sfn_9.2_final_

Shaping the Future of the NewspaperANALYSING STRATEGIC DEVELOPMENTS AND OPPORTUNITIES IN THE PRESS INDUSTRY

STRATEGY REPORTVolume 9 N°2 FEBRUARY 2010 © WAN-IFRA

NewRevenueModels forNewspaperCompanies

www.futureofthenewspaper.comAll the strategy reports are available to WAN-IFRA members and subscribers at the SFN Web site

Newspapers around the worldare planning and testing the best mix of editorial and business strategies that reach beyond traditionaljournalist-driven content, and print advertising andcirculation revenue models

9.2

Shapingthe Futureof the Newspaper

www.wan-ifra.orgA WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS PROJECT, SUPPORTED BY WORLD LEADING BUSINESS PARTNERS

www.atex.com/ THE LEADING SUPPLIER OF SOLUTIONS AND SERVICES FOR DIGITAL, ADVERTISING, CONTENT MANAGEMENT AND SUBSCRIPTION APPLICATIONS.

www.man-roland.com/en/p0001/index.jspA LEADING COMPANY FOR NEWSPAPER PRODUCTION SYSTEMS

www.telenor.com/THE LEADING NORWEGIAN TELECOMMUNICATIONS, IT AND MEDIA GROUP

www.norskeskog.com/A WORLD LEADING PRODUCER OF NEWSPRINT AND MAGAZINE PAPER, WITH 18 PAPER MILLS AROUND THE WORLD

© WORLD ASSOCIATION OF NEWSPAPERS AND NEWS PUBLISHERS, 2010

VOLUME 9 REPORT N° 2 NEW REVENUE MODELS FOR NEWSPAPER COMPANIES

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TABLE OF CONTENTS

Executive Summary 51 Changing Cost Structures 9

Funding Journalism in the Digital Age 9Newspapers in Developing Nations 12Online & Print: Two Types of Journalism 12The Danger of Charging in a World of Excess Information 14Smaller & Less Frequent Newspapers 16The Death of the Newspaper: Exaggerated 16

2 The Paid vs. Free Debate 19Paywall research: Most unwilling to pay 21Harris Poll: Online Newspaper Usage and Willingness to Pay 22Ipsos Mendelsohn and PHD: 40 Consumer Publications' Online and Offline Behaviours 28Outsell: Online News Source Accessibility and Willingness to Pay 30Boston Consulting Group: Willingness to Pay for Online News 32Valérie-Anne Bleyen and Leo Van Hove, Vrije Universiteit Brussel:Western European Newspaper Sites 37ITZBelden: Paid Access Models: Practices and Profiles 41Changing Models: A Global Perspective on Paying for Content Online 44

3 New Content and Revenue Models 53Paid Content: Online & Mobile 54Growing Mobile Opportunities 58Search 59Social Networking 60Foreign News Services 60Microlocal: The New Hyperlocal 62Not-for-profit 63

4 New Business Models for News Project 67The Initiative’s Assumptions 67New Business Models 68

5 Government Funding and Subsidies 75United States 75Denmark 79

Conclusion 81

FEBRUARY 2010 SHAPING THE FUTURE OF THE NEWSPAPER

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For decades, print advertising has been thelifeblood of newspapers’ operating expenses,particularly for printing, distribution andeditorial operations. Together these representmore than 70 percent of a newspapercompany’s expenses. As newspapers grapplewith declining advertising revenues blamed onboth cyclical and structural pressures, they arebuilding a wide array of new revenue modelsto make up for the shortfall in advertisingrevenues.

In this volume, 9.2 New Revenue Models forNewspaper Companies, the Shaping the Futureof the Newspaper project explores how topiece together a New Revenue Mosaic ofmultiple revenue streams. The goals are toform a dynamic, multi-revenue streambusiness to support the editorial department, aswell as the printing and distributionoperations, and continue to provide a tidyprofit for newspaper companies.

The New Revenue Mosaic can be made up ofa multitude of revenue makers in digital andprint media, and related businesses. This reportwill detail the many ideas, and will offer

expanded case studies on the revenue ideasthat are being successfully executed at mediacompanies around the world.

Some revenue models are emerging as hottopics for publishers, such as paid content andmicropayments. Since 2008, media companiesaround the world have been debating the needto charge for their valuable content online, andin many cases, have joined forces in order toaccomplish that worthy objective. Newspapermogul Rupert Murdoch, for example, has saidhe will build a paywall for News Corporationtitles around the world, but the details have notyet been announced, with the exception ofnewspapers under the Dow Jones Local MediaGroup umbrella, owned by News Corp.,rolling out paywalls in January 2010. All-access to the Web site of The Standard-Timesof New Bedford, Massachusetts,(southcoasttoday.com) for example, begancosting users US$4.60 per week in the firsthalf of the month.

On 20 January 2010, New York Timespublisher Arthur Sulzberger Jr. announced TheTimes will charge for content using a “meter”

Executive Summary


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system starting in 2010, but did not announcedetails of the strategy. The meter paymentmethod, used successfully by FT.com, allows10 article viewings before requiring payment.“Our audiences are very loyal and we believethat our readers will pay for our award-winning digital content and services,”Sulzberger said. Added CEO Janet Robinson:“This process of rethinking our business modelhas also been driven by our desire to achieveadditional revenue diversity that will make usless susceptible to the inevitable economiccycles.”In addition to paid-for content, scores ofrevenue-making ideas will be explored in thisvolume, including:• Endowments: According to David Swensen,chief financial officer at Yale University and afinancial advisor to the Obama Administration,newspapers could endow their journalisticoperations, as many educational institutionsare partially endowed, including Yale. Forexample, the US$200 million per year editorialoperation of The New York Times wouldrequire a $5 billion endowment, assuming a 5percent annual return. Multi-billionendowments would go a long way to fundjournalism in segments, for example, a $2billion endowment might yield a $100 million

per year budget, the amount reportedly neededto run American TV programme NewsHour.The Associated Press’ Tom Curley reckons thatit would take the annual yield from a $6 billionendowment to run AP’s core operations.

