“If you’re still pursuing an online business strategy aimed at building impressions, you’re not going to make enough money,” says Dallas Morning News publisher and CEO Jim Moroney. That’s why the paper started a digital paywall.
And it’s why the NY Times is limiting non-subscribers to 20 free articles at its site each month and rolling out digital subscriptions for those who want unlimited access.
That follows News International’s move last year to charge for access to the online sites for Britain’s The Times and Sunday Times. Rebekah Brooks of News International said the decision to charge came “at a defining moment for journalism… We are proud of our journalism and unashamed to say that we believe it has value.”
Different paths to profit
Even if you’re not in the media game, its fascinating to watch these companies put a value on their efforts and move away from relying on ad sales. After all, getting customers to put money where their eyes are is the challenge for many tech companies too.
There are different – and sometimes conflicting – paths to success for publications. Cook’s Illustrated is doing great by taking no ads, charging for access to its recipes online, and staying away from food fashion. Consumer Reports gets taken seriously because of its clearly defined mission, extensive lab testing, and trustworthiness. By offering specialized business content, the Wall Street Journal has one of the most successful paid-for sites with about 407,000 electronic subscribers.
The New Yorker puts investigations of national security on the cover instead of celebs, yet it has the highest subscription renewal rate of any magazine in the country. A privately owned company, it is thought to be turning a profit of around $10m. Editorial decisions there are never made by focus groups.
If you wrote a plan for a magazine and said you thought you could make a profit by publishing 8,000-word pieces on the future of various African nations, hefty analyses of the pension system and a three-part series on global warming, hordes of people would laugh in your face…
No focus group is ever involved in an editorial decision. As [editor David Remnick] puts it, it doesn’t take a genius to work out that one hundred per cent of his readers are not going to get home from work, put their keys down and say: You know, honey, what I need to do now is read 10,000 words on Congo. ‘So you throw it out there, and you hope that there are some things that people will immediately read – cartoons, shorter things, Anthony Lane, Talk of the Town. And then, eventually, the next morning on the train, somebody sees this piece, and despite its seeming formidableness, they read it.’
A stripped down formula brings profits to The Week
And then there’s the success of The Week. Its inspiration: Time magazine’s first issue in 1923 which called for 100 articles – each one less than 400 words – in each week’s issue. That is just one of the many approaches The Week is taking that are completely different than other magazines…
Most weekly news magazines: Hundreds of employees.
The Week: 18 employees at the magazine, 15 at the site.
Competitors: Heavy essays.
The Week: 100 word news bites in simple language.
Competitors: Artful photo spreads.
The Week: Small photographs and minimalist graphics.
Competitors: Expand or reduce editorial content based on ad sales each week.
The Week: Limits the number of ad pages it sells to 20.
Competitors: Expensive reporting and guest columnists.
The Week: No bylines, content is synopses of reporting by other news organizations.
Competitors: Rely on both newsstand sales and subscribers.
The Week: Relies on subscribers for all but a tiny sliver of circulation revenue.
With this approach, The Week is profitable and growing steadily. It’s on track to make $6.3 million this year and its total circulation has grown by 5x since it launched in 2001. (It’s not doing any original reporting though, so you could make a case that it’s just piggybacking on the efforts of others.)
What’s funny is how those numbers aren’t big enough for others in the industry. Mark Edmiston, a former Newsweek president and founder of Nomad Editions, is quoted as saying, “This is not a multimillion-circulation publication, and that’s where you’re going to hit the profits…It doesn’t have a mass market appeal, nor do I ever think it will. It’s very difficult to generate a $30 million, $40 million profit when you’re that small.”
Newsflash: When you’re that small, you don’t NEED to generate $40 million in profit. That’s the nice thing about being small. 300 employees generating $30 million in profit – the multimillion-circulation publication model – is $100,000 per employee. With 32 employees generating $6.3 million, The Week is generating nearly $200,000 per employee. If you’re making twice as much per staffer as your competition, that ain’t too shabby.
Related Signal vs. Noise posts
Ranking tech companies by revenue per employee
More on payroll and efficiency
Josh
on 17 Mar 11Ah, but The Week relies on reporting of other news organizations. So without those 300+ person organizations putting out that reporting on which they rely, there is no The Week.
Their model is tied to the success of the model you’re claiming doesn’t work. That doesn’t seem very sustainable.
thomas
on 17 Mar 11You make The Week sound like a magazine i would never pick up, to be honest.
they are relying on other people’s content, so you really aren’t comparing apples with apples. where do you have the 300 employees=30$m figure from?
ML
on 17 Mar 11@Josh: I hear ya. Actually added a line about piggybacking to orig post. Relying on the content of others does seem like a “lesser” goal than those outlets doing original reporting. But then again, without the efforts of other content creators, there is no Google either.
@thomas: I’m not arguing it’s a publication you should read. I’m saying that the model is successful in a world where others are failing and therefore worth examining. The $30 million is from the quote mentioned in the post by the former Newsweek guy. The number of staffers at Newsweek is ~300 according to this article.
Nano
on 17 Mar 11One thing I find interesting about the news site paywalls is that they don’t follow the traditional freemium “pay-to-remove-ads” model. They still rely very heavily on advertising to generate profits (or attempt to, anyways).
Are there any examples of news sites of traditionally print publishers which will remove all advertising with a paid membership? News/editorial sites like Ars Technica do this, but I can’t think of a single print publication that does this on their website.
Rebecca
on 17 Mar 11Hear, hear. I say, good for the New York Times and good for the journalists who work for them. Why are we so eager to let advertising dictate the availability of quality content? And besides that, the internet is not free. It’s not delivered to our computers by a stork. I hope we all realize that soon.
