The original sin of newspaper publishers, according to News Corp senior vice president of strategy Raju Narisetti, was committed around 20 years ago when they started giving away their content online with the expectation it would grow audiences, which in turn would grow revenue.
“The reality is that we’ve given away our product online, we have grown audience but we haven’t be able to grow revenue because supply of content and supply of journalism on the web has become infinite,” Mr Narisetti told the recent Future Forum conference in Sydney.
The problem was exacerbated by the fact digital advertising rates were much lower because of the greater scale of print. Even bundled print and website buys were no substitute for circulation revenues as print sales declined. New revenue streams needed to be created.
Enter the digital subscription model, which was introduced by The Wall Street Journal in 1995. Because of its premium content and access to Dow Jones services it was a success, showing the way for other top-end titles such as The Times of London, The New York Times and The Australian. By 2010, the WSJ had 414,000 paid digital subscribers which it has doubled to more than 900,000 in 2015. Its combined digital and print sales stands at more than 2.2 million.
According to Sir Martin Sorrell, the founder and chief executive of WPP – the world’s largest advertising group – all newspapers should charge for content.
“I personally believe that paywalls are the way to go,” Sir Martin told the Society of Editors conference held in the UK earlier this year.
He said publishers needed to be “much more free thinking and flexible about how to make revenue” because of a lack of growth in digital advertising – an issue that could worsen if ad blocking software grew in popularity.
Subscription models now exist in various forms on news sites across the globe, although some revised thinking has emerged on the value of audience scale that can be attained by a free site.
Popular British daily The Sun announced it would abandon its two year-old digital subscription model at the end of October. News UK chief executive Rebekah Brooks told staff the masthead plans to grow its audience in part by utilising the lessons learnt about its audience from The Sun’s paid-for era.
Canadian broadsheet Toronto Star also dropped its digital access program in April after less than two years. The publication said subscriber numbers quickly plateaued despite early adoption rates and the Toronto Star would be better off in the long term if it opened up its website.
Ashley Earnshaw, head of Sydney investment at media agency Carat, points to The Sun as a good example of how audience reach can be limited by subscriptions models and said the UK’s Financial Times is one of the few publications that has had success with subscriptions.
“The Sun could not convince its readership that their paid for content was better than the free content they could get elsewhere on the web,” Mr Earnshaw said.
However, it is clear the paid model works for titles targeting the AB socio-economic group, particularly if it can offer premium content or bundled deals.
The New York Times has critical mass with more than one million paid digital subscribers since introducing the pay model four years ago and The Times Newspapers Ltd, which operates both The Times and Sunday Times newspapers in London, posted its first profit last year since 2001 on the back of digital subscriptions. Paid sales of the two mastheads accounted for 51 per cent of revenue, while 44 per cent came from advertising.
Last month marked four years since The Australian became the first general newspaper in Australia to launch a digital subscription model, offering premium and value-added content.
It now has 70,000 digital subscribers – a figure which steadily grew from the 31,000 The Australian attracted in 2011. The success of the model has steadied its sales figures. The September quarter Audit Bureau of Circulations data shows that the national daily’s year-on-year total paid sales held steady at 166,148, despite net paid print-only sales falling by 4.7 per cent to 101,040.
The Australian’s cheapest subscription package has more than doubled in price since it first launched – from $3 a week to $8 – but in that time the masthead has also reconfigured its mobile and tablet apps, launched new products and made much more of its content exclusively available to subscribers.
Current subscribers to The Australian receive unlimited access to The Australian’s website, app and tablet offerings, access to news website Business Spectator and membership to The Australian Plus rewards program.
Chief executive of The Australian Nicholas Gray attributes the success of its subscription model to the paper’s in-depth coverage of sport, business, politics and news and its high quality analysis and opinion content.
“What’s clear in the modern media world is that unique content is incredibly valuable to consumers,” Mr Gray said. “If you’re just rehashing breaking news that everybody else has or content that’s readily available for free from a wide variety of sources, then your prospects of succeeding are very slim.
“The voice and the information have to be unique. Without that you’ll not succeed, but even with that it’s not easy.”
Even though the majority of The Australian’s content is exclusively available to subscribers, its website was able to attract 1.2 million monthly unique visitors according to Nielsen Online Ratings data from August.
All major News Corp Australia, Fairfax Media daily newspapers and APN News & Media’s regional dailies have now adopted variations of the subscription model.
Fairfax Media’s Sydney Morning Herald and The Age websites, which give readers access to 30 free articles before being asked to subscribe, attracted 3.4 million and 1.9 million unique visitors respectively.
In terms of free news sites, news.com.au attracted 3.8 million unique monthly visitors, ABC News websites 3 million, Daily Mail Australia 2.6 million and The Guardian 2 million.
In August, APN News & Media became the latest Australian publisher to embrace digital subscriptions. Its subscription package includes a three months pass to streaming service Presto, one year’s subscription to The Washington Post and unrestricted access to News Corp Australia’s The Courier-Mail in addition to unrestricted digital access to all of its Australian Regional Media (ARM) daily newspaper titles.
Great local content is key to convincing readers to subscribe, according to ARM editorial director Bryce Johns. However, he said it would be wrong to assume all local and regional papers were better placed to succeed with subscription models, merely because their content was generally less reported than national news.
“If you are going to ask people to pay then you need a package that will be seen as offering value,” Mr Bryce said.
“People are taking different approaches. That’s no bad thing. Whether you are trying to monetise online through subscriptions or advertising, we’re all valuing that massive growing audience more highly, and everyone from advertisers to readers should be realising there is a price to pay for quality journalism.”
Digital subscriptions have been rolled out to all of ARM’s 12 daily papers and APN has plans to also bring it to the New Zealand Herald. Readers of ARM papers can access 10 free articles per month before being asked to subscribe, but Mr Bryce said the company would not charge for news in certain circumstances, like during one of the numerous cyclones that have plagued Queensland.
“We are more than a news site to our readers, we are an institution, and no one will be blocked,” Mr Johns said.
According to Carat’s Ashley Earnshaw, whether a site offers subscriptions or is free is not as important for clients as factors like brand safety, engaged consumers, data-led insights and guarantees that ads are “in view”.
“Having a paywall can be an indicator of a loyal, engaged consumer with premium site content. But on the whole paywall models would be secondary to key considerations,” Mr Earnshaw said.
“Audiences will pay for content they value and successful paywalls are a product of audiences that are deeply engaged by the content. A paywall won’t produce a more engaged audience, just profit from them.
“The industry needs to find a model that works, especially for the younger consumers that have grown up in a world of free ubiquitous content and who have never bought a newspaper. This generation expects content for free and with that mindset there is no going back.”
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