As Canadian newspapers have gone back and forth over the idea of charging online readers directly for access to content, trying to find that sweet spot between encouraging them to subscribe to read high-quality reporting and getting as much ad revenue as possible through traffic to popular stories, one newspaper’s strategy has stayed the same for the past decade.
Until now.
As it made its yearly announcement of its financial situation to the public recently, Le Devoir announced that it is opening up holes in its paywall. What was previously a hard paywall that restricted access to most of its exclusive content to paid subscribers has now become a metered system similar to what most paid newspapers (including my employer’s) have adopted.
People without subscriptions will now be able to access 10 paid articles per month before the paywall comes down. (And, of course, as with any metered paywall, there are many ways around that restriction.)
This news is good for those of us who follow just one particular subject. And it might help improve their ad revenue situation slightly. But Le Devoir is facing the same troubles as other major newspapers. And as this analysis shows, the numbers are getting worse.
One has to do a bold move and choose between the paper edition or the web one if it does not have the financial strenght to operate both. Of course i do not know the many issues surrounding advertisement and subscription fees but in a virtual world where everything else is free, one has to wonder what brilliant business decision it was to charge a fee in the first place.
At this point and time i just do not see the competition going back on their decisions and go for a paying edition of their web product. Heck they are even giving away newspaper at every subway station each and every day…
Maybe the money is worth staying with the paper edition for some but let`s face it, we all know what will happen sooner or later.
Newspapers are still attached to the novel concept that they are some sort of sole source for news, something people should pay for over and above what they pay for broadcast TV news, radio, or other internet websites. This while providing essentially the same service and not adding a whole lot of value to the situation.
LaPresse is riding a wave of not only providing the news, but also in providing an value added product which people are willing to pay more for. Merely being “the newspaper online” isn’t a value proposition anymore, considering all of the other sources of news available.
Paywalls generally are not the best way to go because they discourage use. When you link to an article on cartt or the Gazette, I pretty much ignore the link because I have no intention of paying to read the articles. I pay with my attention to what is on the page, if they are unable to build a business model on that, I cannot help them.
Le Devoir isn’t a paper I would consult on a daily basis to start with, and it’s unlikely I would pay to read anything from it. Perhaps presented free, I might be interested to visit their site to see something, and they can make money off of me by selling ad space. Since the incremental costs of offering me the news for free is very small (server costs and bandwidth, the articles are already written and are not part of the incremental costs) they can offer this additional service and be profitable on it if they can attract enough people.
The old ways are dying off, and the subscription model for something widely, freely available is going with it.
Very many stories can be read elsewhere if you have some text to paste into Google.
I just discovered that The Gazette allows you to log in to their ePaper via your Facebook account after you’ve viewed 10 pages free. Why, then, would anyone subscribe to the electronic version?
If Le Devoir is not publishing any original content then that’s certainly a problem.
The ePaper version requires a subscription.
The URL below allows me to view the ePaper and I do not have a subscription. After 10 stories it asks me to sign-up or sign-in with Facebook, Yahoo, etc.
It seems to me there are 3 options:
– Gazette on the web (free)
– Gazette on the web while logged in (Facebook, Yahoo)(free)
– Gazette via ePaper (paid subscription)
http://epaper.montrealgazette.com/epaper/showarticle.aspx?article=66341bbc-9fab-4f4a-9267-e68bca0df621&key=CIRl6gKXk8l%2fa1mvEJaAjw%3d%3d&issue=11322015051500000000001001
It’s very hard to justify a paywall for news content when, as Dilbert pointed out, that same content is almost always available for free via broadcast or other Internet sources – and often with video to boot. Switching business models is the only path forward, but newspapers seem very reluctant to do so.
I should add that newspapers seem to want it both ways: they want to charge readers for access, and then also sell ads, giving them two revenue streams. Does this strike no one else as entitled?
Not me. No one is forcing people to subscribe.
That is part of the problem (and not unlike cable channels which charge for access and run ads). To me it shows business models that aren’t working, so they are forced to double dip.
Basically, if the content was truly compelling and valuable, people would pay enough via subscription to support it. However, the costs versus the subscription rates that people are willing to pay isn’t enough. On the other side, opening it up completely for free doesn’t work for them either, as their market isn’t large enough and their content, which is going to be similar to that available on other news sites in the area, isn’t unique or strong enough to keep people on the sites long enough to merit higher ad rates.
