Paywalls and Newspapers

These next couple of questions deal with online paywalls for news organizations and the future of newspapers.

2:  So, as you just talked about, the nytimes just instituted a paywall, limiting people to 20 free articles per month. In your view, will this plan work for the nytimes? Will it generate enough revenue for them, enough for them to call it a success?

A:  I don’t know. That’s the big question. They tried something similar a few years ago and it didn’t work. So whether they’ve found a better formula this time we don’t know. But a lot of doubts have been raised because so many people have gotten used to the idea of getting it for free. And I know that when I asked my students the other day, “Would you pay?”, they said “no.” They said “we’ll just go elsewhere.”

  • Mr. Collings acknowledges here what everyone at the nytimes knows deep down but wishes weren’t true: most of the top stories the nytimes reports are also reported on by very reputable – and free – news organizations, like BBC or the Washington Post.  If one of them puts up a paywall, people will do what’s convenient and cheap and go find their news elsewhere.
  • I also believe this to be true, but to an extent.  I believe all that the nytimes has to achieve for “success” is a small baseline number of viewers to commit to pay for the online content.  The majority of their online viewers are probably still going to be in the “free” category, but this new paywall is meant to draw money from their most steadfast and committed viewers and content sharers.  A week or two after this paywall went active in the U.S., I found myself out of “free page views” for the month already, and decided I would need to find a way to gain complete access.  So, I convinced my parents to subscribe to Sunday-only home delivery of the nytimes, thus granting me complete online access with this paid account.  If you are thinking about taking the plunge and paying for world-class quality reporting, you can look at the possible subscriptions here.
  • Early analysis of the paywall success has showed that it has caused a slight decrease in daily page views, but it is still too early to tell if it will sustain this consistency.  Below is a useful graphic on the page view differences:

3:  What about for more local or regional news sites that don’t have the numbers of online viewers the nytimes does? How are companies like the Detroit News and Detroit Free Press supposed to survive when charging online likely won’t work for them? Is relying on advertising revenue a sustainable plan for the future?

A:  In order for them to make money, they have to, obviously, have enough revenue from whatever source to cover their costs, and have some leftover for profit. The problem is, they’ve lost the traditional sources of revenue of subscription and advertising, to a large extent. They’ve definitely lost classified advertising. It’s all going to places like Craig’s List. And, the subscription revenue is down also because more people are going online, so they’re not getting the print newspaper. Again, we just don’t know whether they’re going to survive or not. Now, Detroit has two newspapers, two news organizations that have print and online versions. Whether a city in real trouble, like Detroit, can sustain two news organizations I don’t know. Somewhere down the line I can see one of them not surviving.

  • I agree with Mr. Collings’ assertion that because of decreasing subscription and advertising revenues, even large city newspapers are in danger.  I think his doubts on the sustainability of two heavy news organizations in one city are ones that are often ignored in the debate about the future of newspapers.  The efficiency of one paper and one online site is far greater than that of two.
  • My own view is that the Free Press and the News are obviously both struggling to make ends meet, and will at some point in the near future begin talks of merging or at least forming smaller and more unique areas of subscribers.  I think they are going to have to follow the way of the city and diminish in size or combine forces in a merger.  Besides, they usually cover the same top stories about Detroit.
  • An informative and extensive table from the Newspaper Association of America provides data on the historical and recent losses in classified advertising revenue for American newspapers.

4:  Do you think it might go – because my brother and his wife live in Chattanooga, TN, and he told me about, I don’t know how long ago, but there used to be two newspapers, the Chattanooga Times and the Chattanooga Free Press. I believe one was conservative and one was liberal, and recently they combined into one newspaper. So, that’s been working for them. Do you think that might work for Detroit?

A. It’s a possibility. I mean, obviously, when you merge, you lay off some of the staff, and that reduces costs. And it’s not as if the number of people working at these two news organizations are all going to keep their jobs. Definitely not, some are going to lose their jobs. The tricky thing is, if you lay off too many journalists, then you don’t have a good product to offer for in the way of news coverage. Especially, you know, in Detroit there’s been some terrific news coverage. The former mayor is no longer the mayor because of reporting by the Free Press. We definitely don’t want to lose that kind of quality, hard-hitting, public interest reporting. But, it’s tricky. To reduce costs by reducing staff by enough so that you can survive and yet not reduce too much so that the quality of the reporting goes down so much that people aren’t as interested in reading the stories.

  • I think his thoughts on the value and importance of hard-hitting, public-interest reporting get to the truth.  His career in media and reporting has taught him first hand that news outlets have to find the right balance between being a lean, low-cost organization and making the investments to be able to produce the stories that sustain subscribing audiences.
  • I am personally thankful for the vigor and integrity that the Detroit Free Press showed when it pursued the Kwame Kilpatrick corruption story.  Its complete and thorough investigation of this case rid the city of the Mayor and helped it begin a road to recovery and redemption that we are seeing unfold today.

About tommyheld

UMich Ford School of Public Policy 2011 Alum, '13-'14 WorldTeach English teacher in China
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