• Memberships and syndication: World newsstartup GlobalPost.com reported a $1 millionrevenues in 2009, and expects to make $3million in 2010. The foreign reporting serviceemploys more than 70 journalists in 50countries for about $1,000 per month. Thejournalists are required to file one storyminimum per week. President Philip Balboniprojects profitability in 2012. GlobalPost waslaunched in January 2009, by co-foundersBalboni and editor Charles Sennott. They havebuilt the company on three business models:advertising, a membership scheme calledPassport, and content syndication.

• Foundation grants: Among the mostpromising foundation initiatives to fundjournalism, are:

– The Center for Investigative Reporting willestablish a California-based arm with $2.4million in foundation grant money to fund astaff of 10 to produce investigative reporting.

– The Kaiser Family Foundation of Californiarecently launched its Kaiser Health Service

Subscriptions Micropayments Productionservices

Banneradvertising

Behaviouraladvertising

Advertisingnetworks

New printproducts

Distributionservices

Printinsourcing

Mobile textadvertising

Mobilebanners

Smartphonemultimedia

ads

Socialnetworking

Nichenewspapers

Cross-mediaadvertisingMagazines

Searchkeyword

advertisingE-Commerce AuctionsPrintcasting Freemiums Upsells

Self-serviceadvertising

Mobile TVadvertising Video games Wine and

affinity clubsAdvergaming Casino andbingo games

Adult photosand videos

Collectorbooks

Coupons Web TVadvertising

Events andconferences

Web radioadvertisingText alerts

Consortiums Broadcasting

Freenewspapers

Advertorials Websitesponsorships

E-readersubscriptions

Exclusiveoffers

Crowd-funding

Databasemining

iPhoneapplications

Partnerships Readerdonations

Outsourcingoperations

Archives

Endowments Trusts Governmentalsubsidies

FoundationgrantsCooperatives Not-for-profit

statusContent

networks

Source: Shaping the Future of the Newspaper © WAN-IFRA 2010

The New Revenue Model Mosaic

project, aimed at filling a growing void ofnational health coverage.– Voice of San Diego has established scienceand environmental reporting positions, partlythrough foundation grants.– The Knight Foundation has given $24million in grants to fund dozens of local newsWeb sites.– The Huffington Post Investigative Fundreceived $1.75 million in grant money tolaunch its investigative reporting unit.– The international Human Rights Watch,which produces reports about human rightsviolations in 80 countries, has been given agrant to translate the long, dry content intosnappy text and video journalism.• Governmental subsidies and tax breaks:Subsidies and tax breaks that work for onecountry may not work for another, as thecountry's history and culture has everythingto do with whether government involvementon any level will work. In Denmark,government subsidies and tax breaks are thenorm – newspapers don't pay value-addedtaxes and receive distribution subsidies, forexample. Meanwhile, in the United States,many newspapers have rejected any helpfrom the government, other than asking for arelaxation on media ownership rules in someareas, saying they would rather go out ofbusiness than receive help from a governmentit is working to hold accountable.Governmental financial support, in the formof subsidies, tax breaks and paid notices,have been cut by more than 80 percent in thepast 40 years.• Mobile subscriptions: Hundreds of newscompanies have created iPhone apps for theirnews brands. While most are free to iPhonesubscribers, several news publishers arecharging several dollars for the download.Italy’s Corriere della Sera and La Gazzettadello Sport charge €2.39 for both their iPhoneand Blackberry downloads, since October2009. Breaking news, personalised sportsnews, football league tables, weather, localnews, photos, videos and services are availableon the applications. The Guardian sold about70,000 subscriptions to its iPhone app in themonth after its December 14, 2009 launch, at£2.39. At that rate, in one year, that could be a£2 million revenue stream, less Apple’s 30percent commission.

• Not-for-profit entities: The report exploresnot-for-profit status as a hedge against slowingrevenue streams and as a way to harken backto journalistic roots, unencumbered by investorpressures of for-profit companies. Among thecase studies are the Scott’s Trust and thePoynter Institute, both not-for-profitorganisations that own newspapers: the Scott’sGuardian and Observer in the UnitedKingdom, and Poynter’s St. Petersburg Timesin Florida, United States. The report also looksat the non-profit structures of the ChicagoNews Cooperative, and the Press Association’splanned public service journalism project inthe United Kingdom.

• Hyperlocal Web sites, newspapers andblogging: The City University of New York’sinteractive journalism received a substantialgrant from Knight Foundation to develop the“New Revenue Models for News” project(newsinnovation.com), in which hyperlocalblogging was identified as a potential revenuestream for newspaper companies large andsmall. The detailed financial analysis showsthat the business could be a multimillion dollarbusiness within three years. EveryBlock.comwas also awarded a grant from the KnightFoundation, and in 2007 began organising anddisplaying public data and records accordingto location, down to the city block. Today, thegrant period has ended and the site's code isopen source. But EveryBlock founder AdrianHolovaty cringes at the term hyperlocal.Instead, he prefers microlocal, which betterillustrates the process of publishing “anythingand everything that's relevant to theneighbourhood level or deeper,” he said. Usersare constantly inundated with information, andthe more intensely local information there is,“the more of a need to organise it.”

• Cross-media advertising represents apowerful new revenue stream. Mega-mediahouse IMPRESA in Portugal, with a combinedportfolio of TV, radio, newspapers, magazines,mobile and Web operations, developed a cleverand profitable answer to the plummeting realestate market, amid the economic crisis. Theycreated a multimedia campaign with TV, Weband newspaper advertising to give away anapartment. The results: €320,000 profit frompaid-for calls and texts in the contest. Thecampaign was so successful, they will repeatagain in both Lisbon and the Algarve,Portugal’s holiday destination.


