In a major shift in digital strategy, CEO Gracia Martore told Wall Street stock analysts today that Gannett plans to extend a paywall across more newspapers early next year, giving readers only limited free access to content.
She didn't provide key details, such as pricing or revenue projections, and didn't directly say whether the plan would be companywide. "You're going to hear more about that over the next few months,'' she told the annual UBS Global Media and Communications Conference this morning.
In July 2010, GCI started testing paywalls at three of its 82 U.S. newspapers. Since then, management has provided only limited progress reports. Martore's remarks today indicate the experiments have been successful enough to expand to other papers.
GCI's paywall model will be closely watched across the industry because it's the nation's No. 1 newspaper publisher. It proceeds cautiously in new initiatives, so a move toward companywide paywalls would be a strong signal that such a strategy is worth pursuing.
At mid-afternoon, GCI's stock recently traded for $13.53, up 60 cents, or 4.6%, when overall markets are flat. GCI traded as high as $14.47 after a big run-up on Monday.
Subscriptions vs. pageviews
The company's plan comes as the industry wrestles with ways to generate new subscription revenue amid falling advertising sales, and after more than a decade of giving readers free-for-all access online even while it continues to charge for print.
Although paywalls boost subscription revenue, they depress pageviews and therefore digital advertising sales. The challenge is to find a balance that kicks overall revenue higher.
Here's the key "content monetization" passage in her UBS remarks:
"Early next year, we will be piloting our own model to capture added revenue and profitability from our newspapers. As I noted, we create unique local content of high value to the communities we serve. With this in mind, we're taking a holistic view that centers on multi-platform content access. This will ensure readers can access our content when and how they want it -- via the web, smart phones, tablets, e-editions or in print."
Martore continued: "Now, if you're not a subscriber, you'll have limited digital access to our content. We are confident that this new subscription model will better reflect the value of our incredibly engaging content and position our local news operations in a more robust digital ecosystem. You're going to hear more about that over the next few months."
Related: listen to a replay of GCI's one-hour UBS presentation. Plus: Corporate's statement.
Earlier: I'm live-blogging the conference.
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| Martore |
In July 2010, GCI started testing paywalls at three of its 82 U.S. newspapers. Since then, management has provided only limited progress reports. Martore's remarks today indicate the experiments have been successful enough to expand to other papers.
GCI's paywall model will be closely watched across the industry because it's the nation's No. 1 newspaper publisher. It proceeds cautiously in new initiatives, so a move toward companywide paywalls would be a strong signal that such a strategy is worth pursuing.
At mid-afternoon, GCI's stock recently traded for $13.53, up 60 cents, or 4.6%, when overall markets are flat. GCI traded as high as $14.47 after a big run-up on Monday.
Subscriptions vs. pageviews
The company's plan comes as the industry wrestles with ways to generate new subscription revenue amid falling advertising sales, and after more than a decade of giving readers free-for-all access online even while it continues to charge for print.
Although paywalls boost subscription revenue, they depress pageviews and therefore digital advertising sales. The challenge is to find a balance that kicks overall revenue higher.
"Early next year, we will be piloting our own model to capture added revenue and profitability from our newspapers. As I noted, we create unique local content of high value to the communities we serve. With this in mind, we're taking a holistic view that centers on multi-platform content access. This will ensure readers can access our content when and how they want it -- via the web, smart phones, tablets, e-editions or in print."
Martore continued: "Now, if you're not a subscriber, you'll have limited digital access to our content. We are confident that this new subscription model will better reflect the value of our incredibly engaging content and position our local news operations in a more robust digital ecosystem. You're going to hear more about that over the next few months."
Related: listen to a replay of GCI's one-hour UBS presentation. Plus: Corporate's statement.
Earlier: I'm live-blogging the conference.
About 8 years too late.
ReplyDelete"Our incredibly engaging content?" WTF site is she looking at?
ReplyDelete"Holistic" "Ecosystem"
ReplyDeleteSeriously?
Yes, let's boldly move into the era of paid content on the web. Especially now that we've watched our competitors take leading roles and be successful. Industy leadership is not our strength.
ReplyDelete'unique local content of high value?' not at the gannett paper in my neck of the woods.
ReplyDeleteNewspaper publishers just don't understand their business. Readers have never paid for content - they've paid for distribution, and never came close to covering those costs.
ReplyDeleteToday, readers pay other companies for distribution, by purchasing computers/smart phones/tablets and Internet access. The money's going to other companies, but because you don't have to dedicate 80% of your cash flow to physical production and distribution online, you don't need the same revenue to do the same reporting job.
The only reason you need to keep revenue insanely high is to pay off the ridiculous mountain of debt you ran up while you paid no attention to the future of your business.
Fools.
Too little, too late.
ReplyDeleteha ha ha ha ha ha and ha
ReplyDeleteAs if they had content! Boy they really do want to go under don't they?
ReplyDeleteit's all within reach. without reason.
ReplyDeleteThey sucked it out of the rank and file employees - now it's time to go after those left who read the papers.
