Internet
The executives behind the Arkansas and Idaho newspapers believe its because theyve been giving free access to their Web sites only to people who subscribe to the printed edition. Everyone else has to pay to read the Democrat-Gazette and the Post Register online. Meanwhile, most publishers have been giving away their stories and photos to all comers on the Internet.
“To me, an online subscription is just the commonsense thing to do,” says Roger Plothow, editor and publisher of the Post Register in Idaho Falls, Idaho. “To just give it all away on a Web site is completely and blindly idiotic.”
The blunt logic is starting to resonate with many newspaper publishers, who are preparing to erect toll booths on parts, if not all, of their Web sites. They hope the switch brings in more online revenue and gives print subscribers another reason to keep buying the newspaper.
If it works, it would provide a sorely needed boost for an industry that has seen $11.6 billion, or nearly one-fourth, of its annual advertising revenue dry up during the past three years. But the strategy brings enormous risks. Ending free access to news could drive many online readers away and discourage online advertising at a time when more marketing budgets are shifting to the Internet.
Running free Web sites certainly isnt the only reason newspapers are suffering. The allure of less expensive advertising options offered by Google Inc. and other Internet companies already were hammering newspapers before the recession exacerbated the pain.
But the abundance of news on the Internet hasnt helped print editions containing virtually the same content thats often available online a day earlier. As a result, 28 percent of newspaper executives responding to a recent survey by the Associated Press Managing Editors, a group of newspaper executives, said their publications are considering online fees.
Newsdays owner, Cablevision Systems Corp., plans to charge for online access to the Long Island, N.Y., publication beginning this summer. MediaNews Group, which owns The Denver Post and 53 other daily newspapers, has decided to charge for the online version of its print editions but hasnt said when. Having already killed the print edition of the Seattle Post-Intelligencer, Hearst Corp. is assessing whether online fees could help save its 15 remaining daily newspapers, including the San Francisco Chronicle and the Houston Chronicle.
And a startup called Journalism Online is setting up a system that will sell a monthly subscription to material from multiple newspaper Web sites, beginning this fall. The participating newspapers will get slices of the revenue.
“Online fees will give people one less reason to stop subscribing to the newspaper” in the print format, said Steven Brill, Journalism Onlines co-CEO. “Fewer people will be saying, Why am I buying this thing when I can get it free online?”
Even though print ads arent attracting as many dollars as they once did, they still sell for about 10 times the price of online ads. Consequently, Internet subscriptions could help some newspapers even if the fees serve mainly to keep print circulation stable.
Former newspaper editor Alan Mutter, now an industry consultant and blogger, calls decisions during the 1990s to make most newspaper Web sites free the industrys “original sin.” But gaining penance wont be easy.
At this point, whether newspapers charge for their online content or not, free news is likely to remain a staple at major Web sites such as Yahoo, MSN and AOL that pay for the right to post stories from The Associated Press and other sources. Bloggers and citizen journalists are likely to keep posting their own takes on the news on free Web sites. Those free summaries may be enough for readers unwilling to pay for the original stories.
A recent study that the Newspaper Association of America conducted with media consultants supported the idea that online newspaper fees threaten to do more harm than good. The reason: The subscriptions probably wont generate enough additional revenue to justify driving away the majority of Internet readers who wont be willing to ante up.
The study concluded newspapers with circulations of about 50,000 probably wouldnt pick up much more than $1 million in annual revenue from online subscriptions. That estimate is based on the assumption that a newspaper attracting about 250,000 monthly visitors to a free Web site would be able to get just 2 percent of them – 5,000 people – to pay $17 per month.
Meanwhile, that newspaper would likely see its online advertising revenue plummet. Although the study didnt attempt to quantify how much advertising might be sold under this scenario, a Web site drawing substantially fewer visitors figures to be a less compelling marketing magnet. Online ad rates tend to be tied to the size of an audience, although a paying readership can be more attractive to certain advertisers.
Both the risks and lures of online fees have tugged at The New York Times. The newspaper initially charged for its Web site in 1996 only to stop the next year after attracting only 4,000 subscribers. It had more success under another program that attracted about 200,000 subscribers who paid to read the Times most popular columnists online. Then the Times scrapped that approach after concluding it could make more money from selling online ads on a mostly free site.
But now, with its online ad revenue down 8 percent in the first quarter, the Times parent company is once again considering whether it makes sense to introduce more online fees.