Some (Unasked-for) Advice for Smaller, Non-Metro Newspapers

By: Steve Outing According to some critics, too often in this column I've focused on the adaptation of and suggested solutions for larger metro newspapers to survive the digital transition. After all, it's the metros that have suffered the most, with steadily declining circulation; ad revenues moving to more-efficient digital venues; classifieds being decimated by free online competitors like Craigslist; corporate bankruptcies forcing layoffs and cutbacks at chain newspapers; outright shutdowns (e.g., Rocky Mountain News) and reductions of printing and delivery to stem losses and perhaps again allow profitability (e.g., Christian Science Monitor, Detroit Newspapers); and a new wave of small digital news start-ups, both for- and non-profit, eager to fill the space -- and attract the ad dollars -- that newspapers used to have locked up.

As I've answered any time someone has posed to me the question about small-town newspapers not in metro areas, many of them have less to worry about in the short term (unless they're owned by an over-leveraged media company needing to pay off debt). Their strategies can be a bit different, thanks to a longer expected life span for their print editions than metro papers, and less digital competition to force rapid changes in how they do business.

In this column, I?d like to present some advice for smaller, non-metro newspapers. A couple of recent incidents prompted this:

1. Tom Hess, an old friend and housemate from my early 20s, recently was laid off from his job in Colorado. He landed on his feet in Columbia Falls, Mont., a small gateway city on the western edge of Glacier National Park, as managing editor of the Hungry Horse News, "Montana's largest weekly newspaper with a circulation of 7,200" and part of a small regional newspaper chain. It's published every Thursday in print, and has a free-access Web site as well as a paid digital-replica edition with the option of digital subscription combined with weekly print delivery.

2. All columnists have critics, and a persistent one for me has been Roger Plothow, editor and publisher of the Post Register in Idaho Falls, Idaho. His daily newspaper (circulation 24,000) is one of a small number of American papers that has put a pay wall on most of the content of its Web site, in a strategy to protect the print edition by not giving away its news online. Last week my name popped up under a comment from Plothow on Mark Potts' ?Recovering Journalist? blog. Plothow: "Steve Outing is particularly perplexing to me -- his columns are cartoonish and never propose real solutions."

Plothow has told me that he thinks the solutions I have proposed in this column and on my personal blog typically are not relevant to smaller papers. So let's ponder what these two very different small newspapers might do to move into the digital era and profit from the media revolution in which we find ourselves.

Free vs. paid, non-metro edition
With global media titan Rupert Murdoch threatening to lock out his news empire's content from Google (perhaps licensing it to Microsoft's fledgling Bing


The American Press Institute recently profiled 16 general-interest U.S. newspapers -- mostly small or medium size -- that already have Web site pay walls around some or all of their news content. ( Downloadable PDF document here ). API conducted the case studies because "more and more newspapers are launching pay models for online content." (Plothow's Post Register has not been profiled at this writing.)

At most of the papers profiled by API, the model is similar to the Post Register's:

* Some or all news content is not viewable online without a paid print and/or online subscription.
* A digital-replica e-edition that repeats what's in the print edition but is delivered electronically is a paid service. (This is typically included in the price of a print subscription, or can be purchased sans print delivery for a monthly or annual fee.)
* Print, print-digital or digital-only paying subscribers get access to everything on the Web site.
* Some papers also allow a "day rate" for access to the Web site's full content (75 cents or $1 is typical).

Of course, non-local visitors to the paper's Web site get to see only a limited amount of content (typically wire stories, classified ads, sometimes staff blogs, and often short versions of breaking news), but are barred from local news unless they pay for a subscription or, if available, a day pass.

The primary driver of these strategies is to protect the print product, not to focus on digital revenues rising to match print's, nor build a strong digital business for the future. (Such an approach by a big-city daily in a competitive market would be a recipe for driving the company into the ground.) Ergo, digital and Web revenues tend to be a small part of such small-city newspapers' overall cash flow.