ReplyDeleteI think Dylan Smith needs to take a business course. The so called Tucson Sentinel is never going to make any money as a free website. But nice speech
ReplyDeleteFinally! Had Gannett bundled print subscriptions with online access years ago its circ numbers wouldn’t be nearly as bad.
ReplyDeleteOf course, leave it up to Gannett to roll out Facebook commenting in an attempt to “control” content only a few months before it instead of waiting for paywalls to do it…far from brilliant as Cincinnati had more than 1,400 anonymous comments on just one story when it announced its move to Facebook (majority were against it).
Results since Cincy changed? Just 42 comments on its five most commented stories to date.
Move up paywalls or stop Facebook commenting rollout until they’re ready to launch.
This will fail, fail, fail. Unique content my ass. I am a WSJ subscriber and don't mind paying for digital access, because it is worth it. I see no reason whatsoever to pay for online access to my Gannett site. It's simply not worth it. I'll switch to one of the local TV stations sites. That's the thing about content, there's plenty to choose from and it's free
ReplyDeleteOn Facebook I am a fan of our local paper and our local TV station. About three weeks ago there was a major local story developing regarding the murder of a woman in the town next to mine. The suspect hadn't been determined. The local TV station was covering the story on Facebook as it was unfolding. The newspaper wanted to know if you were enjoying the beautiful weather outside. I want to say it was a whole day before the newspaper even made mention of the story on Facebook, if not two days. Come to think about it, the time has come to cancel my subscription to the paper because as someone pointed out here, I can read the local news via the local TV station. Thanks for the reminder. Good luck with those paywalls.
ReplyDeleteBig question: Will USA Today be included?
ReplyDeleteIf content across the board is worth it, people will pay for it. But Gannett went the opposite way first - keep it free at the cost of quality. Fewer warm bodies do mean lower costs, but also lower quality - an observation that can be measured across Gannett's sites. Without an improvement in quality, people won't pay for this - especially in markets that also have local television news that's also online and free.
ReplyDeleteSorry Gannett, but the horses, chickens, and even rats left the barn long ago. It's beyond too late to shut the door now.
Thanks for your (digital) two cents, Anonymous, but TucsonSentinel.com's doing just fine.
ReplyDeletePlease take a few moments to review how print publishing works as an economic model:
Production and distribution of a print newspaper takes 75-80% of cash flow.
Subscriptions amounted to less than 10% of cash flow for a print publication. The money was in advertising.
Online distribution takes less than 5% of cash flow for a news organization. Readers pay other businesses in the distribution chain, not the publisher.
Although the potential revenue stream is smaller online, the free fall of print ad revenue means there's little future there. And given that websites need not support the ridiculous logistical operations of print publishers, there's the opportunity to have the same size newsroom without the archaic overhead of a print business.
Print publishers run trucking companies with newsrooms as an adjunct. Online publishers are able to focus on reporting the news and leveraging their audiences into revenue.
Anonymous, do you really think readers will pay for content they can get elsewhere for free? Maybe you're willing to stake your job on that assumption, but are you willing to put your name to it?
Good luck to you,
d.
Dylan, right on perfect. Even the damn fishwrap is more valuable that the milquetoast content Gannett peels off the wires. Fools is right. Thanks McCorkindork and Dubow, nice work fleecing our company.
ReplyDeleteJim, could you please find another pic of Martore? That ridiculous grin says "I just finished my oatmeal (and your career)" more than "I am the leader of a major US corporation." Just sayin.
ReplyDeleteA salient comment from Mutter yesterday, on a post unrelated to the paywall — http://newsosaur.blogspot.com/2011/12/making-facebook-work-for-publishers.html
ReplyDelete"Fortunately, publishers already know how the media business works: Produce valuable content. Assemble a desirable audience. Sell access to the audience. Make a profit. Repeat."
Well, obviously Gannett doesn't know it. They're trying to sell the content to the audience, not trying to sell access to the audience to a third party.
People only pay for news they can make money with. Thus the legacy business subs to WSJ — that used to be actionable info. But they don't pay for general news. They might pay to get it, but they have never paid for the actual content.
Online, that distribution money is by and large going to the companies that actually handle the distribution: tech manufacturers and ISPs. Newspaper publishers aren't in the middle anymore, to take a cut before paying for newsprint, ink, gas, the pressroom staff, etc.
Think of it this way: paperboys used to get tips. Did anyone every give a a reporter an extra five bucks for Christmas?
5:54 - Agreed. My local TV station's website actually does a much better job of covering the news than the local paywall site. Probably more staff to do so. And it's free of course.
ReplyDeleteI wonder if there will be free access for employees. I would't pay to access the site, so if we don't get free access count me out.
ReplyDeleteThis could help te print side if they don't really want to kill it off. It could also give them a reason to raise content by sending the people to either a pay situation online, or buy the paper to get a more complete story in print. Something I said should have benn the way it was done in the beginning...raise interest online, buy the paper for more in depth coverage.
