscribers. The World has since seen increases in circulation revenue and digital ad revenue, like the Monitor, with the argument being that newspapers have a more devoted user base to pitch to advertisers.

A common thread among the two papers is that both instituted content and delivery enhancements to supplement the paywalls. Both newspapers have completely redesigned their websites since the charges were implemented, with even more of a commitment on quasi-daily Web content, social media engagement and covering local. The World has also redesigned its iPhone and Android applications, which are included in its subscription plans.

“Everyone already had the expectation that we had to produce exclusive, in-depth and relevant local content every day in print,” said Jason Collington, the World’s Web editor. “Since we have no wire [stories] on our section fronts, there is no fall back. When we went to the metered model online, we started promoting that content and offering previews of it, which then started conversations about it in our reader comments.”

For years, many newspapers have merely shoveled their print content onto the Web without embracing the interactive, easy-to-update platforms the space offers users. But for newspapers to charge online, the general consensus is that content must either be niche (like exclusive business news) or unique and compelling enough to draw in users. Although the most urgent attempts have came in the last few years, the past 15 years have been littered with news organizations that sought, and often failed, to charge for online content.

With The Batavian, founder and publisher Howard Owens, with almost 20 years of newsroom experience to his name, offers an alternative to the traditional legacy media, covering quasi-daily community news throughout New York’s Genesee County to the tune of more than $10,000 in monthly digital ad revenue from approximately 130 local advertisers. In the wake of his Columbia Journalism Review back-and-forth on the merits of digital content fees with former Baltimore Sun reporter David Simon, Owens, a paywall opponent, told Street Fight that to be successful online, newspapers should separate their print and digital business models.

“Your print edition is your bread and butter — you should do everything you can to protect that revenue,” Owens said. “Create a new business online, a new content stream, a new revenue stream that is self-sustaining [and] self-sufficient. Therefore, you are creating a new business and new future for yourself when print inevitably goes away.”

If news websites can successfully engage users by providing constantly updating, interactive content, then the advertisers will, with the right salespeople and CPMs, more than likely follow.

“If you don’t have an audience that is really addicted to your site, they’re not going to be talking about it,” Owens said. “If they’re not talking about it, your advertisers aren’t hearing about it. So you have an out-of-sight, out-of-mind problem. If you do manage to get a site that everyone’s talking about, sales become really easy.”

But can legacy publishers, operating on tight budgets during tumultuous economic times, create such a content stream, especially as many local newspapers consolidate their operations and others simply close their doors?

The key for small-to-medium-sized legacy publishers online is keeping it local. The New York Times has unmatched quality, The Wall Street Journal has unmatched business insight and analysis, and the Concord Monitors and The Tulsa Worlds of the industry must have unmatched local content. If so, newspaper paywalls, at least in the short term, might be more than just a “Band-Aid on a bullet wound.”

“I’m trying to serve a whole community,” Miller concluded. “There are some arguments that that’s an outdated business model, that you need to be niche. But the combination of the power of our printed product and our online products is unparalleled. The penetration we have, the cost per eyeball that we can sell advertisers on — you just can’t match it.”

Patrick Duprey is an intern at Street Fight.

What do you think? Are paywalls the future of local online news? Weigh in with a comment.