By paulgillin | August 7, 2015 - 7:29 am - Posted in Advertising, BusinessModel, Circulation, Paywalls

The New York Times marked a milestone of sorts yesterday with the announcement that it has passed the one million paid digital-only subscriber mark, less than four-and-a-half years after launching its paywall. The milestone is validation that paywalls can work, especially if you’re The New York Times.

The news comes less than two months after the World Association of Newspapers and News Publishers reported that global newspaper circulation revenues surpassed advertising revenues for the first time this century (good slide presentation here). The association didn’t say when was the last time circulation was the industry’s biggest revenue contributor – or even if that information is known – but we’d guess it was more than 50 years ago.

The newspaper industry became addicted to advertising in the 1960s – and thus began its downfall. With 80% of revenue coming from advertising by the late 1970s – and circulation functioning as a loss-leader to build audiences – the business had all its eggs in one basket. When the Internet tore a hole in that basket, there was nowhere else to turn.

A painful decade later, there is evidence that newspapers are rebuilding online around the paywall model. They have lost a lot of blood, though, and circulation revenue will never be as large or profitable as advertising was. Wired notes that only one-third of the Times‘ revenue comes from digital subscriptions. It will need a lot more subscribers – or alternative revenue sources – to keep the business stable.

Observers of the cratering newspaper industries in the US and Europe may be surprised at this news: Print newspaper circulation around the world actually increased 2% in 2013 compared to 2012. The pocket of strength comes from rapidly maturing economies in Asia and Latin America, where people who a generation ago might have used newspapers mainly for kindling are now finding them to be valuable for the purposes for which they were intended.

That’s the highlights from the latest World Press Trends survey, which was released last by the World Association of Newspapers and News Publishers. The survey includes data from more than 90% of the news organizations that make up the industry’s total value.

There was no good news report in North America and Europe, where with print circulation dropped 5.3% last year and 10.3% over the last five years. Print ad revenues in North America are down a sickening 29.6% over five years. In Europe, print circulation declines have been even greater – 23% over five years – although advertising dollars have not fallen as quickly.

It’s quite a different story in Asia/Pacific, where print circulation is up 6.7% over the last five years and ad revenues have nudged ahead 3.3% during that time. Latin America is booming. Print circulation is up 6.3% over five years and ad revenues are up a stunning 50%.

It all adds up to an industry that’s a lot more stable on a global basis that many people thought. While overall revenue annual is down about 13% since 2008, results in 2013 were essentially flat, indicating that the industry’s freefall has slowed.

This is no time to celebrate, however. The last two years have shown that the developing world is migrating quickly to electronic media the expense of print, which still delivers 90% of the global industry revenues. While publishers report some success with packaged print and digital subscriptions (single-copy sales are down 26% worldwide but subscription sales are only down 8%), no one has yet solved the revenue problem.

Print Newspaper Circulation and Advertising Trends


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Circulation revenue for U.S. newspapers grew for the second consecutive year, rising 3.7% to $10.87 billion in 2013, according to preliminary data from the Newspaper Association of America.

However, that wasn’t enough to offset continuing deterioration in the advertising business. Total revenues for the industry were $37.59 billion, off 2.6% from 2012. The good news is that the rate of decline appears to be slowing. The bad news is that digital advertising is growing more slowly for newspapers than it is for the industry as a whole. The U.S. online ad market grew by 17% year-over-year in 2013, but newspapers’ digital ad revenues increased by just 1.5%. Digital advertising now accounts for 12% of total industry revenue. It’s not clear how native advertising is being factored into those numbers.

Incidentally, online ad spending  surpassed broadcast TV revenue for the first time last year, according to the Interactive Advertising Bureau.

An interesting new area of growth is digital agency marketing services, in which media companies help local businesses build a digital marketing presence through services like online advertising and direct mail. That business grew 43% last year, although from a very small base.

Declines in traditional print advertising continued their numbing downward trend, falling 8.6% from the previous year. Classified advertising was off 10.5%.