Tim Jahn
on 17 Mar 11Some good thoughts. I’m interested to see how the digital subscriptions for The New York Times goes. Print advertising revenue is only going to continue to decline and newspapers are going to continue bleeding slowly until something is done.
The thing I’m most interested in is to see if this sort of turn can convince the masses to pay for what they’ve been trained is free. If that type of thinking can be overturned, a lot more people than just The New York Times and big publications will benefit.
Darcy Fitzpatrick
on 17 Mar 11I think it’s great that major publications are finally starting to charge for their content, and the 20 free articles cap for non-subscribers is a brilliant way to keep the social media rivers running readers to your content. If your stuff’s so good that readers can’t live with just 20 articles a month, then you’re bound to pick up new subscribers.
The Week, on the other hand, just seems like a way to skim off the top of other people’s passion and labour. Presumably people get into media publication because they have a passion for journalism. By your description, The Week only seems to have a passion for making money. No journalism required.
Don Cruse
on 17 Mar 11As I do the math, the New York Times charges $15 for a phone version + web access, $20 for a tablet version + web access, and $35 for all three. What interests me about that math is that it values the web access at $0.
More precisely, they aren’t charging for web content at all. You can’t buy it alone. What they’re doing is tying your access to web content to you agreeing to subscribe (on a recurring basis) to some other product you otherwise wouldn’t want.
I get the technological motivation for linking the web access to sell apps—it’s hard to charge for an app on a device that also has a web browser. But people without smartphones might be justifiably annoyed, as might someone who has both an iPhone and a tablet.
I haven’t thought through all the implications of this. But, at a minimum, it suggests that the analogies to the Dallas Morning News (for example) are somewhat misplaced. DMN charges for web access. NYTimes is turning its website into a lead generator and sales platform for those other products.
Don Cruse
on 17 Mar 11(Amending that… it looks like the Dallas Morning News is also tying online access to buying an app. I can’t find a true website-only subscription option on its site.)
Tim
on 18 Mar 11@ Rebecca: “the internet is not free”...what exactly do you mean by this?
Adam
on 18 Mar 11Great journalism like the NY Times costs a lot of money to produce and I do worry about the future of journalism (and democracy) if organizations like the NY Times can’t exist because people are unwilling to pay for news.
In my opinion though, the price is too high. They have a fairly fixed cost structure (not a cost per unit). My gut says that if they went to $5 – $7 per month which you could pay for via Amazon and iTunes, they’d get 10x the number of subscribers, and therefore produce much more revenue.
Here’s a link to a letter from the publisher of the NY Times explaining the change http://www.nytimes.com/2011/03/18/opinion/l18times.html.
chai
on 18 Mar 11I {keep|cling on to|carry on} listening to the {news|reports|newscast|news bulletin|news update|rumor|news broadcast} {speak|talk|lecture} about {getting|receiving} {free|boundless} online grant applications so I have been looking around for the {best|finest|top|most excellent} site to get one. Could you {tell|advise} me please, where could i {get|find|acquire} some?
Martial
on 18 Mar 11I don’t pay for value. I pay for what adds to MY value.
If the Times can convince me that my value goes up by reading their brand, then I’ll bite. But I will see if I can get along without them. I need good international news to do my job. The New York Times is decent at this, but they aren’t the only fish in the sea and the BBC is a more important touchstone for more people in my field. What does the NYT do that makes it indispensable to me? Right now, they aren’t even trying to get me to stay. The NYT seems to believe that I value them for them. Sorry, guys.
By contrast, I do, in fact, subscribe to the print version of my town’s newspaper even though I could read it online for free. Because I am politically active locally, I want to be able to skim the whole paper for the important bits instead of trying to make sure I’ve clicked through every link every week. That makes me a better local activist and adds to my value.
Mat Broda
on 18 Mar 11The Week – ok, it “works” when you look at the balance sheet, but it’s really a different product to let’s say Time, so that comparison is flawed.
NYT – “good stuff ain’t cheap. cheap stuff ain’t good”. I look forward to subscribing, but it seems like they could either set a lower price point for the “all in” option (15 + 20 = 35, where’s the economic incentive?) or maybe do a straight “web only” and “web + all other platforms”, doesn’t seem like a good idea to split mobile phones from the tablets – from the consumer point of view, that is.
Ryan
on 19 Mar 11I already pay for internet, I’m not going to start paying to view content. Someone else will have the same news in a matter of minutes somewhere else for free. Have fun going out of business.
Jason
on 20 Mar 11I don’t like ads, but when a publisher creates a paid subscription that allows subscribers to see content without ads the publisher devalues the ads that users see in the ‘free’ version. I’d hate to be the ad sales guy who meets with a customer and has to explain why his website won’t display the customer’s ads to the website’s most engaged, trusted users.
Nick Johnson
on 21 Mar 11Excellent article. A hot topic.
Our company works to transition Newspapers to a paywall model that fits their market. It seems most people are concerned about paying for the content. I pointed out in a article I wrote recently that it’s not that content, but the news gathering service that is being charged to online subscribers.
I could do the research, interviews, and sleuthing to get the story. Or I could sit at home and pay $15 a month to have all that hard work done for me. I think I would opt for the latter. It’s worth it. Advertising is important for flow of commerce, but media organizations shouldn’t make advertising their primary funding source for their core product. They should charge something directly for the journalistic service they provide.
If you like, you can read my thoughts on paywall content here: http://sabramedia.com/blog/what-goes-behind-the-newspaper-paywall
corporate training programs
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