the audit

Paywall pioneer Press+ merges with Piano Media

A European investment fund purchases the company for an undisclosed sum
September 8, 2014

European investment fund 3TS Capital Partners is buying American paywall pioneer Press+ for an undisclosed sum and will merge it with its European paywall company, Piano Media.

The deal creates a global digital-subscription services company that aims to expand rapidly in Europe and elsewhere across the globe, and, importantly, will have more data on what works in digital subscriptions across a diverse set of companies and countries than anyone else.

The combined companies will be led by Kelly Leach, a Dow Jones veteran who resigned as publisher of The Wall Street Journal Europe last month to take the CEO post at Piano, which operates primarily in Central and Eastern Europe.

Journalism industry veterans Gordon KCrovitz and Steven Brill founded Press+ in 2009 when virtually all news organizations had free websites. Before Press+, publishers would have had to spend serious money developing their own pay technology and figuring out what worked and what didn’t. Press+ built technology around the metered-paywall model pioneered by the Financial Times. By allowing publishers to outsource the tech operations and startup costs (Press+ takes a cut of sales) and to set their own price points and page limits, Press+ was the key driver of the paywall movement of the last few years. (CJR is one of the company’s clients.) The company now has revenue in the low tens of millions of dollars.

In 2011, when RR Donnelly purchased it for between $20 million and $35 million, Press+ had fewer than two dozen publishers.

“Before we even started it I went to Arthur Sulzberger and begged him–I wasn’t looking for a job, I wasn’t looking to start a business–to do a metered wall at the NYT because he was ruining it for all the journalists in the world,” Brill says. “He thought I was crazy. That’s (how) Gordon and I decided to start the company.”

Sign up for CJR's daily email

Sulzberger would change his mind by 2011, another key moment in the mass move to paywalls, as The New York Times‘ meter succeeded beyond the most optimistic projections.

Press+ now has 560 customers, mostly in North America. “It’s become the exception that a North American newspaper still has a free model,” KCrovitz says. The combined company will have nearly 700 publisher customers.

Unfortunately, the NYT, along with The Wall Street Journal (where KCrovitz formerly was publisher) and Financial Times, are the exceptions in gathering a critical mass of digital subscribers in the US.

For most newspapers, the primary benefit to the meter model has been pushing price increases for all-access subscriptions to print and digital. That led to a much-needed boost of circulation revenue across the industry that totaled hundreds of millions of dollars. But it hasn’t put a floor under the American newspaper industry, where the bump in circulation revenue may have been a one-time deal–one largely dependent on print. Few American newspapers, many of which are shadows of their former selves, have proven that they can sell enough digital-only subscriptions to support robust newsgathering operations once the print profits run dry.

Piano Media launched as a sort of national paywall in Slovakia three years ago. It got most of the major publishers in the country on board for a countrywide paywall and has expanded from there. It now offers a metered product for individual publishers.

Leach is optimistic that digital growth rates can be boosted. “When you initially put up a paywall, there’s an influx of subscribers. After that there’s going to have to be other tactics and thinking about pricing and promotion.”

Asked if most newspapers still have the resources to generate the kind of content people will pay for, something we’ve wondered for years as publishers gutted their newsrooms, Leach sighs and says, “I hope so. I hope so. It certainly varies.”

The Financial Times, for one, has such resources. It launched its metered paywall seven years ago and has shown recently that even a mature digital-subscription product can post high growth rates, though financial news has some significant advantages of over non-financial news in attracting paying customers. It now has twice as many digital subscribers as it does print subscribers.

A big part of the FT’s success has been using data to become a better marketer of its subscriptions. Press+ uses data on what’s worked for some publishers to help other publishers improve their results. They’ve been able to tell publishers that they can price their subscriptions much higher than they initially expected and show them that reducing the number of free pageviews per month increases subscriptions for each pageview reduced. They know renewal rates for print subscribers who actively use a paper’s website exceed 95 percent.

While digital subscriptions can be very profitable for Press+ and Piano Media, which have no cost of content and whose cost for installing each new meter is relatively low, they have to be profitable enough to help prop up the publishers too. In other words, their future growth depends on the ability of publishers to produce stuff worth paying for.

“For such a long time, publishers have been concerned about pageviews because they’ve been relying on digital ad revenue,” Leach says. “How do we make sure as publishers that we’re generating content that’s high enough value that there are consumers that will pay to have access to it?”

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.