Industry Insight: Newsrooms Might Have to Get Bigger, Go Deeper to Unlock Reader Revenue

By: Matt DeRienzo

The growing consensus that digital revenue from readers is essential to the survival of the news business presents a challenge for companies that have abandoned customer service, slashed editorial staff and trained newsrooms to focus on page views over engagement with readers.

Digital advertising growth isn’t replacing the loss of print revenue for major newspaper companies. Facebook and Google are getting almost all of it. And the ad tech they dominate has upended supply and demand. The $10 CPM rates local newspapers used to expect are up against the dollar or less that it takes to programmatically target the same readers across the web.

So almost every local news organization is pursuing some kind of reader revenue model to supplement advertising. It’s been hugely successful for the New York Times, the Washington Post and the Wall Street Journal as they’ve led the country in holding the new administration of President Donald Trump accountable.

But local newspapers, especially those owned by corporate chains that have maintained shareholder profits in recent years by steadily cutting journalism, aren’t seeing those kinds of results. It’s why we saw Gannett laying journalists off in small markets across the country earlier this year as the Times and Post were trumpeting unprecedented reader support.

Chains such as Tronc and Gannett, which have also pushed digital-only subscriptions in recent years, report meager results so far in relation to their remaining print circulation and the size of the markets where they operate. And it’s hard to imagine that Gatehouse and Digital First Media, whose smaller newspapers have been affected even more by newsroom cuts, are faring any better.

After Digital First Media sold the New Haven Register in Connecticut to Hearst in the spring and cutting more than 60 percent of its staff over the course of a few years, Hearst announced that it would add 10 reporter positions back to the newsroom. There may have been no alternative if Hearst hoped to get individual readers to pay for online-only content.

Until now, newspapers have stemmed the loss of print subscriber revenue by aggressively increasing home delivery prices on a shrinking hardcore base of customers who were willing to pay more for the convenience of newsprint delivered to a front porch. They may be loyal to the tradition and habit of print until they die, but they are dying. In the process, newspapers have rapidly shed overall volume—losing subscribers who cared about the news but weren’t so wedded to print.

The fact that they have not been converted to paid digital-only subscribers shows that a significant portion of that subscriber base might have been paying for delivery of a print product, not “paying for news.” Or maybe the intervening degradation of newsrooms and the quality and breadth of local journalism killed any hope for a transition to subscribing via a new delivery method.

Digital strategies built upon the advertising model may have masked the problem a time. The big cuts to newsrooms didn’t affect page views and unique visitors. Traffic grew in many newsrooms as resources were shifted to more superficial breaking news stories about accidents, crime, weather and viral features and away from deeper reporting about communities. That was a natural shift given fewer resources and stronger demands to grow traffic.

Shifting to a reader revenue-supported model is a record scratch moment.

Who will pay for superficial coverage of a bunch of local topics when there is competition from TV station websites, aggregators and original sources such as police departments using social media directly?

And the big newspaper chains, for the most part, appear to be pushing digital subscriptions in the same way they’ve marketed print. But if print was mostly about the format, not the content, it demands a different approach, and must be led by the newsroom.

That’s inevitably going to mean going deeper, which will be impossible to do with every area of coverage a newspaper used to have. But being “everything about something” is the key to getting readers who care about that something to pay. Newspapers will have to pick their spots, significantly realign beats in some cases, and like Hearst is doing in Connecticut, make an investment.

The other part of the transition is going from selling a product (that print edition on your doorstep) to a service (engaged and crucial local journalism that is vital to community and democracy). In that context, getting people to pay for a digital subscription is a much bigger picture conversation with readers. Chains that have done nothing but cut back on that service and don’t even recognize the shift can’t begin to have that conversation.

Matt DeRienzoMatt DeRienzo is executive director of LION Publishers, an organization that supports local independent online news publishers from across the country. He is a longtime former newspaper reporter, editor, publisher and corporate director of news.

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https://www.editorandpublisher.com/columns/industry-insight-newsrooms-might-have-to-get-bigger-go-deeper-to-unlock-reader-revenue/
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Published: August 21, 2017

3 thoughts on “Industry Insight: Newsrooms Might Have to Get Bigger, Go Deeper to Unlock Reader Revenue

  • August 21, 2017 at 5:59 am
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    Simply put, any product to be marketed effectively must provide the target market with what they want no matter who pays (subscribers or advertisers). Create a newspaper that delivers something that is unique and desirable at the best price and you will have a winner.

    Reply
  • August 21, 2017 at 10:30 am
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    I agree wholeheartedly. I think part of what plays into this is the “false positive” legacy operators saw in their digital growth in the first 20 years.

    It used to be assumed that massive growth publishers experienced was due to the volume of content and its popularity. However, I believe the data supports a different conclusion, that the growth experienced was also a factor of a) the number of people who were going online; b) the number of devices with which they were able to connect; and c) the time they would spend on those devices.

    Now that we’re at the end of the explosive growth of a, b and c, legacy operators are seeing their digital audiences moderate (at best) or decline. Moreover, the sites most able to continue to grow digital audience are those who are most closely connected with their audiences. These are also the sites that will be able to draw consumer support.

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  • August 21, 2017 at 7:15 pm
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    Slashing your way to publishing prosperity is akin to Toyota removing the engines (reporters) and transmissions (editors) from its vehicles and insisting that you buy its products.
    How you people can sleep at night or look yourselves in the mirror is beyond my cretinous comprehension.

    Reply

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