For newspaper sites, charging is a bad idea

'This is a
do or die moment for newspapers.
They need to establish their value now.
They can’t kill their circulation by doing anything in an arbitrary manner. It’s really a matter of maintaining the value while conditioning consumers to pay for more
value.'

For newspaper sites,
charging is a bad idea

Publishers would do better to register readers

By Marty Beard

    When newspapers first began constructing web sites, they saw them as potential gold mines. But for many those gold mines have turned into black holes, with costs far exceeding ad revenues.
    Compounding those losses has been a rising fear among papers that print subscribers will quit paying and instead go to their web sites to get the news at no cost.
    In response, in an effort to boost revenues while heading off print-circulation losses, a number of papers are either switching to or at least considering charging for access to their web sites.
    It's probably a mistake, and most certainly a mistake in the long term.
    So concludes a recent report from media consultancy Borrell and Associates.
    The study found that print subscribers in fact do use papers' web sites in large numbers but that a very substantial share continue to read and pay for their daily print editions.
    Borrell found that 76 percent of readers at newspaper web sites either already subscribe to the print editions or live outside the papers’ markets.
    Rather than close their sites to all but paying subscribers, Borrell says papers would get a greater return by requiring readers to register and then using the data collected to make a stronger case to advertisers, in terms of the quality of their readers.
    Borrell also says papers can create additional revenue streams by creating premium, internet-based services, such as newsletters, and charging readers to subscribe.
    "Publishers think the internet is a threat rather than an opportunity. We think it’s a mixture," says Peter Krasilovsky, a partner with Borrell Associates and Arlen Communications and one of the report’s authors.
    "We haven’t really seen any genuine cannibalism from free internet access, but we also think it’s time for people to start adding value to their internet sites by adding additional features that are enabled by the internet."
    Krasilovsky says that print subscribers are inclined to use a paper's site to supplement the print version, rather than as an alternative.
    "People who are used to the print version of the newspaper are looking for the comprehensiveness of the print version and headlines off the internet," he says.
     Newspaper sites are often accessed for their archives, obituary databases and other special features that aren’t available off-line.
   So far, only a dozen daily papers charge for access to most of their content, but as many as 350 other newspapers are considering making the move.
     But Borrell raises serious doubts as to whether the papers will gain much subscription revenue as a result.
     People still don't like to pay for online content, and few do.
     On average, when papers begin charging for access, the number of online-only subscribers they attract amounts to about 2.6 percent of their print subscriber bases, Borrell found.
     Moreover, in a September Borrell survey, it was found that resistance to paid sites remains high. Only a quarter of users surveyed said they’d paid for online news and information in the past year.
     Fully 71 percent said they felt that there are so many information sources out there that it made little sense to pay for online content. Some 46 percent agreed that online news and information weren't worth paying for.
     Still, Borrell found, newspaper surfers are willing to register, even if they won't pay.
     Newspapers lose only a small percentage of readers when they begin requiring registration, and at the same time they gain data that enables them to better target ads to their online readers.
     Three-quarters of respondents say they’d register for access to a news site, and 60 percent said they’d freely yield at least some registration information without knowing all the details of the information required.
     Just 20 percent say they would stop going to a newspaper web site if it started requiring registration.
    And some consumers even see benefits to registration. Sixty-one percent like the idea because it can filter out advertising that doesn’t match their interests or needs; 56 percent like the idea of registering for the purposes of tailoring a site to their interests, and 49 percent would register if the site were somehow improved.
    Additionally, some newspapers have met with some success by charging for only parts of their web sites.
    For example, Belo’s Dallas Morning News has about 2,000 subscribers who pay $12.95 a year for email newsletters on topics such as pro and college sports, cooking and food, and movies. Still, before Belo began charging, it had 150,000 e-newsletter subscribers.
    Services like the email newsletters and premium traffic, crosswords and sports stats will help prime readers to someday pay for online subscriptions, the report says.
     "This is a do-or-die moment for newspapers," Krasilovsky says. "They need to establish their value now. They can’t kill their circulation by doing anything in an arbitrary manner. It’s really a matter of maintaining the value while conditioning consumers to pay for more value."

Newspapers Restricting Site Access
Newspaper	Circulation	Start Date	Registered print sub-- scribers for the web site	Paid online subs.	Rates and notes
Wallowa Co. Chieftain Enterprise, Ore.	4,000 daily	June 2001	71	24	Print subscribers get in free; online-only subs for out- of-county residents, $39/yr.
The Chanute Tribune, Chanute, Kan.	4,431, M-Sat.	April 1999	130	92	Print subscribers get in free; rates are $76.37/year inside print circulation area; $51.31 outside
Floyd County Times, Prestonburg, Ky.	8,350 3X week	June 2000	N/A	215	Both print and non-print subscribers are charged $19.95 a year for premium site access
The Messenger, Madisonville, Ky.	8,864 daily	N/A	N/A	N/A	Site access includes internet access for $14.95/month or content-only access for $5.95/month
Grosse Pointe News, Grosse Pointe, Mich.	15,400 weekly	June 2000	N/A	~250	Print subscribers get in free; online-only subscribers pay $20/year or $2.50/week
Lewiston Tribune, Lewiston, Idaho	22,301 daily	Dec. 1999	2,700	325	Print subscribers get in free; others pay $72/yr., or $6/month. Free access to archives.
Post Register Idaho Falls, Idaho	23,829 daily	April 2000	1,620	105	Print subscribers get in free; others pay $78/yr. or $6 per 4 weeks.
The Telegraph Nashua, N.H.	26,442 daily	N/A	N/A	N/A	All access is currently free to registrants during trial membership.
The Dispatch Moline, Ill. Rock Island Argus Rock Island, Ill.	23,387 daily; 12,776 daily	N/A	N/A	N/A	Print subscribers get premium access free; online-only subs. allowed only for residents outside print circ. areas, at 50/yr. or $25 per 6 mos.
The Standard-Times New Bedford, Mass.	36,663 daily	Jan. 2000	1,200	600	Print subscribers get in free; others pay 19.95/yr.
The Gazette Cedar Rapids, Iowa	63,000	Sept. 2001	2,100	399	Print subscribers get in free, others pay $60/yr. or $8/mo.
Albuquerque Journal N.M.	110,531 daily	July 2001	7,604	728	Print subscribers get in free, others pay $60/yr. or $8/mo.
Tulsa World Okla.	143,582	June 2001	2,000	14,000	Print subscribers get in free, others pay $45/yr. or $5/week.
The Wall Street Journal	1.8 mil. M-F		~200k	~400k	Print subscribers pay $29 for web access, others pay $59. $20 million in sub. fees in 2000.
Source: Borrell and Associates

-Marty Beard is a staff writer for Media Life.

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