Tuesday, February 05, 2013

Poynter: GCI shows digital circ works small scale

Gannett’s fourth quarter earnings yesterday put to rest the idea that digital paid subscriptions will only work for the biggest newspaper organizations like The New York Times and The Wall Street Journal, according to the Poynter Institute's Rick Edmonds. "They are proving a spectacular success at the company’s diverse collection of 80 community newspapers," he writes today.

Earlier: In the long run, however, what will revenue look like?


  1. There is a time lag between circ price increase and loss of subscribers and ultimately revenue. With "easy pay" and other similar programs, it takes a while for people to reevaluate their decision to continue their subscription. Many papers also prorate existing subscriptions at the time of a price increase.

    The fact that circ revenue went up 8 percentage points less than the price increase is telling.

    An investor should wait several quarters to see if Gannett can maintain the trend.

  2. Absolutely correct, 10:41.

    I also suspect that many traditional print subscribers may not even be aware that their big price increase last year included a digital product which they aren't using and don't want. The most telling statistic would be numbers on how many traditional subscribers have activated their digital accounts since the price jump. Although I don't have access to the data, I'd guess that currently all print subscribers are being counted as digital users since the pricing model changed, but those subscribers may not actually be using the digital product. Please feel free to refute me if you have access to the data. I'd be curious to know what is really going on with those numbers.

  3. Here's the sentence that corroborates the above posts.

    "But the rate hikes came at a cost. During the quarter, circulation volume fell 11% as many customers rejected the higher prices."

    CIRC VOLUME FELL ELEVEN PERCENT. We're used to seeing that. Most businesses would consider that loss a catastrophe, and either re-imagine the model or sell out while there's still some value.

    The third way - the Gannett way - is to try to auto-rotate to a non-fatal crash.

  4. Rick Edmonds and his editors at Poynter should know better than to greet this news with such hyperbole: "A spectacular success."

    As the writers above note, the jury is still out on whether the circulation revenue gains will hold, or whether the higher prices for the newspaper eventually will translate into cancelled subscriptions.

    The jury also is still out on whether the 46,000 digital-only subscriptions will hold.

    The other thing that Edmonds fails to account for is the long-term opportunity cost: How many young readers will simply go elsewhere for their news, condemning newspapers and their websites to a future as niche products for seniors?

    Bob Dickey says that two-thirds of the 46,000 are young readers. So the future of Gannett rests on 30,000 young readers scattered across the country?

    Paywalls are a stop-gap measure. They contribute little to the company ($100 million this year out of $5.5 billion in revenues), and they carry the danger of scaring away the young readers that the company should be wooing for its future.

    Only time will tell whether these results are truly spectacular. Don't get fooled by all of the hype.


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