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• The Metro in London, the most circulatedfree newspaper in the world, has had successwith online gaming, having earned more than£600,000 with four gambling games in 2009:Arcade, Casino, Poker and Bingo. Metropartners with “white label” European gamingcompany St. Minver, www.stminverltd.com,and payments from consumer go directly tocredit and debit cards. Other St. Minver clientsinclude Yahoo! UK and Ireland, and the DailyMail in London.

While there are perhaps hundreds of revenueopportunities to exploit, a newspaper companyneedn’t have to fashion a complicated andoverwhelming New Revenue Mosaic. Theprudent approach is to choose a handful ofbusinesses that are a good fit for thenewspaper company, and proceed full speed tomake these revenue opportunities successful.This report serves as an idea guide fornewspaper companies ready to move theirenterprises to the next level.

• Paid content: 2009 was the year thatpublishers aggressivelyaddressed these paid-content issues head-on.

As the world’s newspaper publishersclamourfor the remuneration of their valuablecontent,a variety of critics, researchers,entrepreneurs, practitioners and academicshave emerged to evaluate the potential of paidcontent, and to develop models for publishersto transform the lackluster revenueperformance to a lucrativebusiness model.

Several majors consumer studies showed thatconsumers are not ready to pay for mostcontent. The key to charging, as this report’sresearch shows, is that the content beingcharged for is unique, and cannot be accessedanywhere else, or if it can be, time is of theessence, as with financial news. The secondimportant lesson is finding out how much tocharge, and how audiences prefer to pay. Forsome, that means a monthly subscription,payable on the newspaper Web site by creditcard. For others, that means the ability to payby article, or by day. As with any otherdecision a newspaper makes, knowing theaudience, what it wants and how it wants it isof utmost importance. For many, offeringaudiences several choices on what they canaccess and how they can pay seems best.


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By Stephen Quinn

Funding Journalism in the Digital Age

The numbers do not look good for print-basedmedia companies. On 4 June 2009 a Moody’ssenior analyst in New York, John Puchalla,criticised the American newspaper industry forits “distorted” cost structures. Similar coststructures operate at newspapers in Australia.In essence, too much of each dollar is spent onprinting and distribution, and too little on whatsells newspapers – the content.

Puchalla noted that 70 cents per dollar werespent on paper, printing, distribution andcorporate functions. Only 14 percent ofAmerican newspapers’ operating expenseswere spent generating editorial content. Theother 16 percent of costs were related toadvertising and marketing.

The New York Times is one of the bestnewspapers in the world. It has won 101Pulitzer Prizes, more than any othernewspaper. Its annual editorial budget of

US$225.9 million is the largest of anynewspaper. Yet that figure is less than a thirdof the yearly cost of printing and distribution –$733.3 million. It is a common story around

1. Changing Cost Structures


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“Distorted” U.S. NewspaperCost Structures

Cents on the dollar spent by category, 2009

“Distorted” U.S. NewspaperCost Structures

Cents on the dollar spent by category, 2009

Source: Stephen Quinn and Jeff Kaye © WAN-IFRA 2010

Paper, printing, distribution & corporate functions

70 cents

Advertising & marketing16 cents

Editorial content14 cents

the world. In Australia, for example, The Agein Melbourne had an annual budget in 2008 ofAUD$315 million (US$290.6 million). Butonly $58 million (US$53.5 million) of that,about 18 percent, was spent on editorial.

About a fifth to a quarter of the personnel atdaily newspapers produce editorial. The otherstaff work in advertising, production,marketing, various forms of administration anda range of other tasks. Of the editorial staff,only about half do the reporting. The restspend their time processing content from wireservices, checking reporters’ stories, attendingmeetings and designing pages.

It is expensive to produce a print newspaper.Staff ratios are changing as newspapersrestructure, but an industrial age product like aprint edition requires a lot of people beyondthe editorial staff. So we must confront a keyquestion: Is it time to ditch print as theprinciple platform for written news, and focuson digital? We think yes, over time. The issueis when. Many factors need to be considered.These include the impact of fragmentingaudiences, the influence of social media, theneed for innovation and new products and thepotential for new revenue as print editionsbecome niche products.

Before any change happens we need to dealwith limiting mindsets. Some mediaexecutives talk fondly of the “romance” ofprint. Journalists have surrendered manualtypewriters and landline telephones for wordprocessors and mobile phones. But old ideashang around longer than old tools.

Marc Andreessen founded Netscape and sitson the boards of Facebook and eBay. He told

Charlie Rose on Rose’s PBS programme in2009 that everything about the onlineexperience is better compared with printnewspapers.

“If you are the guy delivering ice to people’sice boxes, at a certain point you gotta get intoselling refrigerators,” he said.

Journalism will thrive when media companiesfree themselves of the shackles and mindsetof print, and focus on online, wireless,interactivity and whatever new platformsemerge for digital delivery. Tomorrow’sjournalism will appear on a variety ofplatforms designed to reach as many peopleas possible at all times of the day.

Some older news consumers will prefer toread news on paper, and media houses willneed to satisfy that demand. The average ageof newspaper readers in Australia is 50, whilethe median age in the country is 36. Withintwo decades news will primarily be deliveredvia wireless devices and online. Print will bea niche product, depending on the needs ofadvertisers and audiences.

Generation Y will not replace Baby Boomerprint readers as the latter die. Gen Y andrelated groups are too wedded to online andtheir mobile phones. They consume news, butnot in print. One of the authors surveyedjournalism students at a Victorian universityin March 2006. The survey received 74replies, a response rate of 52 percent. Onlytwo of the 74 respondents said they bought orread a newspaper on campus, despite amarketing drive by The Age, the Herald Sunand The Australian that allowed students tocollect free newspapers on campus afterbuying a card for AUD$20.

