Monetizing Online Newspapers

I’m a big reader.  I subscribe to a few newspapers, a few news magazines, at least half a dozen magazines in different categories.  I’ve watched newspapers die before: I still have the final edition of the The Greenville Piedmont, my hometown’s afternoon paper that closed about 15 years ago.  I’ve run a small, local news site, for about a day.

Anyway, I’m really interested in how newspapers are going to make money in the next decade or so.  I’m not trying to jump on the bandwagon of “Whoa, the sky’s falling, newspapers are all screwed, they might as well shut down now.”  But, it’s pretty obvious that the old revenue model isn’t working well.  I’m not sure I can pin down a perfect revenue model; if I could, I think there are thousands of newspapers that would pay well for the info and I wouldn’t be writing about it here.  But, there are a few options out there.

Force Your Readers to Buy What They Don’t Want:

Newsday.com, a local daily in Long Island, NY, threw up a paywall about three months ago.  For a mere $5 per week, you can access their online content.  But, do I have a deal for you.  For only $4.50 a week, you can get the paper delivered to your house and online access.

In the three months since the paywall went up, there are a whopping 35 subscribers.  That’s about $600 a month or so.  Total crap.  But, I bet their subscription numbers have gone up quite a bit.  Seems like a great deal, huh?  Except, it’s really shitty to force your customers to buy things they don’t want.  Everyone does it: You walk into a store looking for a crewneck sweater, you ask the salesperson for a crew neck and she says, “We don’t have one, but let me show you the turtlenecks…”  Come on folks, if I wanted a turtleneck, I’d have asked for one.  Or said, I want a turtleneck or a crew neck.

Same with the NewsDay.com site.  People might be willing to pay for the paper to get the online access, but someday, someone is going to find a way to serve the news needs for the community, not make them buy a paper, and not charge them $5 a week.  The real funny part is that Nielsen estimates their monthly traffic has dropped from 2.2 million uniques before the paywall to 1.5 million uniques.  That’s a 33% hit to your CPMs.  I’m pretty sure advertisers won’t put up with that for too long.

Selling Advertising:

This is a popular solution to the newspaper death spiral issue.  Makes sense to me, afterall, it’s a model that the newspapers already know and are really good at.  Honestly, newspapers have been giving away content for years.  Many years before the internet threatened newspapers, the papers were giving away content and subsidizing their operating costs from advertising.  So, moving to the internet shouldn’t be a huge adjustment for them.  But, they have bloated cost structures that don’t transfer well to the online world.

Newspapers will have to make serious and lasting changes to their reporting, editing, media, and distribution operations.  Perfect opportunity for online only operations, right?  Not exactly.  In Long Island, there’s a second online paper, called the Long Island Press. Now, it’s pretty impressive for a free online paper, but it’s not knocking Newsday.com out of the water.  The LIP is the 32,000th most popular US website, while Newsday.com is the 5,000th.  Those things could change pretty quickly, but the LIP isn’t eating anyone’s breakfast.

Here in Beaufort, there’s an online newspaper that’s going on a year in business.  It has the pageviews, over 400K a month and rising.  They’ve broken quite a few good stories. On Sunday, the editor appealed to the readers to encourage local businesses to support the paper by purchasing ads.  Not the worst idea; get your readers involved and loving your online paper, then explain the economics of the thing to your readers and send them out to do your advertising sales.  The only problem is that The Beaufort Tribune didn’t just ask their readers to go out and recruit advertisers, they stopped publishing.  I don’t know if it’s a good idea for a business to go on strike, I can’t imaging a dry cleaner going on strike so their customers would spread the word about their great service.  But I can understand the financial demands of running a website, so I’m trying not to be overly critical.

Metered Content:

The Financial Times does it.  The New York Times launched an updated version of Times Reader.  This is the NY Times’ second time at content monetization.  The first time was a huge flop; placing some of the most sought after content behind the firewall.  Not a good idea for the folks who love Kristof or Friedman.

The Financial Times is successful because they have very niche content.  Ditto The Economist. According to the ABC, The Economist’s subscription numbers are actually going up in the US.  The Times Reader 2.0 thing will probably make a bit of money.  It’s only a few bucks a week, it’s got a sleek Adobe AIR interface, and it provides value beyond the standard newspaper content.  You get weekly archives, etc.  Most importantly, the NY Times isn’t going to block off their entire site, or even a huge portion of it.  The FT allows visitors to read a handful of articles per month, allows registered free users to access 30 articles per month, and then charges on top of that.

The key to making metered or freemium models work is making sure you have niche content.  The cost of entry into the online news business is so low that you simply can’t republish widely available content and expect people to pay.  The NY Times has plenty of niche content that they can sell.  The Financial Times also has plenty of niche content that people are willing to pay for.  The Wall Street Journal is also successful in metering content and convincing folks to pay a few hundred bucks a year to access special content.

What’s The Solution:

If you’re in the niche content business, charge for your content.  Be realistic, but charge.  People don’t mind paying for something that provides value in their lives.  Books cost money, cable television costs money, board games cost money, golf costs money, shopping costs money.  People are willing to pay for entertainment.

I belong to numerous paid websites.  Most are collections of people with similar interests.  One of the most popular is a webmaster, blogging, and online monetization forum.  I pay a small monthly fee to access the content, conversations, and advice.  It cost me less than $50 a year for this site and I get more than my money’s worth.  Niche.

If you’re not in the niche content business, get there.  If you are running a local newspaper, you’re niche already.  If you’re in a specific industry, finance, for example, you’re niche.  If you’re a national newspaper, better start laying people off.  There’s room for just a few national newspapers.  Those papers are going to be, more or less, The New York Times, The Washington Post, and, possibly, The Los Angeles Times.  These are papers that do local, regional, national, and international news.  If you’re a local paper that simply republishes wire content and doesn’t produce lots of very local news, you’re not going to be long for the world.

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