For newspapers, a big part of it is their own legacy operations. Print is losing money hand over fist, it would probably be cheaper to give each reader a loonie and tell them to buy the competitors paper. However, they cling to the insane notion that some how, some way, young people will suddenly embrace printed newspapers over tablets, phones, and computer based reading. They also seem unwilling to accept that their print reader base is (a) getting older every day, and (b) dying off at a pretty consistent rate, and (c) not getting replaced with a younger generation who has no interesting in newspapers except perhaps to line birdcages. Clinging to the print model is like clinging to an anchor and hoping with enough line attached, you will find a point where it floats.
Print newspapers are like makers of fine rotary dial telephones. Technology has long since overtaken them, and their only remaining customers will likely all be dead in the next 10 years.
The subscription PLUS ads model is just as out of date, it’s a left over from the print world where people would gladly pay for a paper that was 50% of more ads. These days a website with more than about 10-20% ad coverage is considered pretty spammy and readers tend to stay away. Charging people to get hit with plenty of online ads (and paying for the connection to get it) is perhaps the most dead end concept of all.
Actually print is what is keeping newspapers in business. It’s where the vast majority of their ad money comes from.
Actually, they cling to the insane notion that either young people will pay for content or advertisers will pay print money for online ads, or that they can cut themselves to profitability. Or all of the above.
They’re well aware of that. What would they need to do to “accept” that reality, according to you? Shut down?
“Actually print is what is keeping newspapers in business. It’s where the vast majority of their ad money comes from.”
So all those amazing huge losses have nothing to do with print? Your answer is entirely misleading – yes, there is more ad money on the print side, but the production and distribution costs are sinking the business, and putting the resulting “paper” out to people who just don’t buy paper anymore.
“Actually, they cling to the insane notion that either young people will pay for content or advertisers will pay print money for online ads, or that they can cut themselves to profitability. Or all of the above.”
They cling to the insane notion that they can somehow be all things to everyone and in doing so, the horribly unprofitable dead tree edition will suddenly be profitable. Many moved online not to hope for the future, but as a way to generate extra revenue to pay for the dead tree edition to continue. Even you current situation is about making the overall postmedia Montreal situation profitable, so they can keep printing dead tree editions.
“They’re well aware of that. What would they need to do to “accept” that reality, according to you? Shut down?”
Shit or get off the pot. If the dead tree edition is massively unprofitable (and it clearly is, Postmedia doesn’t even remember what a profit looks like), then they need to coimpletely change the nature of the business. That is what LaPresse is moving on, with the goal (and the vision) to not have to print a dead tree edition soon enough.
If they are well aware that their reader base is eroding, the reactions so far don’t seem to be to far forward thinking…
Production and distribution are expensive, but they’re the cost of creating a printed newspaper. You can take that out if you stop producing the paper, but your revenue losses will far exceed the reduction in costs. Newspapers’ online operations are not making money by themselves. The print side is subsidizing the online side, not the other way around.
It’s not. For some newspapers it’s profitable and for others it’s not. Where it’s been “massively” unprofitable, those papers have been shut down.
La Presse is gambling a lot on the tablet being the future of news consumption. And other than ending the Sunday edition, it hasn’t done anything to phase out the printed product. That may happen eventually, probably when the print product alone is no longer making money. But for now, La Presse is still printing and distributing on paper, and there’s a reason for that.
“Newspapers’ online operations are not making money by themselves.”
Of course they aren’t, because they (up until recently) have all been run as afterthoughts or sources of “additional” income, rather than being the feature product. That means (until very recently) they were basically an extension of the printed paper, and nothing more. A good example would be Canada.comm which was effectively “local newspaper put online”.
“It’s not. For some newspapers it’s profitable and for others it’s not. Where it’s been “massively” unprofitable, those papers have been shut down.”
The facts just don’t support that. Postmedia continues to pour on the red ink (likely to lose 100 million in this fiscal year), with revenues dropping quickly (more than 10% drop year to year). Postmedia has been losing money, cutting jobs, and selling physical assets like crazy to try to stem the tide, but the facts are the facts: For every dollar they take in, they spend $1.25 or so to get it (and worse yet, with most of their debt in US dollars, they just took an extra 20% plus hit there too!).
There is no indication that daily inky newspapers are making money anywhere in Canada. The only one potentially making a profit is the Globe and Mail, and that is pretty hard to figure as it’s held mostly by a private entity, which in turns own the service that provides much of the non-local content for the paper. That entity is profitable. Even those papers who appear potentially profitable (such as JdeM) have achieved their bottom line results by severe cost cutting and outsourcing of content production.