In March this year Professor Alan Knight, ina survey of Australian journalism students,found 90 percent of aspiring journalists didnot read newspapers, preferring to get theirnews from commercial television or online.Yes, even journalism students are forsakingprinted newspapers.

Americans already favour online as their mainsource of news and information. In June 2009polling firm Zogby International publishedresults of two major polls on how Americansgot their news and what sources they mosttrusted. Zogby asked which of the four primaryinformation sources was most reliable. More


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Annual BudgetsThe New York Times & The Age

Source: Stephen Quinn and Jeff Kaye © WAN-IFRA 2010

733.3

225.9290.6

53.50

100

200

300

400

500

600

700

800US$

Printing &distribution

budget

The New York Times The Age

Editorialbudget

Totalannualbudget

Editorialbudget


than twice as manypeople chose the Internet(37 percent) ahead oftelevision (17 percent),newspapers (16 percent)and radio (13 percent).

Ironically, most of the news Americansconsume online comes from traditional mediasources. Zogby offered two explanations: “TheInternet allows people to seek informationfrom thousands of blogs, aggregators andsocial networks, and to migrate to those thatshare their point of view. The informationreceived may originate from the same oldmedia, but it is wrapped in designer packagingthat matches personal tastes and ideologies.”

Technologies such as electronic readers, oftenabbreviated as e-readers, offer a platform thatcuts the cost of non-editorial operations. Theymaintain the metaphor of the printed product,but they are a limited option because they lockpeople in with proprietary software. Amazon’sKindle DX is one of the latest to offernewspapers. On it, The New York Times andThe Washington Post cost US$13.99 a monthand $11.99 a month respectively, but contentonly appears in black and white. News isdownloaded wirelessly while people sleep.

But Kindle’s wireless option is only availablethrough one telecom company in the UnitedStates. Amazon CEO Jeff Bezos said theKindle DX will change the economics of thenewspaper business. But all e-readers work onproprietary software, meaning customers withdifferent devices such as the iRex iLiad, theSony Reader or the host of e-readers being puton the market regularly can only access books,magazines and newspapers in the formatdesigned for each specific device. Would youbuy a music player that forced you to buysongs from only one label? Or a car that forcedyou to use one brand of petrol?

Journalism will be liberated and ready for acommercially viable future when it embracesinteractivity and involves the audience, andfocuses on delivering content to standardisedmobile phones and online platforms. Whywireless and online? Because consumersalready pay for mobile phone content, so apayment mindset exists. Audiences will notpay for online content they have received forfree for more than a decade. That issue isdiscussed later in this article.

In June 2009 the head ofdigital operations at theNew York TimesCompany, MartinNisenholtz, said hiscompany was likely tobegin charging for

access to news on mobile devices before it didso on the Web.“Mobile offers a better opportunity for paidcontent,” Nisenholtz said. Publishers couldcharge for micropayments in the sense thataudiences were already accustomed to payingfor individual items on their mobile phone.People in the Nordic nations and parts ofEurope and Asia already pay for cans of softdrink or parking with their mobile phones. It isa short leap to pay for news as well, if it hasadded value.Mobile phone ownership in Australia hadalmost reached a saturation point by early2009, with 92 percent of the populationowning a mobile phone, according to Nielsendata. A range of functions such as mobileInternet boosted the uptake, particularly forusers aged 16 to 29. Australia’s telecomsmarket continued to grow in 2009 despite theeconomic crisis, driven by demand for mobileInternet and broadband, IDC analysts said.Despite having less than 1 percent of theworld’s population, Australia ranks ninth inthe world in terms of data downloads ontomobile phones.Smart-phones, which are effectively smallcomputers that allow people to access theInternet wirelessly, will always be morepopular than e-readers because people can domore with them than read black-and-whitetext. As smart-phones evolve they will becomeone of the main delivery mechanisms for newsand information. Media houses need to preparefor ways to charge for that content. Three infive iPhone owners in America already use themobile Web more frequently than they readprint newspapers, according to a survey bymetrics firm comScore, published in July 2009.Only one in 10 of the world’s 4.2 billionmobile phones are smart phones. In July 2009Morgan Stanley Research predicted theproportion could reach half in the “next fewyears.” They described the migration toInternet-connected mobile devices as “one ofthe biggest opportunities in the history of thetechnology industry.”

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’’

’’Consumers already pay

for mobile phone content,so a payment mindset exists.

Newspapers in Developing Nations

Printed newspapers are thriving in countrieswith low broadband penetration. Newspaperexecutives in these countries should not becomplacent, because demographics andtechnology will produce rapid change. Indiarepresents an example of how profound thechange will be.

In 1976, when the country’s population was775 million, one copy of a newspaperappeared for every 80 people. A quartercentury later, as the population passed onebillion, one newspaper was available for every20 Indians. By mid 2009, India had 68,000newspapers, with more expected to emerge.They sell for a few cents per edition. Unlikeonline, print does not require electricity andInternet infrastructure. Power shortages stilloccur in some parts of India. Broadbandpenetration in 2009 was about 4 percent, andconcentrated in major cities.

Some pundits have suggested that risingliteracy in India will mean an audience forprinted newspapers well into this century. In1976, 35 percent of Indians could read. By2008 the figure was 70 percent. Rising youthliteracy, at 82 percent in 2009, does suggestplenty of potential readers. But thoseyoungsters are more likely to seek their newsand information online, just as theircounterparts do in other countries. As cheapbroadband inevitably becomes available,newspaper circulations will decline. A July2009 report from Forrester Research estimatedthat about 2.2 billion people worldwide wouldbe online by 2013 – a global increase of 45percent. Almost half of those new users wouldbe in Asia, with 17 percent in China alone.

In 2009, the United States had the mostInternet users followed by China, Japan, Braziland Germany. Within five years China will bein first place, followed by India, and then theUnited States, Japan, and Brazil.