But this strategy can only work in certain markets. For example, the Web site of the Arkansas Democrat-Gazette puts its locally produced stories behind a pay wall; an online-only subscription costs $5.95 a month or $59 a year. This model has been in place since 2002; there are 3,400 online-only subscribers, and they account for about $200,000 a year in revenue, according to the API case study. The Democrat-Gazette (print circulation 183,000 daily, 270,000 Sundays) has been able to stick to a pay wall model for local news online because it's the only daily newspaper in Little Rock, Ark.

Meanwhile, reports API, "sister paper the Times Free Press in Chattanooga, Tenn., was unable to sustain a (Web site) pay wall due to competition by a local free Web site."

So, an online pay wall strategy for local news in smaller communities seems to be possible only in one-newspaper towns where there's not yet any serious free online competition, nor nearby newspapers that offer free news online. Idaho Falls appears to still fit the category where it's feasible to employ a Web pay wall strategy -- though I would argue that it's not wise. None of the pay-walled newspaper Web sites profiled by API make any serious money on the Web or with digital-replica editions; it's a defensive strategy, where publishers cite either stable print circulation, or actual growth in print sales because of an online pay wall.

No pay wall in tourist towns
That the Hungry Horse News in Montana would keep locally produced news free on its Web site makes sense. Columbia Falls, as a gateway town to a popular National Park, thrives on the tourist trade. To block people planning a Glacier National Park vacation from the paper's online content would be folly. Local hotels, guide services and other tourist businesses in the town have plenty of ways to market themselves nationally online. But the Hungry Horse News' Web site and its other e-services are also important vehicles to reach potential visitors searching the Web for info on where to spend money when they arrive in the area.

In a small town that relies on tourist dollars for much of the year, putting its best local content behind a pay wall and relying primarily on local visitors to pay for the Web site costs is inappropriate. Small-town papers like the Hungry Horse News are no longer just for locals; their Web sites reach a national and even international audience of people interested in vacationing in the area. That distant audience can be monetized by targeting the right Columbia Falls advertisers and their special offers to prospective visitors, while not also blasting online ads for businesses that rely on the local trade (which just wastes the latter's ad spending).

To my old friend Tom (and perhaps it will be of use to others in his position), here are my recommendations for the Hungry Horse News to take advantage of digital opportunities while continuing to operate a successful print newspaper:

1. Offer paid subscriptions to the newspaper that also include free access to a digital-replica edition (already implemented: The Hungry Horse News newsstand price for the print edition is 75 cents).
2. Offer paid digital-replica edition subscriptions that mimic the paper in electronic form, for those second-home owners in the area and others who want to keep up with Columbia Falls and Glacier National Park news and developments and prefer not to receive the print edition by mail when the news is several days old (already implemented).
3. Continue to keep all your Web site content -- including locally produced news -- free to all. And yes, that includes print subscribers who might be tempted to save money, cancel the print edition, and rely on the free Web site.
4. Have your Web manager focus on better ad targeting, in order to identify out-of-area users as potential tourists interested in hotels, camping, excursions, etc. and show them relevant ads.
5. Most importantly, devise other reasons for paying print and/or digital subscribers to keep paying -- primarily by value-added online, digital, mobile and even physical extras not available to non-paying users of the Web site.

No. 5 is a variation of the "freemium" strategy. Its advantage is in building up a digital/online/mobile business by focusing on what the Internet and mobile can do for your news operation, rather than downplaying it. It's playing offense instead of defense; it's planning for the future, not putting it off.

Some examples of digital goodies to give away free to paying print and/or digital subscribers (but charge others):
1. Mobile-phone text message alerts about important local breaking news (including important yet seemingly mundane news like road closures and power outages).
2. Regular e-mailed (or mobile phone) discount coupons from local businesses.
3. Free classified-ad placement for non-business advertisers, but with paid upsell features (photos, bold type, preferred placement, etc.) beyond the basic few lines of text, and discounted rates on the upsell features for paying subscribers. Columbia Falls does have Craigslist to worry about; Kalispell, 20 miles away, has a Craigslist site where you'll find people from Columbia Falls placing free ads. Also being able to place free ads on the Hungry Horse News? Web site would be an enticement to be a paying subscriber, again supporting the print edition and paid digital edition.
4. Discounted print-display and Web site banner ad rates for subscribers. Advertisers that don't subscribe pay the normal rates. (For a local business, subscribing to the paper or paper plus digital or digital-only would be a no-brainer in order to get the discount ad rates.)
5. A membership program with benefits given free to subscribers, but non-subscribers can pay for with an annual or monthly fee. (See the Times of London's online membership program and envision a small-town version.)

