Many large papers are reporting success with digital subscriptions. In October, Financial Times owner Pearson reported that during the first nine months of 2012, digital subscriptions increased 17 percent to 313,000. The Wall Street Journal reported that it had about 537,000 digital subscribers as of last fall, with 80,000 of them reading versions for tablets, smartphones, or e-readers, while the rest received the online edition.
But the most talked-about pay model is that of The New York Times. In October, The New York Times Co. reported total average digital circulation was 896,352 daily (up 136 percent year-over-year) and 850,816 Sunday (up 129 percent). Those numbers include all paid and verified digital subscription copies as well as paid subscriptions to replica editions on e-readers, including Amazon’s Kindle and Barnes & Noble’s Nook.
Whether you call it a paywall, a meter, or a digital subscription, is it time for publishers to start embracing this paid model as a revenue generator?
Some news organizations are treating their digital strategy like a velvet rope, offering subscribers (or “members,” as they’re called) exclusive items, from free concert tickets to members-only events.
The Day in New London, Conn., launched its pay model in September 2011. “Our senior management group wanted to find something that was consumer-focused and could generate revenue growth,” said director of marketing and audience development Daniel Williams.
The result was a Web-based rewards program called The Day Passport, which provides exclusive access to discounts, giveaways, and member events at local venues and attractions. To become a member, subscribers can pick from three print or online membership options, or a digital-only membership that ranges from $9.99 to $22.99 per month. The Day allows 10 free premium articles a month before visitors are asked to subscribe.
A year after launch, Williams said the program has generated more than 1,000 digital-only members and around $100,000 in revenue.
“For 100 years, we’ve depended on the address delivery model, based on where you live and the household,” Williams said. “Now we know about the individuals inside the home.”
Williams said the meter model is a long-term business strategy for the company. “This is a growth model for us. It’s changed over the last eight to 10 years, when we were directly monetizing the audience. Now we’re indirectly monetizing them based on user profiles. We’re shifting away from the address profile, and now advertising is based on the data from these users and readers.”
He said publishers are still struggling with how to create a single sign-on — one profile that follows a reader across different platforms. By working with a partner such as Clickshare (clickshare.com), The Day is able to provide that option.
Based in Amherst, Mass., Clickshare was founded more than 10 years ago as a single sign-on provider. Since then, it has added metered access to its list of services. Clickshare currently works with more than two dozen newspapers.
Director of business development Greg Smith said the majority of publishers are looking for flexibility, as well as the ability to see who their real customers are, as opposed to “fly-by” readers. “They’re looking at retaining their customer base.”
The (Charleston, S.C.) Post and Courier also has a membership model, which launched in May. The paper offers several membership options, including a digital-only subscription for $10 per month. The Post and Courier set its meter at five free page views before asking visitors to subscribe. By setting a low meter, director of audience development Steve Wagenlander said it allows the paper to “catch more fish.”
“Readers get to know the content first instead of hitting a hard paywall,” he said. “After six months, we’ve caught more fish than those with a higher meter (based on collected data from affiliates). It shows people are saying ‘yes’ more at the Post and Courier.”
Wagenlander said the paper has 1,175 digital-only subscriptions, and he anticipates that number to rise to 1,500 in a year. He added, “The biggest change I’ve seen is that members feel good about spending money with us.”
Members-only events have played a big role in the Post and Courier’s transformation. Wagenlander said the paper has hosted several free public events, including renting out the local aquarium for 1,200 members with free food and music; a giveaway to attend an “American Idol” tour concert; tickets to see a local production of “The Wizard of Oz” with cast photos; and a food truck rodeo.
“It’s a thank you for being a reader and creates a lot of goodwill,” Wagenlander said.
Member benefits also include home delivery of the printed paper, full access to postandcourier.com, unlimited access to the iPad app and mobile apps, Post and Courier magazines, access to the e-edition, complimentary text message alerts, email newsletters, and a Kindle subscription.
The Toronto Star recently announced it would launch paid digital subscriptions in 2013. Although details on how to register and how much the paper will charge are still forthcoming, director of community relations and communications Bob Hepburn said it would be a metered model.
Currently, the Star offers a product bundle that includes an ePaper (digital replica) subscription powered by NewspaperDirect and a Kobo Vox e-reader for $12.99 per month if the consumer signs an 18-month contract. According to consumer marketing manager Nadine Chevolleau, there is an early cancellation fee, but the e-reader does not have to be returned. The Star does not promote the ePaper on its website, but Chevolleau said the results have seen a nice lift in consumer revenues.
Chevolleau said the paper launched the bundle slowly, first targeting existing weekend customers and allowing them seven-day access with the ePaper. She said another small mailing was sent to households outside Toronto who didn’t have access to seven-day delivery, and the response rate was better. Another mailing to former subscribers is also in the works.
Chevolleau said 150 e-readers have been distributed so far.