An interesting factor in circulation revenue growth is the success of digital-only circulation revenue, which was up 47%. Bundled print and digital circulation packages increased 108%. However, print-only circulation revenue dropped 20%.

Read more on MediaLife.

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With BuzzFeed and Upworthy reporting eye-popping traffic growth and planning to hire teams of reporters, many people are wondering whether sharing is the new currency of media success.

The idea is that if you give readers enough top-ten lists and animated GIFs they’ll do all your marketing for you. You don’t even have to worry about search engine optimization because nothing ever went viral on search. This philosophy has even given birth to a new style of headline writing that’s intended to stimulate sharing (“Why’s This Kid Throwing Coins? The Reason May Or May Not Blow Your Mind, But Something Does Blow Up,” reads one recent Upworthy example).

Henry Blodget

But maybe sharing isn’t all it’s cracked up to be. In a recent case study on USA Today, Michael Wolff looks at Business Insider, the hyper-caffeinated new-media brainchild of exiled Wall Street bad boy Henry Blodget. Business Insider is notorious for its fixation on being first and for driving its reporters to exhaustion. It’s a content mill – albeit with higher quality than many of its peers – that churns out large volumes of information in the quest to earn shares on Facebook and Twitter.

And it’s generating traffic: 25.4 million unique visitors in January, says Wolff. The problem is that Business Insider has low reader loyalty:

Only a small percentage of Business Insider’s traffic actually seeks it out and regards it as a worthy destination and a source with particular brand authority. Most other readers land on a Business Insider article because of search-engine results, or because of an engaging — tabloid-style — headline in a Facebook feed and other social-media promotions, which generate 30% of Business Insider’s traffic.

Wolff asserts that this drive-by traffic has little value because readers don’t identify with the brand. Worse is that the drive for big numbers becomes a race to the bottom.  As advertising rates continue to drift lower, publishers must seek ever-higher traffic volumes to stay in the same place. This means resorting to gimmicks like contests, cheesecake photos and celebrity gossip. That attracts poor-quality traffic which has low brand affinity and little value to advertisers. It’s a vicious cycle.

Digital Dimes

Blodget disagrees. In a response on Business Insider he says that the very problems Wolff cites are actually opportunities. New media companies don’t have legacy businesses to protect and so are free to disrupt mainstream competitors and steal revenue, he says. “We are better at serving digital readers than many traditional news organizations, so we can thrive on these ‘digital dimes,'” writes Blodget. His post displays a photo of what are presumably a group of happy young reporters in the company’s New York offices (Wolff says Business insider has hired 70 full-time journalists at a cost of more than $15 million a year. Do the math).

We think Wolff is on to something. Take a look at the chart below from the Pew Research Journalism Project. It depicts traffic to the 26 most popular U.S. news sites over a three-month period. It shows conclusively that visitors who reach a site directly (via a bookmark or typing the address into a browser) stay much longer, read much more and visit more often.

This isn’t surprising when you think about it. Typing “” into a browser is an act of brand affinity, whereas headline-clickers on Facebook don’t really care where the headline comes from. The BuzzFeeds and Upworthys of the world must compete headline by headline. Is that a problem?

Attracting readers with gimmicks is nothing new. One of the myths of the news business is that people read newspapers primarily for the news. The reality is that they read for all kinds of reasons. Any veteran of the pre-digital publishing days will tell you that an embarrassingly large number of traditional newspaper readers bought copies for the coupons, Ann Landers, comics, the Jumble and the daily horoscope.

But at least in those days readers knew what brand to buy. Today’s audience has more affinity to the content than to the publisher, and aggregators like Flipboard are constantly looking for ways to supersede publishers’ brands with their own. Brand still matters. A click is not the same as a reader.


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Freedom Communications' Aaron Kushner (photo by Jebb Harris, Orange County Register).

Freedom Communications’ Aaron Kushner (photo by Jebb Harris, Orange County Register).

California newspaper defies industry wisdom to stay alive – and prospers” declares The Guardian in an analysis of the Orange County Register‘s death-defying experiment under the leadership of a former greeting card executive with no background in newspapers.

