Thursday, February 6, 2014

Paywalls are not a cure-all: Evidence from Gannett

Nieman Lab reporting:
The invaluable Rick Edmonds has a useful analysis of Gannett’s latest earnings and comes away with some disquieting findings. Key among them:
Circulation revenues were up for the year (1.1 percent) but down for the fourth quarter (-1.6 percent) 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 + digital subscriptions at its 80 community newspapers.
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.
Gannett does have a strategy to get the figure headed back up this year, said Martore and Bob Dickey, head of community publishing. The company has begun including a section of USA Today news as an enhancement at four of its papers and plans to roll that out to most of the rest in 2014. By the middle of the year, Martore said, the expanded content could provide the rationale for another round of price increases.
But even if further improvement is not forthcoming, Gannett counts the paywall initiative as a success. Martore said the company had made good its promise that the move would increase operating income by $100 million.
...So yes, it’s better to have $100 million than not to have $100 million. (The paywall skeptics, I think, generally don’t wrestle with this — that’s real money, and I don’t think there’s strong evidence that paywalls in the main have substantively limited newspapers’ ability to launch other innovations or engage with its audience.) But it is not a long-term “solution,” in any sense, to the real problem: the continuing decay of the print-centric business model that newspapers were built on.
http://www.niemanlab.org/2014/02/paywalls-are-not-a-cure-all-evidence-from-gannett/

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