Publishers have offered free content online since the dawn of the Internet, but many are reversing this stance now that digital readership shows signs of overtaking print readership.
Toronto’s Globe and Mail launched its digital subscription service, Globe Unlimited, in late October. Visitors to globeandmail.com can access 10 free pieces of Globe and Mail content per month before being asked to subscribe. Globe Unlimited is available at no additional cost for five- or six-day home delivery subscribers, and it is discounted to $4.99 for partial-week home delivery subscribers. For non-subscribers, a Globe Unlimited trial is available for 99 cents for the first month, after which the cost is $19.99 per month.
Publisher and chief executive officer Phillip Crawley said the paper already offers Globe to Go, the digital replica of the paper, and Globe Investor Gold, an online portal to stock performance analysis. Globe Investor Gold was founded 10 years ago, and members pay $15 per month for access. According to Crawley, the service has 15,000 subscribers.
“We already had a digital revenue stream,” he said. “But we believed that type of revenue could work on a broader base than with a niche website.”
While in the research phase, Crawley said the Globe and Mail looked at other paid models, such as the Financial Times, Wall Street Journal, and New York Times, and tested price sensitivity with user groups.
“In Canada, there is a shift with consumers and how they consume content,” he said. “We see a growth in tablets, which is a popular option now. Our readership comes from higher incomes and education, and they are early adapters of new devices … this can improve delivery and add new content and tools.”
A subscription to Globe Unlimited includes access to the subscriber-only Dashboard, a new tool to personalize each reader’s news experience. Digital subscribers also get access to exclusive content, such as the new Streetwise column, providing up-to-the-minute developments and news on the financial markets, and ROB Insight, a new feature providing business readers with an early jump on the stories unfolding each day.
Before the launch, Globe Unlimited was heavily promoted in print, online, on television, and on the radio. The marketing campaign also included a wrap that took over the Oct. 22 paper, the day the service launched.
With an impending move to a new building in 2015, Crawley said that having the metered model has forced the paper to think ahead in a constructive way. “We want to ramp up video production and put in a video studio, where we can produce and edit our own videos,” he said. “It will be another good source of ad revenue and a paywall incentive.”
The Daily Herald in Arlington Heights, Ill., was the first Chicago-area newspaper to charge regularly for digital access. The paper launched its metered model, Subscriber Total Access, in September 2011.
Kelly Bolyard, assistant vice president and director of interactive media/digital development, said print subscribers pay an additional $1 per week for their current subscription, while digital-only subscribers pay $7.99 a month for unlimited access to Daily Herald digital platforms. Non-subscribers are limited to 10 page views a month without paying for digital access.
Bolyard said the paper rolled out phase two in October, offering a 99- cent trial for the first month and $7.99 for the second month. “We’ve seen good movement,” she said.
“To launch and survive in a competitive market is a win for us financially,” Bolyard said. “We’ve increased our circulation revenue and seen digital growth.”
In Europe, Norwegian newspaper Fædrelandsvennen (FVN) implemented Varnish Software’s paywall service in May. Varnish (varnish-software.com) is based in Oslo, Norway and works primarily in the Scandinavian market with Norwegian newspapers. The company currently has 60 clients.
Varnish chief executive officer Per Buer said, “FVN had been experiencing an increasing slump in the number of online readers for several years before they deployed the Varnish paywall solution with great results. Once deployed, the solution met all of FVN’s requirements while maintaining the website’s optimal performance and scalability.”
According to a case study, the goal of FVN’s online management team was to make more quality material available to existing subscribers while making less content available for non-subscribers.
“The effect of launching the Varnish paywall has surpassed all our expectations,” said Christian Stavik, editor-in-chief of FVN’s online edition. “We are already seeing a great return on investment, as the number of subscribers has grown by 2 percent, and we are also selling more of our paper edition.”
Once a publisher figures out if a digital subscription service is necessary, the next question is whether to go with a hard paywall or a metered model.
More than 350 publications, including the already-mentioned Post and Courier and Daily Herald, use Press+ (mypressplus.com), a service of RR Donnelley, for their metered models. (Disclosure: E&P is a Press+ client.) Based in New York City, Press+ launched in 2010.
Co-founder Steven Brill said he believes that publications lose their voice when they put up a hard paywall. The Press+ staff doesn’t even use the term “paywall,” he said.
Brill explained the difference: “A paywall is like diving off a cliff without knowing if the bottom is too deep, too rocky, or too cold. A meter is like walking into the shallow end of a pool.”
Co-founder Gordon Crovitz said data has ended the debate among publishers over whether they should charge for content. “Data shows there is no downside,” he said. “We learn from the data where to start, how much to charge, what is the best approach, or to bundle.”
He added, “It became very clear after the meter that publishers were seeing online revenue while selling additional ads and keeping their audience.”
