Monday, November 18, 2013

Read A Newspaper Recently?

About a year ago the Bellingham Herald put their online content behind a paywall and was followed by the other McClatchy papers The News Tribune of Tacoma and The Olympian.

Right after the last election, The Herald of Everett took their online content behind a paywall, leaving the Peninsula Daily News— also owned by Sound Publishing— as the last daily paper in the Puget Sound basin without a paywall.

After asking Bellingham Herald executive editor Julie Shirley whether the strategy putting up an online paywall worked to increase paid subscriptions, I got kind of an answer from publisher Dave Zeeck at The News Tribune who said that McClatchy Corp. didn’t release information on a paper-by-paper basis but from the McClatchy’s company third quarter report:

“...year-over-year circulation revenue went up 6.5% or about $5.3 million. I would assume most of that increase is paywall revenue, but that's a matter of interpretation, rather than fact. For the same quarter our daily circulation dropped 5.6%, and our Sunday circulation went up 1.1%.”

That’s for all of the 30 company papers. So did it help the three Puget Sound McClatchy papers?

The circulation figures from the Alliance for Audited Media (AAM) show the daily circulation of The News Tribune went from 74,826 (9/30/12) to 73,557 (3/31/13) and the daily circulation of The Olympian went from 21,876 to 21,621 in the same period. There were no audited daily circulation figures for the Bellingham Herald, which stood at 16,154 at the end of September 2012.

Going to paywall didn’t result in much change in daily circulation where figures were available but seems to have brought increases in Sunday subscriptions. McClatchy Corp. lists Sunday subscriptions for The News Tribune at 98,155 in 2012 and for The Olympian at 27,201. The 3/31/13 AAM report lists Sunday circulation for The News Tribune at 102,080 and for The Olympian at 30,143. Again, there were no Sunday circulation figures for the Bellingham Herald in the latest AAM report.

So, as far as I can tell, daily circulation didn’t get worse for The News Tribune and The Olympian and Sunday circulation got better. Is that good enough to make daily print news with paywalls a good business proposition for these papers in Puget Sound?

Zeeck, speaking again to the overall 30-company McClatchy picture, thinks newspapers have a future:

“If we're taking more money in by charging for digital subscriptions, both for our print customers and our digital only customers, then I think that's good news for print publications. In my opinion, going down 5.3 percent in daily subscriptions when you are charging people more to pay for the digital portion of their news consumption, that's a very good sign. So is going up 1.1 percent in Sunday circulation. I think print has a very long future.  I think it was more in doubt when people could get their news for free on the internet, and drop their print subscription.  Now, however you take the news, you have to pay for it. I think that bolsters print subscriptions in the long run.”

Maybe so. For the sake of daily print newspapers in the Puget Sound basin, I hope so. For McClatchy’s 30 daily newspapers, online revenue from circulation and advertising increased over the previous year’s third quarter; overall net earnings, however, declined in large part due to continued losses in print advertising. The business of newspapers is not to provide the news; it’s business is to provide the space for advertisers to communicate with readers.

The more eyes on your product, the better your chances are to sell advertising and increase revenue. What brings and keeps eyes on your product? Content, news, items of interest to readers.

An important question is whether the print and online content of the Bellingham Herald, The News Tribune and The Olympian has the kind of content in quantity and quality subscribers are willing to pay for. Will more people subscribe so more advertising can be sold— and more revenue generated? Is this the business model that will keep daily print newspapers serving the Puget Sound basin?

I hope so but am feel pessimistic when I read the recent report from the Pew Research Journalism Project: News Use across Social Media Platforms. About half of Twitter and Facebook users say they get their news from those sites, and 65% of users of social media platforms say they get their news from only one social media site. And roughly only a fourth of users of each social media platform say they also get their news from newspapers, about the same as all adults.

And on the revenue side, I learned last week that Google is on course to do $60 billion in revenue this year, almost all of that from advertising. According to, Business Insider CEO Henry Blodget , Google alone is now bigger than either newspapers and magazines. (See graph, above, in Google Is Now Bigger Than Both The Magazine And Newspaper Industries )

Maybe Google’s success and the success of Facebook aren’t necessarily taking away ad revenue from magazines and newspapers but what makes these platforms appealing is their ability to deliver large audiences that can be segmented, targeted and sold to. Daily newspapers are neither search engines nor social media platforms. But, in this day and age— and into the future— what are they?

--Mike Sato

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