“Per capita online spending is likely to remainhighest in North America, Western Europe andthe developed markets of Asia throughout thenext five years,” said Zia Daniell Wigder, asenior analyst for Forrester Research. Butshifting online populations and growingspending power among Asian consumers meanthat Asian markets will “represent a far greaterpercentage of the total in 2013 than they dotoday.”

Online & Print: Two Types of Journalism

The Internet is a constant stream. It iscontinuous. Torry Pedersen, CEO of Norway’sVG Company, describes it as a “bubblingbrook.” Pedersen was managing editor of theprint newspaper VG and later editor-in-chief ofthe online edition before becoming CEO.Online news coverage was a constant stream“like a bubbling brook” while print coveragewas like bottling water, he said. “Both thebrook and the bottle contain water, just as boththe online and print editions can containfantastic journalism. But they are two differentformats.”

Print content is fixed in time and tends to lookbackwards because of its reflective nature.Online and print need different kinds ofjournalists to produce different forms ofcontent for specific audiences. In an era ofconstantly updated digital content for online,with content offered on a variety of platforms,we need flexible editorial staff. For long-formprint content we need a reflective kind ofjournalist. Each platform requires a differentform of content, which suggests that integratednewsrooms, which combine newspaper andonline staff and often expect reporters to workin several platforms, are not relevant for allforms of journalism. Pedersen believesintegration should be reserved for specificareas such as sport or culture or lifestyle ortravel because reporters can specialise in thesesubjects.

Successful revenue models will involve amyriad of approaches, or what we are calling a“confederacy of models.” The actual numberwill vary for individual media houses, eachwith its own unique culture and way ofdelivering news. The issue here is that allmedia need to be new media. The key tosuccess in the future will be experimentation,innovation and life-long learning. Those whocan adapt the fastest will win. As Darwinfamously pointed out, the species that surviveare those that adapt most efficiently, not thestrongest. This means innovation andcreativity will become paramount.

All of the changes discussed so far will requirenew forms of leadership and new kinds ofeditors. A solely print-focused editor is adinosaur. As John Maynard Keynes, theNobel-prize winning British economist, noted:


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“The difficulty lies not so much in developingnew ideas as in escaping from the old ones.”Modern media houses need leaders who lookforwards rather than backwards, and theindustry needs to start grooming the rightkinds of people: individuals with flexiblemindsets who understand change management.

Frederic Filloux, editor of Norway-basedSchibsted International, said spotting andnurturing talent should be the “most critical”part of an editor’s job. The past 20 years hadrevealed a “clock-punching” mentality at toomany newspapers that created “multiple levelsof inefficiencies.” Newspapers needed peoplecomfortable with the digital world, and notthose who sought to push online into the too-hard basket or the periphery of the organisation.

As part of the future, media organisations mustembrace the audience and work with, notagainst, social media and social networks suchas Facebook and Twitter. Consumers havealready embraced social media, and we arguethat one avenue to the future consists ofbuilding communities through socialnetworking. In the United Kingdom,eMarketer estimated that two in five Internetusers, or about 15.4 million people, used socialnetworks at least once a month in 2009. By2013, eMarketer predicted the socialnetworking population would reach 21.9million, or half of UK Web users. Many ofthese people are members of the desirable ABdemographic.

Lena Samuelsson, editor-in-chief of SvenskaDagbladet, the major daily in Stockholm,summarised the situation: “Newspapers mustgenuinely listen to, and interact with, theirmost important target groups.” Newspapersneed to focus on the demographic they seek toreach rather than being mass media.

Given that advertising goes where theaudiences go, media companies must embracesocial media to get those audiences to come toonline newspaper sites. Paul Gillin, a researchfellow and member of the advisory board ofthe Society for New CommunicationsResearch, co-chairs the social media clusterfor the Massachusetts Technology LeadershipCouncil. Ironically, he also writes theNewspaper Death Watch blog(www.newspaperdeathwatch.com). Crisessuch as those the American newspaperindustry faced in 2009 demand innovative

thinking, fast reaction times and tolerance forrisk, he wrote on his blog. “One reason we’veseen so little of this in the newspaper industryis that the people at the top have no capacityfor making dramatic changes. The innovationthat we’ve seen comes almost entirely fromstartups or skunk-works operations.”

SCHIBSTED

Schibsted, which owns a range of mediahouses in Europe, offers an example of afuture-focused organisation that succeedsbecause it embraces innovation. Schibstedowns VG, Norway’s highest-circulating dailynewspaper, and VG.no, the country’s mostsuccessful news and information Web site. VGeditors believe they need different kinds ofjournalists to produce news content for eachplatform, so they have separate structures andcompanies even though they share the samenewsroom. The online news site has 50journalists compared with about 270 for theprint edition. A higher proportion of the onlinejournalists produce original content comparedwith the newspaper: 40 out of 50 online,compared with 150 out of 270 at thenewspaper.

As noted at the start, insufficient staff atprinted newspapers are assigned to the keyprocesses of producing and selling content.And too much of a print newspaper’s budget isspent on printing, paper and distribution. VG’sPedersen believes integrated newsrooms mightbe needed at small media organisations. Butnot for a large media house like VG.

“In my opinion a completely integrated modelis so hard to get right that it reduces the chanceof success of both editions.” He argues foradvertising as the primary business model foronline. “Online positions are all about criticalmass. If you manage to occupy a leadingposition, it becomes very difficult for your


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competitor to take you on. In reality criticalmass offers greater protection than actualquality differences in relation to yourcompetitors.”

Pedersen also noted that print newsroom costsare higher than costs for online editions. “Ifthey are merged it is more likely that thehigher cost structures of the print editions willinfect the online editions rather than viceversa. If both print and online editions are partof the same company, with the same board ofdirectors, I believe that more time will bespent on the challenges facing the establishedmedium, than on the opportunities presentedby the new medium. Both deserve properattention, but not at the expense of each other.”