On that last item, a news membership program offering excellent discounts from local advertisers and other benefits (e.g., discounts or free entry to newspaper-sponsored events like concerts or rodeos) might appeal to vacationers spending a week or two or three in the area. They'd see it promoted in the newspaper that they pick up while shopping, or through an e-mail promotion before visiting, then purchase a one-month membership in order to get the advertiser deals while vacationing.

Could local news be free in Idaho Falls?
While I have the sense that Plothow at the Post Register in Idaho won't follow my advice, I would recommend a similar strategy for his paper.

* Pull down the pay walls around the Web site's content.
* Create a program of online and mobile extras (editorial and advertising benefits) for any paying subscriber -- print, print-digital or digital-only -- and give them away free as enticement for continuing to subscribe.
* Make the extras and membership program a revenue stream for non-subscribers willing to pay.
* Take this seriously, so that paying print and/or digital newspaper subscribers feel like they're getting something valuable just for continuing to subscribe to the newspaper. And the membership is so enticing that many non-subscribers will be compelled to pay for it.

Newspaper publishers who have deployed pay wall strategies like Plothow's are fond of saying that the non-local traffic that Google News, et al send them is next to worthless. But there's a price to pay for keeping the rest of the world away from your local news content online unless they're willing to pay you. Here's what it will cost your company:

1. An opening for new competition. Thanks to the very low barrier of entry and cheap technology required to become a publisher today, small local-news Web start-ups and even individual local bloggers will use your pay wall as an opportunity to attract the audience not willing to pay to get your newspaper's content. What may start out as a gnat may become a predator in time, drawing away audience and advertisers.
2. An opportunity to build for a digital future. Even small towns like Columbia Falls and Idaho Falls someday will see digital consumption of news dominate print; it will just take longer to get there than in major cities. Putting up a Web pay wall stifles digital innovation, as the company's focus and resources remain primarily on maintaining print revenues, leaving an opening for others.
3. Citizen news literacy decline. It's well documented that younger people, especially those growing up not knowing what life was like without the Internet, are not fond of or accustomed to paying for news. A small-town paper that locks down its Web news behind a pay wall may well lose the next generation, and those already in their 20s. Yes, a small-town paper is a business, but it's also a civic institution vital to the healthy functioning of local government and democracy. A business model that caters only to older readers who are used to paying for news is a recipe for future civic decline.
4. An opportunity to benefit from external audiences. For small towns that don't rely on tourism, it can be difficult for a local publisher to discern how non-paying Web visitors from, say, the East Coast can benefit a newspaper or its advertisers in Idaho. But in this business we all know that technology marches at a fast pace; solutions for targeting advertising based on the location of a far-flung visitor will arrive in time and help. For an example, see my previous E&P Online column about instant ad matching for big breaking stories; it details technology being developed to pair real-time ads with real-time news, such that a big story in a small town resulting in a big traffic surge to the local newspaper Web site can be monetized. Newspaper Web site pay walls close out coming opportunity.

One size does not fit all
This certainly is not the same advice that I'd give a struggling big-metro newspaper in a competitive market, where going digital-first and even cutting back on print editions might make the most sense. But I do believe that smaller newspapers can find a balance between legacy print and new digital business strategies -- retaining the old and its still-lucrative revenue flow, while being open to new digital growth opportunities.

My old friend Tom has inherited a newspaper that is positioned to straddle the print and digital worlds and make money from both, if he chooses that path. My old critic, Roger, seems to be too focused on maintaining the print business model and thus has implemented a digital strategy that blocks the opportunities headed his way and fights the nature of the Internet and the digital generation.

I invite both of them to respond to this column on my personal blog, SteveOuting.com. And you, too.