“La Presse is gambling a lot on the tablet being the future of news consumption.”
The gamble isn’t on that being the future of written word news consumption, it’s the reality as it stands. More and more people every day get their news via electronic services and not printed versions. The specialty magazine world has been decimated by the move to online services. Even more mainstream magazines are moving away from monthly printings, or are being heavily consolidated with other similar titles sharing content between multiple titles. LaPresse’s only real gamble is if they can come up with a sustainable model that brings in enough income and continues to get people to use their app, website, and services.
They know the future of printed newspapers. They just don’t know exactly when it ends.
Postmedia is definitely not the most financially healthy organization. But a quick look at their financial report shows that for the three months ending in February, print advertising and subscription revenue across the chain was $121 million, while printing, distribution and production was $40 million. The math just doesn’t make sense for shutting down print.
I should also point out that for the six months ending February, Postmedia had a positive operating income. Its problem isn’t that its papers aren’t making money, it’s that it’s paying too much interest on its debt.
The numbers don’t really break it down very well. With a salary mass of 66 million in the quarter, some part of that is attributable to having a print version. The old “other operating expenses” also makes it hard to break down propertly.
However, the near constant decline in topline ad revenues is key here. Your “80 million margin” disappears pretty quickly. Ignoring all costs related to financing, depreciation, and all other direct operating costs, this year 12.8 million Operating income “before” next year turns to a loss, and things continue down that same road each successive quarter. With a 15% drop of add revenue every year and a Operating Income before being lower than potential drop in advertising, Postmedia is in no better shape next year than it is today – unless something serious changes. It’s likely that the “solution” will be the same as it ever was, cutting more jobs and trying to shrink into profitability. That usually means harming the product, making it less desirable overall, and discouraging future advertsing, feeding the loop again.
It would be quite interesting to see how the compensation breaks out between jobs for news gathering, jobs for website operations, and jobs for print production (such as page layout and stuff) and to see what the “other operating costs” actually break down as. There is a point, and it’s likely not that far away, where operating only in the digital realm, even with a significantly reduced staff, is in fact the profitable way.
It would have to be a significantly reduced staff, since the difference in ad revenue between print and online is about an order of magnitude.
“It would have to be a significantly reduced staff, since the difference in ad revenue between print and online is about an order of magnitude.”
The question is how much of the staff is related to producing the print paper, and in shutting down the print paper, what would the remaining staffing numbers be? Example, if 1/3 of all the staff costs are unique to the printed paper, then they have 20 million a year right now.
You also make the assumption that the digital version would not increase readership or increase reach such that advertising revenues would rise up. One business is expanding and growing, and one business is in contraction.
It’s not simple to accept the reality. The print industry keeps holding onto the printed paper as both it’s legacy and it’s justification, the pedestal that the printed paper stands on the feel superior to all the little upstarts nipping at their heels. But the trend is clear: 10 years or less from now, the combination of a dying readerships (literally passing away) and continued declining ad revenues will spell the end.
Postmedia is trying to stave it off by getting as many papers together as possible and to try to synergy the whole mess into something that you produce just slightly more than once, and print all over. It’s only a matter of time in my mind that the National Post ends up with a local wrapper around it “Post inside the Gazette” or “gazette inside the post”… probably the last stop before online only.
The real issue is that if the print paper operations continue to work and run and function on the sort of scale they have in the past, they will very likely never be profitable. The online world is way more challenging and requires that you do way more work for way less cost, that you re-use content more, and gain income over a longer period of time.
There is also the big issue of self-competition. Searching for Montreal related stories brings up the National Post generally ahead of The Gazoo, and the first thing the national post does is try to jam a subscription on me, for an “online replica of the printed paper”. Good intentions, but does it work?
It’s a hard question to answer because a lot of people do work for multiple platforms. There’s a centralized prepress system and Postmedia Editorial Services that lays out and edits print pages. But even if it’s 1/3 of all employees, that’s not going to make up for the financial gap between revenue and expenses.
No, I make the assumption based on the trends of the past decade that the increase in readership for digital will not make up for the drop in print advertising revenue.
La Presse considers the iPad app its main publication. Newspapers all over the place are using buzzwords like “digital first” and defining themselves as multimedia companies. But yes, print is still king because that’s where the revenue comes from.
If that’s the case, we have 10 years to find a business model for major newspapers that will allow them to survive.