The company hosts quarterly meetings with publication affiliates, where Brill said real numbers are shared among colleagues. He said that in the classic business model, which includes both circulation and advertising, a paywall leads to lost advertising revenue. But, if a metered model is set at 10 free page views, visitors see a welcome message at the first page view. At eight page views, a warning might pop up with how many more views are available.
“If they get to 10, that’s a loyal reader of the website,” Brill said. “They’re the most committed, the most likely to say yes, but with a wall, the reader is immediately asked to pay when all they wanted was to read the story first. There’s a psychology to it.”
When Wagenlander attended an affiliates meeting, he saw that the Press+ staff was thinking digitally. “That’s what newspapers need when they’re thinking of subscriptions. (Press+) is relying on our content and they are providing a skill set we need. It’s refreshing to have that in a partner, someone who is immersed in the digital space.”
On the other end of the spectrum is the Honolulu Star-Advertiser. The paper began charging for its online content in August 2011 under a hard paywall. While some sections remain free, there is a charge to read premium content. Online visitors are given the first few lines of a story, but to read it entirely, the reader must sign up for a digital subscription.
Publisher Dennis Francis said that during the six months of research, the paper looked at free websites and metered systems but ultimately decided go with a paywall.
“A metered system is like getting free appetizers and cocktails in a restaurant and when it’s time to pay for the entrée, they’re full and ready to walk away,” Francis said.
The technology is handled in-house by the paper’s online staff. Francis said the paper “likes to have control” of the service. Digital access is included with a print subscription, while several other packages are offered, such as print and digital for $19.95 per month, a 14-day digital pass for $1.99, and digital-only with pricing based on location. International digital subscriptions are $15 for a year, $1.95 a month, and 99 cents for a 24-hour day pass.
Within a month of launching the paywall, Francis said digital subscriptions increased 2 percent. He said there are currently 15,000 digital-only subscribers.
“We started at zero,” Francis said. “Whatever we get is better than zero.”
The Worcester (Mass.) Telegram & Gazette launched its metered model in 2010 through Clickshare, but from 2002 to 2006 it operated under a hard paywall.
Online director Mark Henderson said data showed that a hard paywall spoke against the paper’s message of having a local news and regional site. Bringing back a metered model was a way to drive additional advertising support and place value on local reporting.
After the third click on the website’s premium content, a message pops up asking the reader to register. Print subscribers have unlimited access once they register, while casual visitors are asked to pay for access after the tenth article. Unlimited access to telegram.com and the mobile site is regularly priced at $14.95 per month and includes a rewards card with discounts to local restaurants and merchants.
The Telegram & Gazette, which is owned by the New York Times Co., launched its metered model a year ahead of its sister paper. “We made the decision with the meter locally, and the choices were all made locally,” Henderson said. “But there was a lot of pressure to deliver. It added an element of complexity.”
Henderson stressed that each publisher has to decide what is right for them, whether that’s a paid meter or a hard paywall. “What works in your market,” he said. “At least know what your next step is.”
Whether the paywall has been up for two years or two days, newspaper decision makers have plenty of lessons to share.
“Audiences do want to be engaged with us,” said Bolyard of the Daily Herald. “If we treat the audience correctly and give them quality content and advertisement, then the money will come.” She also predicted more papers will offer fewer stories for free before asking readers to pay for the content. “And don’t offer too many packages,” she said. “Less is more.”
Wagenlander said the Post and Courier learned a lot about its online audience. “There’s a misconception that it’s our print subscribers going to the site, but we know now readers are driving page views, not print subscribers. We also underestimated the willingness that people have to pay for online content … and overestimated the pushback numbers.”
Clickshare’s Smith said he sees more publishers charging for online content. “Everyone waited for the New York Times, and now they’re finding success. (Publishers) see it’s not a dying business; it’s evolving, and those that don’t get it will be left behind.”
“Judging on the success the first movers on the paywall trend seem to have had with their paywall-based business models, I would say that paywalls are here to stay,” Varnish’s Buer said.
“But what we are observing is that the publishers that are yet to decide on a business model to replace their advertising-based revenue strategy are still unsure of how to best monetize their content. When it comes to installing paywalls, loyalty is a primary concern.”
At The Day, customer loyalty played a key part in the transition. “We saw about 70 percent resistance based on online comments,” Williams said. “But within 48 hours (of the launch), our promoters became the biggest advocates of this shift.”
Williams said after the paper applied the meter, there was a 25 percent loss of page views, but there was no negative impact on ad revenue. Meanwhile, membership revenue increased by 8 percent.
“The preprint advertising model is collapsing,” he said. “We keep hearing the word audience, but there hasn’t been much done to monetize it.”
Williams is encouraged to find demand for the paper’s products, though. Based on last year’s numbers, he saw a 3 percent increase in consumers paying for digital access.
“We’re seeing a shift in the industry’s business model, where it’s becoming more consumer-focused,” he said. “We’re reaching the tipping point where consumer revenue will pass advertising revenue.”