The VG media house in Norway hassucceeded financially even in times ofrecession. A huge proportion of its traffic (86percent) comes through the home page, whichmeans the site can charge high advertisingrates on the home page. In mid-2009advertisers paid 210,000 Norwegian crowns(about US$38,000) for a banner advertisementon the home page, for 24 hours duration. Mostonline sites around the world would love thatkind of revenue for online advertising.

Google News has struggled to becomeestablished in Norway because of thedomination of VG.no and the company’s otheronline sites. The print edition of VG gainedabout 75 percent of its revenues from newsstandsales (by law people cannot subscribe) withthe rest coming from advertising. In 2008 thenewspaper had earnings before interest and taxof 214 million Norwegian crowns (US$37.6million), on an operating margin of 12.9percent. Revenues for online came fromadvertising and a collection of areas such asthe site’s weight loss club, live video of keyfootball games and a range of small butimportant niche areas. Eivind Thomsen, seniorvice president for Schibsted, said the futurewould consist of “many hundreds of businessmodels, all changing over time.”

Schibsted’s success also shows the importanceof embracing social media and being part ofthe community. The Norwegian media groupcame to that realisation early. VG.no editorsrequire their journalists to get involved withsocial media. Well-known reporters haveeffectively become a “brand.” Bylines on theonline site include links to each reporter’s

Facebook profile and Twitter account.Reporters recommend stories to Facebook“friends” and Twitter “followers.” VG.no’seditor-in-chief Espen Egil Hansen saidcommunication with audiences should makeup at least 20 percent of each reporter’sworkload. How many Australian newspaperreporters welcome that level of personalcontact with their audiences? Too many avoidtheir audiences.

The Web is the world’s biggest photocopymachine. It is too easy to copy innovations thatwork. So innovative companies are forced toinnovate all the time to stay ahead ofcompetitors.

Schibsted’s senior vice president described theprocess as having a “temporary monopoly;” inother words, his company had to continue toinnovate to stay ahead. “One of our businessmodels is to get readers to come to us.”

VG.no is one of the few online sites with atleast two editors, sometimes three, assigned tolook after the home page. It is a reflection ofthe importance of the front page – remember,86 percent of the site’s traffic arrives via thehome page. VG.no’s traffic is huge – three infour Norwegians visit the site each month –and most of the content is free.

The Danger of Charging in a Worldof Excess Information

In June 2009 News Corp. CEO RupertMurdoch said newspapers had to chargereaders for online content. American industryheavyweights met in “secret” in Chicago amonth earlier to discuss strategies forcharging. In an interview on the News Corp.-owned Fox Business Network, Murdoch saidonline content would no longer be free andnewspapers would sell subscriptions forpremium content, though concedingnewspapers would continue to make moneyfrom advertising. It had been a mistake fornewspapers to rush to the Web to try to get abigger audience, Murdoch said, and all NewsCorp. newspapers would be charging forcontent within a year. He suggested one of thecompany’s prime assets, The Wall StreetJournal, was proof paid premium contentworked, though noting it was because of thepaper’s proprietary financial reporting andanalysis.

1414

Lionel Barber, editor of the Financial Times,told the Media Standards Trust in London inJuly 2009 that “almost all” news organisationswould be charging for online content within ayear.

“How these online payment models work andhow much revenue they can generate is still upin the air,” Barber said.

Building online platforms that could chargereaders on an article-by-article or subscriptionbasis was one of the “key challenges” facingnews organisations. Barber said quality newswas expensive. The Financial Times had 100foreign correspondents in an editorial staff of600 worldwide. By mid-2009 its Web site,FT.com, had more than 1.3 million non-payingregistered users worldwide, with another110,000 paying subscribers. The printnewspaper had a circulation of 411,988.

FREE AND FREEMIUM MODELS

Business people with expense accounts arewilling to pay for newspaper content, as arepeople who consider paying a small amountfor information to use that information tomake more money. But business-to-businessaudiences represent a small segment, relativeto the amount of free online content around theworld.

Charging for online content for general news isfolly in societies where audiences have accessto high-quality free services such as the ABCor BBC or CBC. The Internet offers vastamounts of free English-language news.Charging can only work in small and affluentmarkets where people want local information,or within unique language groups like Norway.

Vivian Schiller, president and CEO of theUnited States' National Public Radio (NPR)and former senior vice president and generalmanger of NYTimes.com, told Newsweek inJuly 2009 that people would not pay for onlinenews in large numbers, describing proposals tocharge as a “mass delusion” in the newspaperindustry. “In other words, they [executives]think that wanting it so badly will … changethe behaviour of the audience. The worlddoesn’t work that way. Frankly, if all the newsorganisations locked pinkies, and said we’reall going to put up a big fat pay wall, youknow what, more traffic for us [NPR].”

Americans have a phrase that is apt here: Youcannot put the toothpaste back in the tube.

People will not pay for general news contentthey can get elsewhere for free. And only atiny part of the content of a local dailynewspaper, as they are currently configured, isworth putting behind a pay wall.

But people will pay for a variety of servicesthey value. The free model and free-pay hybridmodel, often called “freemium,” in which basiccontent is given away and a premium is chargedfor advanced or special features, will growstronger as world economies pull out of therecession, as long as that content is distributeddigitally. We have already seen that printproduction and distribution consumes upwardsof 70 percent of costs, eating into resourcesthat could be devoted to the digital product.

Quality free content online will attractadvertising. Other revenue sources willemerge, depending on what is delivered alongwith free news content. Successful examplesinclude online crossword puzzles from TheTimes or Schibsted’s weight-loss programme.The future will also see a world of nicheadvertising – lots of slivers of content, allwaiting to be monetized, and all based on thefree or “freemium” model. With the latter,basic content is given away and a premiumcharged for advanced or special features.

