November 06, 2003

Making Online Readers Count - and Pay

The Wall Street Journal's readership - as measured by the newspaper industry's official circulation bookkeeper, the Audit Bureau of Circulation - leapt 16 percent in the last year, a phenomenal gain that the Journal engineered by combining, for the first time, its print and online readers.

The paper added 290,412 paid online subscribers to its base of 1.8 million print readers, a nifty bit of arithmetic allowed by ABC under certain conditions. "The electronic edition has to be a replica of the print edition and meet certain price parameters," ABC spokeswoman Marybeth Meils told Newsday.

The Journal is the first major newspaper to meld online and paid subscribers into an audited readership figure it can sell to advertisers. Generally, the larger the subscriber base, the higher the ad rates a publication can levy. The move is certain to influence other newspapers.

Those papers that have already been charging for online content will likely look for ways to add their electronic readership to their advertising base. Those that don't charge now surely will begin to consider it.

"When the big boys take two steps forward everyone else takes one step forward. People are going to sit up and take notice of what the Journal is doing," Earl Wilkinson, of the International Newspaper Marketing Association, told Newsday.

Coincidentally, the Online Journalism Review today has a piece by Donn Friedman of the Albuquerque Journal on how to convert a newspaper's web operation "From Free to Fee in 10 Easy Steps."

Friedman, naturally, is an enthusiastic proponent of paid content. He writes:

"Since we closed off our site to all but paying subscribers two years ago, 35,000 print newspaper subscribers have signed up to use the site. Almost 2,000 people are now paying either $8 per month or $60 per year for online-only subscriptions. That's more than $100,000 in truly new revenues generated by subscriptions."

On the paid vs. free scale, I stand boldly in the middle.

I pay for the Wall Street Journal online (because when I got the print version it always ended up in the parking lot). I sometimes dip into the paid archive of the New York Times. I just bought an article on organizational culture from the Harvard Business Review for six bucks.

I wouldn't' pay, though, to read the Albuquerque Journal. If it broke a big story that interested me, the AP or someone else would pick it up and I could read it for free soon enough.

But Donn Friedman doesn't want me for a reader (not that he wouldn't take my $8 if I offered it). He want Albuquerquens uh, New Mexicans. He writes:

"Many pundits - including Borrell Associates analyst Peter Krasilovsky - say closing off your news site to all but paying readers is a formula for failure. Unless. Unless you happen to be the sole provider of local news in a remote place, like Spokane or Albuquerque." (Emphasis added.)

In other words, paid doesn't work - and by that I mean generate sufficient traffic, not revenue, because audience is the biggest revenue driver - unless the what's being sold is unique. The Wall Street Journal is unique. The Albuquerque Journal? Also unique. It dominates New Mexico's print media. Today's report from Iraq? Not unique.

As I've said before [ Read: Newspapers Disrupted ], new media is a disruptive technology to newspapers and the correct response by them is to explore techniques that preserve audience, and therefore influence and thus relevance, rather than seeking short-term financial gain.

As Krasilovsky says: "Paid content is a great way to make more money, but the real money is in advertising and marketing, don't ever forget it."

Nonetheless, I believe other papers will attempt to replicate, on their own lesser scales, the Wall Street Journal's success at broadening its ad base with online readers. Why wouldn't they? It seems like free money.

Friedman, though, even as a paid-content advocate, points out that the process is not easy and that challenges range from cultural to technical to financial. He summarizes several paid content models, most of them tiered to allow some free access, which I think is the smarter way to go.

The Wall Street Journal allows free access to some stories and to its Opinion Journal. It understands that branding and audience are as important as revenue, and, in fact, the latter cannot flow without the former.

I hope publishers don't forget the lesson in coming days when they ask their site managers: Why aren't we charging for all this?

Links
 Newsday Inclusion of Web Subscribers Sparks Newspaper Circulation Debate
 Donn Friedman From Free to Fee in 10 Easy Steps
 Peter Krasilovsky Newspapers Want to Charge for Content, but Will Readers Pay?

Posted by Tim Porter at November 6, 2003 08:21 AM
Comments

You may have seen this already, but the Donn Friedman piece earned an excellent rebuttal by Vin Crosbie:

"Paid access unfortunately has become a dogmatic, rather than a scientifically studied, topic. Publishers often make decisions about it based not upon evidence and knowledge but upon prejudicial beliefs. ... Like all prejudices, these beliefs about paid content are dangerous for the newspaper industry."

It's a good read.

Posted by: Ryan on November 11, 2003 12:18 PM
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