Aaron Kushner (right) and his partner, Eric Spitz, formed Freedom Communications and bought the Register a year ago. They then stunned the shell-shocked newspaper industry by declaring their intention to go completely against the prevailing practice of layoffs and cost cuts. They would invest in print, double their reporting staff,  increase subscription prices and  put up one of the industry’s most rigid barriers to online access.

They’ve kept their promise. Newsroom staff is up to 360 from a low of 180 when Freedom took over. The Register routinely publishes daily issues that are nearly twice the size of its nearby rival, the Los Angeles Times. Page counts have been increased by half, color expanded and even the quality of paper improved.

Daily circulation is holding steady and total circulation is up sharply if you include the 28 weekly papers the company has invested in over the last 12 months. The Register has hired investigative reporters and lured newspaper wunderkind Rob Curley out of exile to rejuvenate the editorial product with a focus on local news and practical advice.

Freedom is showing particular sensitivity to  local businesses. One promotion late last year gave each reader the opportunity to contribute $100 worth of advertising to his or her favorite charity. Some 1,300 nonprofits benefited from the program.

Kushner thinks the time is right to place a big bet on print. “Never before and never again will so many people be in the sweet spot of newspaper readership as the next 20 years,” he told the Guardian. “It’s called the baby boom.”

There’s no doubt the Register is growing, but is it prospering as the Guardian‘s headline proclaims? The jury is still out on that.

Ken Doctor ran the numbers back in January and concluded that the Register may be able to cover its estimated $9 million+ in additional annual costs through higher subscription fees, but that the advertising market is in long-term decline and there’s little that any newspaper can do about that. Doctor contrasted Kushner’s growth strategy with the slash-and-burn tactics being applied by Advance Communications and said we’ll know in about two years whether growth or contraction is the recipe for success. Clearly, we’re pulling for Kushner.

Writing on in May, Ryan Chittum said the odds are against Kushner, but noted that if he fails, “he will have gone down investing in journalism.” Chittum also has some revealing stats about the profitability of newspapers, which remains quite strong. When newspapers shut down, it’s because they can’t afford the cost of their debt, he says. Most are still in the black on an operations basis, which makes Advance’s frequency cutback strategy all the more puzzling.  It also suggests that value investor Warren Buffett  isn’t a billionaire for nothing.

Kushner says he’s in it for the long haul and he now has his eyes on a bigger prize: the L.A. Times. Tribune Co. is going to be looking to unload some assets now that it has exited bankruptcy, and many observers believe the Times will be on the auction block. If Kushner buys it, he can all but own the southern California market. Regardless of the  current fortunes of daily newspapers, having a  near-monopoly on even a shrinking media business in the country’s largest media market has to be attractive.

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How are the experiments in reduced frequency that began in Detroit more than four years ago and have since spread to Cleveland, Syracuse, New Orleans and now Portland working out? Not so well, says author and J-school professor John K. Hartman.

Writing on Editor & Publisher‘s website, Hartman says the most from seven-day to three-day home delivery has caused massive subscriber flight and forced publishers to quietly backtrack. Newhouse, which is cutting frequencies across its line of dailies, has already had to introduce a new tabloid to produce on the days the Times-Picayune doesn’t publish.

Hartman blames greed. He accuses Newhouse of sabotaging journalism at the papers it own in the name of maximizing profits for the Newhouse family.

Newhouse is saving big money by eliminating news staff, eliminating office staff, eliminating delivery staff, and eliminating delivery expenses. In other words, Newhouse is getting out of the daily newspaper business and into the tri-weekly advertising shopper business.

We didn’t know this, but Hartman says the Detroit Free Press and News have re-introduced daily delivery to about 15,000 homes. The experiment, which was positioned as a “bold transformation” in December, 2008,

lost so many readers they had to beef up their non-delivery-day newspapers and restore limited seven-day home delivery. The Free Press now offers home delivery to 15,000 households through independent contractors the other four days a week. Nonetheless, hundreds of thousands of readers of the print products were lost in Detroit, and the projected switch of readers and advertisers to digital sites has not taken place.

