Metered pay walls ..... Ca-Ching! Ca-Ching! Ca-Ching!

Good Day Readers:

The problem with metered pay walls is they tend to be leaky. If an interesting article has been well-researched and written it will attract attention on the internet and be cited (linked) in other stories. But one example. Recently, we saw a passing reference to a piece in The Financial Times of London so visited it only to run smack into a pay wall. However, after a little searching we found a nice precis of it in The New York Times. In other cases, you can find something reproduced verbatim linked on a subscriber's website or blog.

Sincerely,
Clare L. Pieuk

Newspapers gear up to charge for digital access on websites, smart phones and tablets

Tuesday, April 3, 2011

LOS ANGELES, California - Newspapers are returning to a business strategy that served them well in the heyday of street-corner newsboys shouting the front-page news. They're enticing people with a little free online content before asking them to pay up.

After years of offering news for free, a growing number of newspapers have launched so-called metered pay walls, which give readers a few free stories online before requiring them to sign up for a digital subscription.

About 300 newspapers across the United States, and a growing number of Canadian media companies, have adopted such plans, which usually give subscribers some mix of web, smartphone and tablet computer access.

"A lot of our customers are telling us, 'that's fair,'" says Rob Gursha, Vice-President of Consumer Marketing at The Star Tribune, a 300,000-circulation daily in Minneapolis. In November, the newspaper began charging people as much as $1.99 a week for online access to an unlimited number of story views a month. Nearly 20,000 readers have signed up.

For newspapers like The Star Tribune, it's a second chance at digital success. As the internet gained in popularity in the 1990s, newspapers decided to give away news on their websites while continuing to charge readers for print editions.

By keeping online editions free, publishers hoped to gain enough readers to attract web advertising. But as readers flocked to free news on websites, many of them cancelled their print subscriptions. And online advertising hasn't generated enough revenue to make up for the combined declines in print subscriptions and print advertising.

Fewer than a quarter of the 1,350 daily newspapers in the United States charge for online access so far, and none of the biggest newspapers in Canada currently have a pay structure. But industry executives are increasingly optimistic pay walls can boost digital revenue.

At Postmedia (TSX:PNC.A), testing of a metered system has been underway since last year with The Montreal Gazette and The Times Colonist in Vancouver, the latter which it has since sold.

"We're getting ready to pilot some more and look at some different models of metering and multiple platforms," says Postmedia spokeswoman Phyllise Gelfand.

Torstar (TSX:TS.B) has also tested pay structures at websites for The Hamilton Spectator, Waterloo Region Record and The Guelph Mercury. Company spokesman Bob Hepburn said the company doesn't plan to put up a pay structure for the website of The Toronto Star, its biggest newspaper, though he said the company is "continuing to monitor" trends and successes within the industry.

Newspapers take different approaches and have different price structures. Some set a limit on the number of stories and some on the number of page views. But there's little doubt executives are hoping pay walls will spur a turnaround in the industry.

As publishers and media executives gather in Washington this week at the Newspaper Association of America's annual meeting, the question of how to increase digital revenue is front and centre. Attendees will take part in panel discussions and lectures such as, "New Revenue Models and Strategies" and "Reaching Young Readers: Digital Tips From the Digitally Savvy." They'll trade notes on how to develop applications for tablet computers and smartphones. And they'll talk about ways to derive new forms of revenue from tablets and e-readers such as the iPad and Kindle.

"We're really looking at innovation and execution," says NAA president Caroline Little.

On their own, online pay walls won't make up for the print advertising revenue the industry has lost the past decade. Rick Edmonds, a media business analyst with The Poynter Institute, which offers training for journalists, in St. Petersburg, Florida., says calling 2012 a turning point for newspapers and digital revenue is a "little strong." But, he says, pay walls are one of many salves for easing the industry's pain. Already, they have helped shore up circulation of weekend newspapers because many weekend subscriptions come with online access included. That's important because the Sunday edition is the most profitable for most newspapers.

In their quest for digital revenue, many U.S. publishers have turned to Press+, a company started by entrepreneur Steven Brill and former Wall Street Journal publisher Gordon Crovitz that helps newspapers build and operate pay walls. The company says it has launched pay walls for 292 U.S. newspapers.

Of course, convincing readers to pay for something that was once free isn't easy. Brill recommends publishers give away enough free page views so that only the heaviest users are asked to pay.

"You ease them into the idea that they're going to be asked to pay," Brill says. "It works much better than an abrupt message."

Many readers who realize they're about to hit their limit sign up early to save themselves the hassle, he says.

On average, a subscriber gained through Press+ pays US$6.50 a month, of which Press+ keeps 20 per cent.

The New York Times Company which is not a Press+ client, served as a model for the rest of the industry.

 The Times says 454,000 people have signed up for digital access to The Times and International Herald Tribune in the year since it started charging. It is cutting free access from 20 to 10 pages a month starting this month. The Times charges as much as $35 a month for full access to its content.

This isn't The Times' first attempt at a pay wall. In 2005, the company launched TimesSelect, which fenced off premium news stories and commentary by Times columnists including Maureen Dowd, Joe Nocera, and Thomas Friedman. Readers paid $7.95 a month or $49.95 a year to read TimesSelect content. The company ended TimesSelect in 2007, explaining that it could generate more revenue by making content available for free and supporting it with advertising.

Under its recent pay wall plan, the Times' digital and print circulation revenue grew five per cent to $242 million in the final quarter of 2011. That helped blunt the impact of an ad revenue drop of 7 per cent to $359 million. Overall revenue was down 3 per cent.

That success, although with one of the best brands in journalism, has prompted others to follow suit. In Canada, The Globe and Mail will take another run at charging customers some of its content this fall.

The newspaper had some of its content behind a pay wall several years ago before opening up the entire website, and its online archives, to the public for free.

"We feel that we've got some areas of content which lend themselves more to this than others," says Globe publisher Phillip Crawley.

"As the industry has evolved there is a general global trend towards saying 'Yes, but there also needs to be a value for accessing digital content.'"

Newspapers that have tried a pay wall say online visits decrease — at first. The Star Tribune's online page views dropped by up to 15 per cent before rebounding to pre-pay wall levels within a few weeks, says Gursha. Lee's Billings Gazette saw traffic fall by a quarter and then bounce back within a few months.

The Dallas Morning News took a slightly different approach when it installed what's known as a "leaky pay wall" in March last year. Editors tag exclusive or premium stories and reserve them for paying subscribers, while giving all other stories away for free. Although the move reduced online traffic by about a third, the newspaper has seen a steady flow of new digital subscribers, says Morning News publisher Jim Moroney. Print circulation revenue, meanwhile, also has gone up.

However, Crawley says there's still value in the physical newspaper, as long as its presented the right way to a modern audience. The Globe has worked to revamp its paper in recent years focus more on colour pictures and a flashy front page that utilized new printing presses that its partner invested in.

"We still believe there's good growth in print if you produce the right kind of print — high quality design, high quality paper, high-quality content," he says.

With additional reporting from by David Friend at The Canadian Press