While in a city like Baltimore you could do that level of journalism, even enterprise/watchdog journalism, in an online-only way for $3.6 million, that isn’t what Simon is proposing. He wants “day-in, day-out comprehensive coverage of entire metro regions” (recent comment). In 2009, he wrote that the $3.6 million budget could provide a metro newsroom “that covers local politics, local culture, local sports, and financial news.” I don’t see how $3.6 million even begins to get that job done.
One of the best and smartest metro newspaper editors of the past couple of decades, John Robinson, has said newspaper paywalls are a Band-Aid on a bullet wound.
It’s an assessment backed by some hard facts.
While the Dallas Morning News logged 50,000 subscribers, it’s unclear how many of those are mere up-sells from print subscribers (hardly counting, then, as online-only revenue and loyal digital subscribers). The paper also saw monthly pageviews drop by 9 million. Consequently, digital revenue was down 11 percent to $7.8 million. The paper’s parent company, Belo, reported a net loss in the first quarter of $3.9 million. Meanwhile, the newspaper is spending $4 million a year to promote online subscriptions.
The Memphis Commercial Appeal has traded a 30-percent drop in traffic for 1,600 people willing to pony up $9.99 a month for digital access. The good news is Sunday subscriptions are up by 1,000 since the paywall was erected. Editor Chris Peck said online revenue is not down, despite the drop in traffic. It’s been years since I worked for Scripps, the Commercial Appeal’s parent company, but if it still relies heavily on bundled classified ad revenue, which it then counts as online revenue, a change in website traffic would not affect revenue. As a company, Scripps continues to report flat or declining revenue in just about every category.
The Columbia Tribune has seen a 25-percent drop in traffic, a decline in engagement, and watched some traffic shift to a different, still-free local news source, all for a meager $80,000 in subscription revenue. And this from a paper that had achieved an impressive 15 percent of its revenue from digital prior to putting up the paywall.
The Arkansas Democrat-Gazette is often cited—as Simon did in our discussion—as a model for newspaper publishers. The fact is, whatever strength the paper had in circulation, it isn’t clear that charging for online content was the reason. Unlike many newspapers in the country, owner Walter Hussman kept subscription prices low in order to buoy circulation numbers. Unfortunately for the paywall stalwarts, Hussman was forced recently to double newsstand prices for the paper to help offset declining advertising revenue. This is not the action of a healthy newspaper company.
The Minneapolis Star Tribune has 300,000 print subscribers and is charging a modest $1.99 a week (much less than Simon’s proposed $10 per month for the Sun) and has only 20,000 online subscribers (“only” being relative to our previous points about what’s required to sustain the kind of journalism Simon expects paywalls to sustain). Since the paper is now held by private equity, earnings reports are hard to come by.
While some of the raw numbers attributed to early adopters of paywalls might seem impressive, there are two things not being fully disclosed by publishers: the percentage of bundled packages with primarily print-minded subscribers and the churn rate for digital subscriptions. The higher the churn rate, the slower growth publishers will see over time and the higher the cost of customer acquisition.
We also don’t know what percentage of digital subscribers (bundles or not) are older readers. Newspapers need a strategy that works with a younger audience, and if young readers are buying digital subscriptions at a low rate, the paid online model can hardly be said to represent the future of quality journalism.