Newspaper Revenue: Are Paywalls the Answer?
The health of the newspaper industry is increasingly at the mercy of online revenue and money made off of paywalls. So how is the largest U.S. publisher faring? Gannett, with a combined weekday circulation of 4.9 million, announced recently that their circulation revenue is expected to increase by 25 percent at the end of next year despite a circulation volume drop of 7 percent. All told, the publishing giant’s paywalls—up and running at 49 of the companies 80 newspaper markets—are on pace to earn Gannett $100 million in operating profit by the end of 2013.
Still, circulation revenue alone can’t lift the newspaper industry back to fiscal health. Many of the major newspaper companies are barely treading water. The New York Times Co., which includes the flagship paper, The Boston Globe and About.com, had stable first quarter 2012 revenue but operating income dropped 23 percent to roughly $20 million. And while digital subscriptions for the New York Times are a full-bore success, with 454,000 new members agreeing to fork over money for the paywall, The Boston Globe has a paltry 18,000 paywall subscribers. Still, the company anticipates some $125 million in paywall revenue at the end of next year.
The Tribune Co. is said to be in an upswing, though reports indicate television revenues are cauterizing the financial wounds of its papers. The Washington Post, meanwhile, is losing circulation and ad revenue, with no paywall. And Gannett’s circulation revenues can’t mask its first quarter 2012 results: operating profits are down 47 percent for its publishing division compared to the 2011 period.
What are you hearing from your newsrooms to boost income? Are paywalls viewed as a panacea? And how are the smaller papers measuring up?
Tags: media
Views: 67
Replies to This Discussion
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Permalink Reply by Charles Lussie on -
My newspaper, The Advocate, is planning to adopt a paywall later this summer. Not sure launch date. 10 stories a month is the limit I'm told. Not sure how porous it will be. We're family owned. The economics of this are opaque to me. I can see two sources of revenue, additional online, or additional and/or saved print subscriptions. Web advertising based on clicks, etc., would seem to suffer. What am I missing?
Charles
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Permalink Reply by Mikhail Zinshteyn on -
Maybe taking a page out of News Corps print division might help: Even when you divorce its TV revenue from its paper sales, the print division still out-earns The New York Times. Looking at operating income alone, the difference is 16 to one in favor of News Corp. That's a nice way to enter the rough waters of print media without TV revenues to keep your operations afloat. http://www.theatlantic.com/business/archive/2012/06/even-without-mo...
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Permalink Reply by Scott Jaschik on -
I'm always disappointed in discussions of paywall not to see emphasis on audience make-up (as opposed to total numbers) and journalistic mission. Obviously a key factor here is the economic vitality of journalism, but I wish more people would ask about whether the health of a newspaper (and journalism as a whole) is well served by excluding key parts of the audience. Publications like The Wall Street Journal have historically served an elite in American society (well before the Internet), so I doubt a paywall there changes the audience. But as other newspapers worry that they aren't read by the young, but those without much money, etc., what about the non-financial costs of excluding people?
My publication is different in that we have a specialized subject matter and audience (people in academe), but by providing open content, our readers include not only presidents and other senior administrators, but grad students, adjuncts, and the (majority of) professors who don't work at institutions with expense accounts for faculty to read the news. I believe our journalism is better because of the breadth of our audience. Many publications (specialized or metro dailies) are trying to split the difference with some content for all, and some content for just a few. But I have to ask: As institutions committed to sharing information and ideas, why would we build our economic future on the idea of "more information for some than others."?
Proponents of paywalls argue that bills need to be paid, and that's of course true. But journalism has long been built economically on monetizing the audience (through advertising) more than on circulation revenue. It can be done without paywalls. My staff is growing, our audience is growing, our revenue from various kinds of advertising is growing and makes us profitable.I don't know the details behind the economic choices made by every publication. But I'm frustrated by the "we have no choice" argument for paywalls, and by publications basing their decisions on the success of publications like The Wall Street Journal and The New York Times (publications with audiences in just about every way atypical of those of most daily newspapers). And I'm frustrated by people not asking questions about the values behind an open audience vs. a paying audience.
Scott Jaschik
Editor
Inside Higher Ed
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Permalink Reply by Mikhail Zinshteyn on
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Thanks for writing in, Scott. I understand why excluding readers from content is a concern, but how much of the reading public is having their intake of news affected? It seems very local papers don't (based on this 2009 article I just linked to) suffer the economic malaise larger papers do, either because there's a history of paying for content or the local paper has a monopoly on news in the area. Regardless, the paywall is something being adopted by national publications that lost big on advertising dollars. For local papers, the two car dealerships and and grocery stores in the 25-sq. mile town still need to post ads; national brands are likely more reluctant since it's so expensive and they can reach audiences through social media.
I also wonder how much of the informed public is losing out as more national papers try the paywall. Has the number of readers gone down? Or is the bigger point that the potential to add more readers is disrupted by the paywall, since its that much more expensive and difficult to start reading a Gannett or NYT Co. paper if you're someone who's never had an interest in reading the big dailies until now.
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Permalink Reply by Mikhail Zinshteyn on
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Check out this take down of David Simon's support for paywalls from Columbia Journalism Review: http://www.cjr.org/the_kicker/why_david_simon_is_wrong_about.php
Scott Jaschik said:I'm always disappointed in discussions of paywall not to see emphasis on audience make-up (as opposed to total numbers) and journalistic mission. Obviously a key factor here is the economic vitality of journalism, but I wish more people would ask about whether the health of a newspaper (and journalism as a whole) is well served by excluding key parts of the audience. Publications like The Wall Street Journal have historically served an elite in American society (well before the Internet), so I doubt a paywall there changes the audience. But as other newspapers worry that they aren't read by the young, but those without much money, etc., what about the non-financial costs of excluding people?
My publication is different in that we have a specialized subject matter and audience (people in academe), but by providing open content, our readers include not only presidents and other senior administrators, but grad students, adjuncts, and the (majority of) professors who don't work at institutions with expense accounts for faculty to read the news. I believe our journalism is better because of the breadth of our audience. Many publications (specialized or metro dailies) are trying to split the difference with some content for all, and some content for just a few. But I have to ask: As institutions committed to sharing information and ideas, why would we build our economic future on the idea of "more information for some than others."?
Proponents of paywalls argue that bills need to be paid, and that's of course true. But journalism has long been built economically on monetizing the audience (through advertising) more than on circulation revenue. It can be done without paywalls. My staff is growing, our audience is growing, our revenue from various kinds of advertising is growing and makes us profitable.I don't know the details behind the economic choices made by every publication. But I'm frustrated by the "we have no choice" argument for paywalls, and by publications basing their decisions on the success of publications like The Wall Street Journal and The New York Times (publications with audiences in just about every way atypical of those of most daily newspapers). And I'm frustrated by people not asking questions about the values behind an open audience vs. a paying audience.
Scott Jaschik
Editor
Inside Higher Ed
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Permalink Reply by Mikhail Zinshteyn on
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The Guardian in UK isn't even worried about making profits or raising a paywall. They just want to keep their losses below 15 million pounds in five years: http://www.gq-magazine.co.uk/comment/articles/2012-07/03/interview-...
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