Nieman Foundation at Harvard
Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.
And on the seventh day, they didn’t rest; they sped up.
Next Tuesday, look for The New York Times to announce its first Sunday print circulation gain…since 2006. (Update: That’s a Sunday home delivery print gain.) Let three words soak in: Print. Circulation. Gain.Those are wonderful words to anyone in the newspaper business and a small encouraging sign of our turbulent times, right?
In a word: Yes. But…
I’ve been following the Sunday print/daily digital trend since the Times went public with its pay system in January. In an elementary, sleight-of-marketing hand, it priced its Sunday + digital offer cheaper than its digital-only offer, which has apparently worked with its many smart readers who can do basic math. Why not get the Sunday paper in print and smartphone/tablet/online access, especially if it’s cheaper? For readers, it makes common sense. For publishers — almost all of whom applaud the Times ploy — it’s a way to bolster their highest-profit day of the week, a day that brings in a third or more of their ad revenue and is home to that precious keep-it-to-the-bitter-end preprint business.
That simple pricing twist has apparently turned a five-year-old negative line into a thin, positive one at the Times. In addition, circulation revenue is up — not a lot at 1 percent, but up — at the Times in the last quarter, so the overall move to get readers to pay more of the freight of the news business is moving in the right direction.
What’s been dismaying this week, as I talk with many publishers at the dozens of other dailies now charging for digital access, is that it’s hard to find the Times model moving similar Sunday-plus trends elsewhere. Publishers don’t want to disclose actual numbers, but the apparent consensus among those who have charged for six months or more (which covers the reporting period we’ll see when the Audit Bureau of Circulation FAS-FAX numbers releases its half-yearly numbers Tuesday) is that print/digital reader bundling hasn’t had much effect on the decline in circulation numbers.
Why? It may well be that it’s too early, with pay psychologies just kicking in. Or it may be that propping up the print business won’t be a route to the future. Or maybe too few papers have aligned all the things a publisher needs to do to make the Sunday + digital equation work; maybe they haven’t aligned the stars well enough yet, though we do have one just out-of-the-box experiment, in Memphis, that displays early alignment.
It’s important to note: Even if the print decline is not significantly affected, charging for digital access remains a prime strategy going forward. What we’re looking at, entering 2012, is paid content 2.0 for many publishers, a new rev that will push the faster-adopting among them to a fuller alignment of business model, product, and analytics.
By way of background, let’s remember that the circulation decline (tracked well with a series of charts, midway down the page at State of the News Media) is simply breathtaking, from a height of 62.5 million copies in 1993 to about 43 million now.
It looks like the Tuesday report will follow recent trends. In other words, still down — but as the p.r. spin has it, with “moderating declines.” Translation: We’re off the floor of devastating high-single-digit declines experienced in the depth of recession, and getting closer to the lower-single-digit declines of 2006-2007. Even those publishers who expect to be up a tad don’t attribute it to their new print/digital bundling/pricing strategy.
That’s a conundrum. Reducing print loss (or churn) is one of the top-rated reasons for putting up a paywall, and a number of paywall publishers have adopted the Sunday preference for digital pricing as well. Why isn’t it doing that effectively?
Let’s call it the revised newsonomics of Sunday print and daily digital (first edition: “The newsonomics of Sunday print/tablet subscriptions“) subscriptions. Why aren’t paywalls helping print circulation much?
Let’s start with the uncertainty principle. Newspapers have chosen from this menu of options to improve circulation:
So even in cases where circulation has improved, publishers don’t know exactly what to attribute it to. Their guesses, though: the first three factors are more important than digital bundling. So here we see, exposed, one Achilles’ heel of a legacy business: Data collection and analytics can’t tell them specifically enough how well their strategies are (or aren’t) working.
Beyond uncertainty, let’s look at the model. The Times’ — and the Journal’s — model is All-Access. That means you pay for access across the board, whether using paper, a computer, a tablet or phone. Yet most of the Press+ papers seems still to be offering free smartphone access, even as they restrict iPad access. Mobile access is already providing 10-20 percent of news company page views, and growing rapidly. Why not drop a print subscription if you find most of your reading is done on the phone? Semi-access is a tough selling point, or incentive to keep print.
Another key part of the model is how many free article views a month a site allows visitors. Many started with 20, the Times’ number, but found few visitors bumped into the wall. So visitors found that they didn’t need subscriber access to the local site because they didn’t use it enough — which provides one fewer reason to keep paying for the paper. Many Press+ sites have lately been getting more restrictive (including MediaNews, largely moving its 20+ sites to a five-free-view model in August).
Even among papers with a harder paywall with little sampling allowed (another key to growing newer customers, but that’s another story), circulation loss hasn’t been stemmed — but it certainly makes us wonder the declining value of the print product unto itself.
Beyond the model, let’s look at the products. First off, a local newspaper is not The New York Times. While once first cousins, the Times is now in a distant relative: global, national, truly multimedia — and with a strong, differentiated-from-daily, stand-on-its-own Sunday product. That’s just the nature of our world. The Times is a peer of CNN, MSNBC, BBC, NPR, ABC, the Journal, the Guardian, and a few more, while local papers are still that — with varying digital add-ons.
Those digital add-ons, I believe strongly, are one of the key reasons the print/digital bundling isn’t as effective as publishers want it to be.
Many of the paywall papers still rely on e-edition or e-edition+ replicas for their tablet products. A relative few offer useful mobile apps. Let’s recall the NYT product/pricing strategy: build strong mobile products and then lead with those when you are moving to paid access. (Look at the consistent sub offer, fronted by mobile products.)
Local publishers, largely, haven’t delivered the suite of mobile products that makes the new offers sufficiently appealing. One way we can measure this is to see what percentage of print subscribers find restricted digital access sufficiently compelling to sign up for. In August 2010, when The New York Times first started tracking home delivery customers, it found that 50 percent had a linked account. As of Oct. 24, 73 percent of all home delivery customers had linked. For many local papers climbing the paywall, they’ve found starting “linked” totals to be in low single digits. This linked number is one vital new metric in determining how well these companies — and models — are becoming truly hybrid ones.
Overall, my sense is that for too many publishers’ digital circulation pushes simply aren’t aligned enough. Let’s take one quite recent launch that does seem aligned. The Commercial Appeal in Memphis launched its All-Access pay system about a month ago. The top two aims, publisher Joe Pepe tells me: protect print circulation and keep the preprints business stable, the two goals are, of course, quite connected by a Sunday paper focus. So Pepe has priced Sunday paper + All-Access digital just a buck a month ($11 compared to $9.99) higher than complete digital access. The paper is up a net of 500 Sunday subs in a month; that’s a great start.
What we may see in the Memphis plan is the kind of alignment The New York Times is working. A true all-access business model, including mobile access. Real mobile products, not just e-editions. Integrated authentication across print and digital. A sampling program (five pages a month) to give potential buyers some access. A Sunday pricing scheme that makes intuitive consumer sense. It’s an alignment that both invites consumers with a good offer, and makes it harder for them to find a way around the system.
“They no longer have a loophole they can crawl through,” says Pepe.
Is Memphis the paid content 2.0 model the industry is looking for? Too early to tell, but many eyes will be following the Commercial Appeal’s experiment.
Photo of Sunday New York Times by Steve Rhodes used under a Creative Commons license.
