One of the questions I am most often asked by publishers is could they/should they charge subscriptions for their online newspapers.
My answer is: "If you can, you should, but you probably can't."
There are at least 16 U.S. newspapers trying to prove that they CAN charge for their online products. They have met with mixed success.
Traditional thinking has been that if a paper charges for online news and sports, the readers will NOT come. The hope is that if a newspaper offers news, sports and feature content on the Web for free, the newspaper can become the dominant Internet site in the trade area. That dominance - or ownership of the local Internet "franchise" - should be able to become a profit center through advertising sales. Many papers have successfully up-sold classified ads, but often struggle with other types of Web advertising.
One of the chief defenders of the subscription-only online newspaper model is Jon Losness, editor and general manager of the Rochester, Minn., Post-Bulletin..
The Post-Bulletin converted from a free Web newspaper to a subscription-only model last spring. The Post-Bulletin posts its classifieds to the web in an area that is accessible without a subscription and also runs a free community portal site that offers general information about Rochester and the noted Mayo Clinic- but no news. The Post-Bulletin has long charged a surcharged to post classifieds on the Internet.
"We have valuable content - news, sports, financial information - that costs us money to collect," Losness said. "If people want it - and there is no place else in our market to get it - they should be willing to pay for it."
The paper initially lost 40 percent of its page views and received about 400 e-mails complaining about the change.
Losness said the site. www.postbulletin.com, has regained some of the lost page views, but is about 35 percent lower than when the site was entirely free.
The Post-Bulletin provides an individual password to its print subscribers and allows out-of-area on-line visitors to purchase a subscription to the site. Losness said he's had 99 customers pay $60 a year for subscriptions - almost $6,000 a year in circulation income, numbers that the Audit Bureau of Circulation accepts under new guidelines as paid circulation.
Losness said he's sure he would sell significantly more on-line subscriptions if the Post-Bulletin allowed Rochester residents to buy on-line-only subscriptions. He said the decision to not allow local residents to buy an on-line-only subscription was a calculated effort to protect the paper's print circulation.
"Someday, I'm certain we will sell an on-line-only newspaper in our own trade area," Losness said. "Why would I not want to be able to have a product that doesn't have newsprint or delivery costs?" But for now, the newspaper has decided to protect and promote local print circulation.
Losness said the paper received hundreds of angry e-mails when it stopped posting content that could be freely accessed, but some 75 percent of the lost page views came from outside the Rochester trade area, so advertisers didn't care.
"The complaints I got were not from customers," Losness said. "I define a customer as someone who is paying me money. Why should we care about what non-customers want or complain about?"
Losness said the Post-Bulletin has steadily grown paid print circulation over the past 10 years, up from about 35,000 10 years ago to over 42,000 today. He said his print circulation is up 635 in the last six months - including the 99 for the on-line product.
Part of the circulation growth, Losness adds, comes from Rochester's population growth. Circulation penetration has seen a slight but steady decrease in the last decade.
According to Borrell & Associates, a Dallas research company, at least 16 newspapers, including the Post-Bulletin, are offering or experimenting with paid-circulation on-line newspapers. Some of the efforts have been prompted by the change in the ABC guidelines, which allow paid online fees to be counted as paid subscriptions.
The Albuquerque (N.M.) Journal, circulation 110,531, shifted to a model similar to the Rochester program (print subscribers are provided a password, while non-print subscribers can buy an online subscription. The Journal predicts $20,000-$30,000 a year in increased circulation revenue.
Donn Friedman, assistant managing editor for production and technology at the Journal, reports mixed results since the adqjournal.com starting charging subscriptions as of July 1.
He said unique visitors are off by 30 percent, but page views have declined only slightly. He said about 10 percent of the paper's approximately 25 advertisers quit advertisng, but some of those have returned.
Friedman said 750 persons have paid either $5 a month or $60 a year to subscribe, and some 12,000 subscribers to the Journal have taken advantage of the free registration.
Friedman said the circulation director is "much friendlier now" that the circulation department no longer believes the free online newspaper is causing a loss of paid subscribers to the print product. Friedman addedd that more than 300 new print subscriptions have been obtained through the online web subscription service in the last two month - compared to 297 starts in the first six months of 2001.
There is a downside, Friedman said. The paid circulation product has greatly increased the need for customer service, mostly from the nearly 13,000 free or paying registered users who lose their passwords or have other problems logging on.
Friendman said the on-line department totals 3.5 fulltime employees, and technical support now eats up almost one fulltime person.
Also, now that customers are paying for the online product, they are more demanding. "It used to be when we have a free web site, and there was a holiday or someone called in sick, we might not staff and update the site until the next day or 12 hours later. Now folks who are paying want news all the time and we can't take holidays off," Friedman said.
Friedman said he has received "thousands" of email complaints since the paper started limiting access. "Basically they (the complaints) say we are trying to ruin the Internet."
Friedman said the Journal posts its print classifieds to the ABQJournal.com site, and the ads are accessible even without a password. Unlike most newspapers, the Journal never added a surcharge for posting its classifieds to the Web. "We (the Journal's Internet department) never got any credit for classifieds," Friedman said. He said he's hopeful that the online department might receive a credit of $1 each a month for the Journal subscribers who are given free access to the web site.
"Research has shown that 90 percent of the Internet users will not pay for an online newspaper,"Friedman said. "But that means there are 10 percent who will pay. Why not go after that 10 percent?"
Some smaller papers are trying the paid online newspaper model.
- The weekly Grosse Point (MI) News, circulation 15,400, restricts its entire site at grossepointenews.com to subscribers only. According to Borrel and Associates, the papers has 170 online weekly subscribers and 160 annual subscribers since it began its subscription program in the summer of 2000.
- Borrel reports that the Chanute (KA) Tribune, a Monday-Saturday daily with 4,431 subscribers, began a subscriber-only online newspaper in April 1999. The site now has 92 online-only subscribers, with 2 to 3 percent of the print subscribers receiving free access.
- The Lewiston (ID) Tribune, with a daily circulation of 22,301, switched to a pay online newspaper model in December 1999. The paper reports that its online subscription ranged from 300 to 350, with 2,700 paid print subscribers using free access.
- The Post Register, a daily in Idaho Falls, Idaho, has had a paid site since April 2000. The Paper says traffic fell 75 percent, but revenue was not affected because the paper hadn't sold any online ads to begin with. The paper has 105 paying subscribers and 1,620 print subscribers who are given free access, Borrel reported.