Economist: Have Newspapers Bottomed Out?
After years of bad headlines the industry finally has some good news
... Many papers have been raising the price of their subscriptions and news-stand copies, which has helped to stem losses. But a more important contributor to the change of mood in newspapers is what Ken Doctor of Outsell, a consultancy, terms a “revolution in reader revenue”. “Paywalls”, methods of charging readers for online content, have become popular. The number of American newspapers with some sort of paywall has at least doubled this year. More than a quarter of newspapers now have one, and most big groups that do not have plans to charge for digital access. This is a global trend: newspapers in Brazil, Germany and elsewhere are fed up with giving away their articles for nothing on the internet.
Charging for content online used to be the privilege of the lucky few, such as the Financial Times and Wall Street Journal, offering market-sensitive information readers would pay for. General newspapers opposed charging because they feared their traffic would drop—and their fragile digital ad revenues would fall rather than rise.
Several factors have changed their mind. For one, technology has got better and cheaper. Online pay systems were expensive to build and test, but Press+ changed that. The firm, which was founded in 2010—and was bought last year by RR Donnelley, a big printing and marketing firm—licenses the technology for newspapers to erect a pay system in return for a cut of digital revenues. So far 566 (mostly American) papers have signed up, and 400 of them have launched.
Tablets and other mobile devices have also been a boon for news organisations, because they make paid digital subscriptions more attractive. Many newspapers have started offering “all access” editions, bundling print and digital subscriptions (sometimes at a slightly higher price). Executives say that if they can train people to pay for digital subscriptions, they will be less threatened by print’s persistent and inevitable decline, since digital editions bring in fatter margins. ...
... But it has also become clear that digital advertising dollars will never offset what newspapers are losing in print advertising—which is why papers want to be less dependent on ad revenue. Advertising, which is high-margin, has historically contributed around 80% of American newspapers’ revenues, far more than in most other countries. This is changing, mostly because advertising has slid so far. In the third quarter the New York Times earned more than 55% of its revenues from circulation, compared with only 29% in 2001. Newspaper bosses say they are moving their papers to a model where they get half their revenues from advertising and half from circulation. ...
The article goes on to explain that there are still many challenges and paywalls won't work for everyone. Advertising will still need to be a part of the mix and it is unclear of ad revenue decline can be stablized or reversed.
Do you have any pay subscriptions for news? Do you anticipate you would buy online subscriptions for one of your favorite news sources if they create a paywall?