Continuing a newspaper industry tradition of burying bad news about its business, The Oregonian announced that it will scale back home-delivery frequency from seven to four days a week.

The news is tucked into the fourth paragraph of an otherwise effusive press release on Oregon Live that crows about the launch of a new company that will “expand news and information products in Oregon and Southwest Washington” and “introduce new and improved digital products.”

In reality, the main purpose of the new company over the next few months will be to hire survivors from Oregonian Publishing Co. which produces the state’s largest and longest continuously published newspaper. That company will close on Oct. 1. Oregonian write Brent Hunsberger provides balanced coverage – and leads with the real news.

Like newspapers in Detroit, the The Oregonian will continue to publish in print seven days a week but will limit distribution of Monday, Tuesday and Thursday editions to city newsstands. Its 170,000 home subscribers will see deliveries cut to Wednesday, Friday, and Sunday. In a baffling bit of doublespeak, the company also said home-delivery subscribers would get a Saturday edition “as a bonus.” It also stressed that the “Wednesday, Friday and Sunday editions will be enhanced with more content than current editions while the Saturday newspaper will have news and a strong emphasis on sports content, along with classified advertising.” In other words, a cut of 50% is an improvement.

The bigger story is that there will be unspecific but “significant” layoffs at The Oregonian, which currently employs 650 people. The paper, which has won seven Pulitzer Prizes and five since 1999, employs more than 90 journalists according to Hunsberger’s account. However, Ryan Chittum thinks the editorial cuts have been more severe. Writing on, Chittum estimates that the newsroom staff has declined from about 315 in 2007 to 175 today. His assessment is blunt:

[Advance Publications’] new template for its newspapers is now depressingly familiar: End daily delivery; fire a third to a half of the veteran journalists, particularly the editors, particularly in news; replace some of them with young, inexperienced (and most important: cheap) labor; put them on the hamster wheel; toss around insipid buzzwords; spend a bunch of money on new offices; piss off readers; embolden competition.

Seems about right. Chittum also notes that Advance Publications’ cutbacks at the Times-Picayune in New Orleans backfired when a competitor from Baton Rouge moved in to take advantage of subscriber unrest. Advance has had to respond with a tabloid edition on days the Times-Picayune doesn’t publish, thereby negating many of its cost savings. Advance has said that it will make similar frequency cutbacks across its portfolio.

Oregon journalists are already rushing in to show their support. Former Oregonian reporter Ryan Frank has taken to social media to raise funds for a bar tab for laid-off staffers. He’s already raised more than $3,000. Follow the fund’s progress at #OregonianBarTab on Twitter. And give generously.

Thanks to Brian Parks for tipping us off to this news.


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The World Association of Newspapers and News Publishers (WAN-IFRA) released an upbeat report on the state of newspapers worldwide, pointing to growing readership levels in emerging economies but cautioning that engagement levels are still low.

The report includes data from 70 countries that account for more than 90% of the industry’s value. It shows:

  • More than half the world’s adult population reads a daily newspaper, with 2.5 billion reading in print and more than 600 million consuming in digital form.
  • The newspaper industry generates more than US$200 billion of revenue worldwide each year. However, that figure is down 2% from last year and 22% since 2008. The numbers are dragged down by plummeting ad sales in the U.S., which has seen print advertising revenues fall 42% since 2008. The good news is that ad revenues are up 9.1% in Latin America, 3.6% in Asia and 2.3% in the Middle East and North Africa.
  • Newspaper circulation remains high, through stagnant, globally. Circulation declined only .9% worldwide in 2012 from a year earlier, primarily due to  rising circulations in Asia. Circulation is down 2.2% globally since 2008, with the steepest declines in Europe.
  • While newspapers are a vital information source, they aren’t engaging online audiences very effectively. Newspapers accounted for only 7% of visits, only 1.3% of time spent online and only .9% of total pages visited.
  • U.S. newspaper publishers now generate 27% of their revenues from non-traditional sources, such as digital advertising, services and ancillary products.