News Corp. was looking at bundling content,chief digital officer Jonathan Miller told theEditors Weblog, SFN's sister site, in mid-2009.This could include putting all the mediagroup’s New York-based content into onesubscription package.

In June 2009 The New York Times waslooking at different ways to charge for onlinecontent. One was similar to a model theFinancial Times used, where readers could surfthe site without being charged until a pageviewor word limit was reached. Then a metereddevice would start running and it would chargethe user for the rest of their time spent. At thetime of writing the Financial Times allowed 10free articles a month per user, then required asubscription. The other option involved a“membership” scheme where readers woulddonate money and then be invited into acommunity that would offer free merchandiseand other benefits.

Many people find their news through searchengines such as Google. But articles behind apaywall cannot attract a good Google ranking,making the content nearly invisible in

15


15

searches. So newspapers need to find asolution to this when they start charging. TheWall Street Journal currently allows its paidcontent to be accessed free via Google. Is thisfair to paying customers? Could thisknowledge deter potential subscribers?

Rupert Murdoch was right when he said theprint editions of newspapers would look “verydifferent” in the future. In the interview on FoxBusiness Channel mentioned earlier, Murdochsaid it would probably take 10 or 15 years forthe public to “swing over” to accepting newson mobile phones or panel devices such as theKindle DX. We need to distinguish herebetween changes in print forms of media, andchanges in news distribution via mobilephones or panel devices.

Print will become a niche product. Within ageneration most news will be delivered tomobile phones and newer versions of personaldata assistants, as well as online. It will bemuch more interactive than we currently know,constantly updated, and make better use of thestrengths of online and mobile technologies.

Smaller & Less FrequentNewspapers

Printed versions of newspapers will still exist,but in significantly modified forms. They willbe full colour, smaller in size, and appear afew days a week. Their content will focus onthe future rather than telling audiences whathappened yesterday. Think of a bi-weeklyversion of The Economist.

In other words, print will play to its strengths.Media houses must move away fromshovelling print content online. That is the wayof the dinosaur. The daily newspaper will getsmaller – the size of an A4 magazine. Theywill be edited to cater for busy people, and notthe bloated publications we got whenbroadsheets moved to compact size and triedto replicate all the content from the broadsheet.

Print editions should focus on what audiencescan expect today and later in the week ratherthan yesterday. Perhaps a fifth of the contentshould reflect on the significance ofyesterday’s major events. People appreciate anoverview of what was important yesterday.But it must be combined with analysis of whatwill happen today and tomorrow. A printjournalist who focuses on yesterday is astenographer or secretary. A journalist who

tells people what to expect later in the week isa “journ-analyst.” (Journalism education,incidentally, will also need to change toproduce these analysts rather than secretaries).

Print needs to focus on backgrounding thenews, and giving people insights into whythings happened rather than merely telling themwhat happened yesterday. Audiences havealready read and heard what happened today onWeb sites, and on radio and television news.

Juan Senor, director of the InnovationInternational consulting company, saidnewspapers had to move from being a heavy toa light industry. Senor used the analogy of thecircus that Phineas Taylor (P.T.) Barnumintroduced in 1871, at the time the “greatestshow on earth.” The prime performers thenwere the elephants. But circuses have changed.By the 21st century, live entertainment such asthe Cirque du Soleil have become vastly morepopular. Cirque du Soleil has been creditedwith re-inventing the circus. It has no animals,and relies on human ingenuity.

Senor said it is time for newspapers to “get ridof the elephants.” This involves significantformat changes and a need to understanddifferent audiences, as well as buildcommunities. “We need to think of newspapersas service platforms that create profit.”Traditional news that covers the “who, what,where and when” are a commodity availablefree online around the world, he said. “Buthow, why and what’s next are worth apremium.” (Disclosure: One of the authors is aconsultant with Innovation International).

The Death of the Newspaper:Exaggerated

One of the great exaggerations of the recessionin 2009 involved reports of the death of theprint newspaper industry. Yes, some will die.But most others will modify themselves, andsome will prosper over time.

Roger Fidler’s “mediamorphosis” theory tellsus that new media do not kill old media,provided the old media learn to adapt.Remember what we said earlier about Darwin?Gavin O’Reilly, president of the WorldAssociation of Newspapers and NewsPublishers (WAN-IFRA), acknowledgednewspaper managers needed to embracechange, and echoed Fidler’s words: “Whennew technology is launched, it usually finds its


16

place alongside an existing technology,” hetold a Power of Print conference in Barcelonain June 2009. O’Reilly was confident about thefuture of newspapers because advertiserswanted to reach stable and reliabledemographics. WAN-IFRA (of which SFN ispart of and which published this report) notedthat worldwide newspaper circulation in totalhad risen in 2009, with rises in Asia boostingthe total, despite falls in Europe and NorthAmerica. RECESSION-HIT VS. DEBT-RIDDEN

At this stage we need to distinguish betweendebt-ridden media companies versus recession –hit companies. Many debt-ridden companies –those that borrowed hugely during goodeconomic times – will perish because theycannot manage high levels of debt and interestrepayments. But media companies that ride outthe recession will flourish again.Recession-hit companies are in pain becausethe recession of 2008 and 2009 was worse thanthe combined impact of the previous twoglobal recessions. But that pain is bearable,said Earl Wilkinson, executive director andCEO of the International NewsmediaMarketing Association (INMA), a non-profitorganisation with more than 1,200 members in82 countries worldwide.In an article published on the INMA Web sitein April 2009 headlined “Separating truth fromfiction about newspapers in this recession,”Wilkinson wrote that many debt-riddencompanies could not transform themselves fastenough and are in trouble. Some of thecorporations that owned newspapers woulddisappear, but the newspapers they ownedwould survive, Wilkinson said.“These corporations own newspapers thatremain operationally profitable, but mustrestructure debts amassed in a business culturethat encouraged highly leveraged ownershipconsolidation on the back of a harvestingstrategy that may have gutted newspapers asmuch as today’s recession.” For a recession-ridden company, the downturn was irritating“but business will return and the only mysteryis about how much cash to conserve and forhow long.”Wilkinson offered a schematic to distinguishnewspapers whose business models meantthey would be “less affected” or “moreaffected” by the economic downturn. Less

affected newspapers are subscription-based,paid newspapers, distributed in a tightgeographical area. They receive less than 60percent of revenues from advertising, have lowreliance on classifieds in the advertising mix,low debt, non-union, had capital expendituresnot tied up in print operations and operated incities with low broadband Internet penetration.

