Wednesday, February 05, 2014

Edmonds: Gannett's fourth-quarter earnings report hints at looming problem with newspaper paywalls

After yesterday's fourth-quarter and full-year financial report, the Poynter Institute's Rick Edmonds notes that circulation revenue was up for the year (1.1%) but down for the fourth quarter (off 1.6%) compared to the same period in 2012.

CEO Gracia Martore explained in a conference call to analysts that the company has now “cycled through” the lucrative introduction of paywalls together with bundled print plus digital subscriptions at its 80 community newspapers, Edmonds says, adding:

"This raises the concern that capturing revenue from new digital subscribers and pairing 'all access' print/digital bundles with a big price increase could be a one-time revenue event. Gannett not only failed to continue gaining circulation revenue at the end of the last year, it lost a little, as these subscriptions came up for renewal."

To Edmonds analysis, I'll add the following from a post in December where I said Gannett's overall digital strategy was in danger of hitting a wall on growth:

A forecast boom in digital-only subscriptions aimed at a key audience, younger readers, has become a stunning bust. In the third-quarter earnings teleconference with Wall Street analysts, Martore conceded Gannett had sold fewer than 100,000 nationwide vs. a forecast 250,000 to 300,000 by year's end. If sales remain tepid, the company will be saddled with three million aging subscribers and no clear path to replacing them.

In yesterday's conference call, Martore didn't mention digital subscription goals -- and analysts didn't bother asking, likely because they knew the worrisome answer.


  1. A very high percentage of print subscribers understood that the digital access was just an excuse for a price adjustment. A very small percentage of the print subscribers actually use digital.

  2. Why would they use digital? Gannett has never figured out how to actually give people more content online. When you read the same things in the paper that appear online what the sense of going online?

  3. I'll go the other way. If you want content that happened between 10pm LAST NIGHT and 5am TOMORROW, why would you wait for print?

    I read my local (Arizona Republic) paper the way I read the NY Times. If I want to read something NOW I do it online. I stash the papers during the week, and when I have time for the features or extended local news, I'll pull 'em out and read. At the end of the week, they go in the recycler

    I'd take a reduced-price digital product over print any time.

  4. Another round of single-copy and subscriber price increases is on the way at some sites, so that may offer a short-term revenue boost.

  5. There is a lot more content to pick and choose from on websites such as USA Today plus video. The problem is the audience that the clickable content appeals to is least likely to want to pay for it. In essence. No one wants to pay for candy. Give them steak in a nice format, and people will open their wallets. This is why NYT gets away wi a pay wall. Gracia doesn't know journalism, just revenue.

  6. This company does not believe in content creation, just aggregating clicks. It operates on a philosophy that all content is equal and attainable anywhere, and you can sell it as long as you make it look pretty. They've cut into the bone of reporters and editors at their papers; who'd want to buy the product of that, online or in print?


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