While the report can be seen as a glass-half-full scenario, we think it’s encouraging to see publishers diversifying their revenue sources. The industry’s historic dependence on print advertising in general – and classified advertising in particular – is at the root of its problems. The rapid decline of those revenue sources is prompting some publishers to get creative about finding new revenues. Those that succeed will be stronger for it.


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Paywalls continue to spring up across the news landscape while new-media enthusiasts warn that gated news is a throwback to a bygone age.

Britain’s Telegraph and Sun announced plans to erect paywalls almost simultaneously after successful tests. The Telegraph, which claims to have the largest circulation of any U.K. daily, will give away 20 articles free every month and charge £1.99/mo. thereafter for unlimited access to the website and smartphone apps. The Sun‘s move is timed to make the most of parent company News International’s £20M deal to show near-live clips of Premiership football highlights on its websites beginning in August.

In Canada, Postmedia Network will roll out paywalls across all 10 of its properties, including the National Post. The move completes an experiment that began two years ago and has been deployed in stages. Digital-only subscribers will have to ante up $9.99/mo. for reading more than 10 articles in any title within a month.

Perhaps most indicative of the surging popularity of paywalls, though, is Politico’s decision to experiment with the idea. The Washington, D.C.-focused news service, which was once personified the new breed of digital-only publishers, has given in to the reality that advertising rates continue to fall and subscriber revenues must become part of the business. “We believe that every successful media company will ultimately charge for its content” said a memo signed by several of the Politico’s top executives.

Circling the Wagons

We continue to be more interested in experiments that break new ground in publishing economics than efforts to resurrect old models. There’s plenty to report there, as well.

Ken Doctor kicks us  off with a fine analysis of where NewsRight went wrong. NewsRight was a consortium of 20 publishers that sprung out of the Associated Press in early 2012 with the mission of tracking down copyright violators while also creating a subscription model that would permit digital publishers to license quality content for redistribution.

“Publishers have seethed with rage as they’ve seen their substantial investment in newsrooms harvested — for nothing — by many aggregators…” writes Doctor on the Nieman Journalism Lab, “…but rage — whether seething or public — isn’t a business model.”

Bingo. Consortia are good for only two things: setting standards and raising awareness. They’re a terrible way to create new products. The idea of pursuing copyright violators individually is ludicrous, anyway. It’s like trying to stamp out ants. There are always more where the first batch came from.

The only anti-piracy tactic that works is a public awareness campaign, and the newspaper industry has shown little interest in that. NewsRight died because the members inevitably had conflicting priorities, and it was impossible for everyone to find common ground when everyone had something to lose.

Does BuzzFeed Have it Right?

Sponsored Post on BuzzFeedDoctor points to the work being done at NewsCred, BuzzFeed and Forbes, among others, as examples of new ideas worth developing. “In 2013, we’re seeing more innovative use of news content than we have in a long time,” he writes. We’re particularly interested in BuzzFeed, the viral content engine started by Jonah Peretti and others in 2006. At first glance it looks like any other new-age news site, with a bottomless home page stuffed with a jumble of seemingly unrelated content ranging from the profound to the ridiculous.

As New York magazine points out in a lengthy profile, though, there’s a lot more going on there than cat photos. BuzzFeed is tuned to create content that people want to share, and it could care less who the authors are. The home page blithely mixes contributions from staffers and advertisers with minimal labeling. Every element within every story can be shared on every social network you can imagine. Every page is designed to maximize audience interaction with the content.

BuzzFeed makes little effort to segregate advertiser contributions from the work of its own staff. A photo essay on “12 Tips to Have An Amazing Barbecue” from Grill Mates sits next to “Just The London Skyline, Made Out Of Sugar Cubes” by staffer Luke Lewis. Some of the branded stuff is actually pretty good, like, JetBlue’s “The 50 Most Beautiful Shots Taken Out Of Airplane Windows.”