ReplyDeleteJim,
ReplyDeleteTo answer your question - I don't see a way USAT can survive without implementing a paywall. The other two "national" dailies, The New York Times and The Wall Street Journal both have already implemented, with surprising, if limited, success. If USAT wants to remain relevant in that marketplace, then yes, a paywall, or free app with subscription model seems to be the only way as print products die their slow death.
There is a team dedicated to the paywall strategy and implementation for the community newspapers, which is being overseen and administered by USCP with assistance from consulting firm BCG. Gannett Digital is not part of this effort. USAToday will not be part of the consumer pay-for content strategy, and will continue with an advertising and distribution model, such as business traveler distribution in hotels. The bigger long-term goal for content overall is to combine USAToday content with local market content to create more of a CNN-like news bureau, compliments of ex-CNN execs David Payne and Mitch Gelman.
ReplyDeleteDon't you need content to put a paywall around? Just sayin'.....
ReplyDeleteDoes this mean a President of Paywall (and of course, senior vice president and a paywall marketing chief) will soon be hired?
ReplyDelete11:34 wrote: "The bigger long-term goal for content overall is to combine USAToday content with local market content to create more of a CNN-like news bureau, compliments of ex-CNN execs David Payne and Mitch Gelman."
ReplyDeleteThis has been Corporate's holy grail virtually since USAT was launched in 1982. In print, the dream was to wrap USAT in a local news section, and deliver it to the 80 or so community markets. Now, it's a digital dream.
But I'm starting to see some of the results, and they're unsettling.
Local community readers aren't universally in love with the USAT-produced nation/world pages. And the USAT-delivered nation/world content online buries good non-local stories at the bottom of the community homepages. Plus, they're often missing fresh, big national news. (I know because I watch.)
Meanwhile, USAT is featuring stories prominently on its homepage from the community papers -- stories that simply aren't sophisticated enough, or broad enough, to warrant that kind of big play. Just because it's exclusive, Gannett-produced content doesn't make it appealing to a national audience, nor appropriate to dominate the homepage.
I've posted this once before, but it's applicable here:
ReplyDeleteImagine the Coca-Cola Co. gave away its product for years, free of charge -- all the while diluting the ingredients and making it more and more tasteless
Then, and only when it was flavorless, Coca-Cola started requiring consumers to pay for it -- and without any promise of improvements.
That's where I see the current paywall strategy.
Nice Coke analogy, Jim, but at least the Coca Cola company understands that water is a big seller, and these days they can even sell it for the same price as Coke!
ReplyDeleteand so paywalls will be the "iceberg" that finally brings down "the Titanic".
ReplyDelete2:12 - I think that is what Corporate is aiming for.
ReplyDelete7:35 here.
ReplyDeleteDylan, I get what you are saying. And it makes perfect sense. But answer these questions for me.
1) Has the number of paid people preparing content for TucsonSentinel.com gone up, down or stayed the same in the last four years? (I say paid because of the rise of reader-submitted content. While some of it is very good, you can't always rely on it to be accurate, detailed, fair, etc. without a paid professional there to oversee it.)
2) Over that same period, has the quality of content gone up, down or stayed the same? How
would its readers answer that question?
What I was saying was more in line with Jim's Coke analogy. He just said it a lot better.
And no, no names. Let's just say that I fear attaching my name to these comments right now. That might change in the future. But since I need to put food on the table, I must remain anonymous for now.
Hi Anonymous (2:46),
ReplyDeleteNo worries - I didn't use my name here when I was still laboring for Gannett ; )
And my comment was a response to 4:31, actually. I wasn't disagreeing with you, but I'll respond anyway....
TucsonSentinel.com launched in January 2010, so we don't have a four-year measurement.
In the main, the only reader-submitted content we publish (other than comments) goes into the opinion section. And most of what's there is from experts, politicians, and commentary from other news organizations.
Outside of the comments, everything we post is overseen by an experienced editor (or more than one, even).
Given that our readership is steadily rising, and the amount of time they spend on each page is increasing, I'd say they're at least finding our quality acceptable. We have more contributors than ever, and we consistently break news well before some of the other news orgs in town.
cheers,
d.
The best part of this fiasco is that cease and desist letters are going out to other local media outlets as part of the paywall launch.
ReplyDeleteIt's amazing to me that they began "testing" paywalls in the summer of 2010 - and all reports were that publishers had gotten "religion" about deriving value from their content - and here it is, a month from 2012, and they are just now making some kind of move? What have ya'll been waiting for?
ReplyDeletehas the quality of content gone up, down or stayed the same? How
ReplyDeletewould its readers answer that question?
The civility of comment may have improved in the Daily News Journal in Murfreesboro TN, since going to FaceBook because comment has virtually shut down. What is left is pretty dull. The local whistleblowers" have disappeared along with a lot of insight into the happenings in the community. Gannett has shot itself in the foot.
ReplyDeleteKeystone Cops alive and well.
ReplyDelete