Is this serious journalism? Well, no. We don’t think corporate brands will ever produce that. But if they want to run their grilling tips next to similarly lightweight content from professional editors, why not let them? The genie that goes by such names as “brand journalism” and “content marketing” isn’t going back in the bottle. A recent survey concluded that corporate marketers and agencies consider branded content to be among their most effective branding tactics, and that 69% plan to spend more money on it in the coming year.

The bigger issue is whether sustainable publishing business models can be found that don’t rely entirely upon display advertising or subscription revenue. BuzzFeed and NewsCred are making some progress there. We don’t believe they produce serious journalism, if sex, gossip and voyeurism can attract a large enough audience to support real journalism, then we’re in favor of it. The idea isn’t new. It’s worked in the U.K. for decades.

Content Marketing Effectiveness

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By paulgillin | April 13, 2013 - 10:31 am - Posted in BusinessModel, Circulation, Demographics, Newspapers, Paywalls, Revenue20, Solutions

In a dying industry, the sensible thing to do is to maximize your revenues before you die. Paywalls might well make money for newspapers. But that doesn’t mean that newspapers aren’t dying. Quite the opposite.

Felix Salmon, Reuters

That quote, which we first saw in this Mathew Ingram piece on paidContent, gave us new insight on why we dislike paywalls so much. Yes, the newspaper industry seems to be adopting them at a rapid pace, and yes, the paywalls at The New York Times and Financial Times are reportedly successful, but there’s something about putting the subscription genie back in the bottle that strikes us as a step backward.

Salmon puts his finger on one of the weaknesses of most current paywalls: They are defensive strategy. They’re designed to keep loyal readers on board, but they repel potential new readers.

Alan Mutter shares worrisome statistics: More than two-thirds of regular newspaper readers are over 45, their average age is 57 and the average age of the online newspaper audience grows one year older every year. This industry is still headed toward a cliff. Unless those demographics turn around, it’s only a matter of time before the audience dwindles to a size that is no longer economically sustainable.

What’s the answer? Unfortunately, no one has come up with one. In another piece this week, Ingram criticizes paywalls for being a no-growth strategy. His article is mostly a restatement of Mutter’s analysis, but the really interesting part is in the comments section that follows. Both critics and supporters of paywalls vigorously debate the alternatives, and both sides make good points. Done right, it seems that paywalls actually could attract new subscribers, but no publisher is reporting the kind of circulation gains that will be needed to replace this rapidly aging audience.

The time seems right for micro payments, but that idea has never gained any traction. Kachingle was one of the early players in newspaper micro payments, but it has now morphed its business model into a co-marketing app content somethingorother that we can’t figure out. People seem to be OK with using Google Checkout for 99-cent purchases, but not for five-cent purchases. We think there’s a psychological barrier to micro payments. Below 99 cents, people don’t want to be bothered to think about paying. In fact, charging a nickel to read a 5,000-word article seems a little absurd, as if the article has no value. At some point, micro payments work against you.

Reuters’ Salmon argues that paywalls as currently implemented are too inflexible. They impose a limited number of subscription options on visitors regardless of what the visitors want or how they behave. Paywalls should use a sliding scale that maps to the needs of the individual reader, he suggests. People with an intense interest in sports will pay more than those who care deeply about entertainment, so they should pay a different price. Few publishers understand their audiences in that kind of depth, though.

We did see one bit of encouraging news this week. The Newspaper Association of America reported that advertising revenues continued their seven-year-long string of declines, dropping 6% in 2012. However, overall revenues were down only 2%. The reason is that publishers are finally diversifying their revenue streams, and not just by charging readers:

These new revenue sources, which include such items as digital consulting for local business and e-commerce transactions, now account for close to one-in-ten dollars coming into newspaper media companies. They are significant enough in scale that NAA has begun to collect detailed data about these revenue categories and track their trajectory year-to-year for the first time.

Consulting? Affinity programs? Marketing Services? Where have we heard those ideas before?

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