More affected newspapers were the opposite.They produce only single copies, aredistributed for free, operate in a broadgeographical area and receive more than 60percent of revenues from advertising. Theyalso have a high reliance on classifieds in theadvertising mix, high debt, powerful unions,major capital expenditures tied up in printoperations and high penetration of broadbandInternet. Many of the newspapers that closedin the United States in 2009 were the weakerpublication in two-newspaper markets, boggeddown with huge debt.

Slate, the online-only news magazine foundedin 1996, offers an example of new possibilitiesfor news organisations. Jacob Weisberg waseditor from 2002 to 2008 before he becameeditor-in-chief of the group. In that time Slatemoved into profit. In an interview with TheEconomist published in July 2009, Weisbergsaid Web-only journalism was viable becauseit did not have print’s huge fixed costs.

“The marginal cost of distribution is zero.Most of what we spend at the Slate Groupgoes into creating original content,” he said,adding that Web advertising can support bignewsrooms if they escape some of their“legacy” costs. “The test I’d most like to see isof a well-financed, for-profit, Web-only'newspaper' with no printed version. Theproblem is that the leading news organisationshave a stake in Web-only newspapers notworking because they will accelerate thedecline of the large, if faltering businesses thatrevolve around print.”

What about future revenue sources? Weisbergsaid The Economist had become the envy ofall serious media because of the way it haddeveloped multiple revenue streams over aperiod of decades. “Slate’s secondary sourcesinclude syndication and licensing, charging forSlate on mobile devices, book publishing, andaffiliate fees for referrals to Amazon. I like themodel of a free Web site, but paid mobileapplications.”


17

The huge cost of buying a printing press andestablishing distribution chains limited thenumber of newspapers and effectively createda monopoly or duopoly for anyone who couldafford those costs. Now the metal and moneyin those presses has become an anchor thatlimits development.

Jonathan Knee, who directs the media programat the Columbia Business School in New York,said the high barriers to entry the newspaperbusiness once enjoyed in an offline worldsimply “did not exist in an online world.”Because digital start-ups have low costs it iseasier for them to reach profitability, providedthey generate revenues.

Knee suggested generations of monopolyprofits had dulled newspaper managers’senses. Many had avoided their responsibilitiesto force journalists “to think harder about whattheir readers want, rather than what they wanttheir readers to want.”

The recession and economic imperatives havedriven the decision to go digital at newspaperssuch as the Christian Science Monitor and theSeattle Post-Intelligencer. Editorial managersmust seize the future, and choose digital andwireless delivery, rather than wait for outsideforces to make those choices.

VG’s CEO Pedersen calculated that at least 55percent of the cost of publishing a newspapercould be eliminated by going online. The mainissue is the tipping point of the savings fromgoing online versus the loss of advertisingrevenue. In a speech on the future ofjournalism at the National Press Club inCanberra in July 2009, News Ltd CEO JohnHartigan highlighted the dilemma traditionalmedia faced, anchored by high investments inprinting presses.

“An online reader generates about 10 percentof the revenue we can make from a newspaperreader. So, for every reader we lose from thepaper we need to pick up 10 online,” he said.

In their June 2009 report, “Moving intomultiple business models: Outlook fornewspaper publishing in the digital age,”Marcel Fenez and Marieke van der Donk ofPricewaterhouseCoopers concluded that printremained the largest source of revenuegeneration for newspaper publishers. It would“continue to be so for some time” though theydid not nominate a time frame. The pair also

acknowledged the “huge potential” for growthonline, and noted that it is unlikely newspapersin the future would appear either in the formatsor volumes seen today.

Clay Shirky, who writes about the socialeffects of Internet technologies, believesorganisational forms perfected for industrialproduction like the newspaper need to bereplaced with structures optimised for digitaldata.

“It makes increasingly less sense even to talkabout a publishing industry, because the coreproblem publishing solves – the incredibledifficulty, complexity, and expense of makingsomething available to the public – hasstopped being a problem.”

It is time for innovation, and each experimentwill seem “as minor at launch as Craigslistdid,” Shirky said. “No one experiment is goingto replace what we are now losing with thedemise of news on paper, but over time, thecollection of new experiments that do workmight give us the journalism we need,” hewrote on his blog in March 2009.

We believe people will pay for news andinformation they perceive will add value totheir lives. The “content is king” argument isdead because the Web produces so muchcontent. Valued and quality content representthe new royalty. The issue is finding theresources to produce that content, and thenconnecting that content with the rightaudience. Success will come to media housesthat embrace innovation, creativity and anentrepreneurial spirit, and hire people withthose attributes.

Stephen Quinn is anassociate professor ofjournalism at DeakinUniversity in Australia.Prior to becoming aneducator, Dr. Quinnworked for BBC-TV, TheGuardian, ITN, TVNZand the Australian

Broadcasting Corporation, as well as severalnewspapers in Australia. He is a regularcontributor to the Innovations in Newspapersannual reports, published by InnovationInternational for the World Association ofNewspapers and News Publishers.


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2. The Paid vs. Free Debate

As the world’s newspaper publishers clamourfor the remuneration of their valuable content,a variety of critics, researchers, entrepreneurs,practitioners and academics have emerged toevaluate the potential of paid content, and todevelop models for publishers to transform thelackluster revenue performance to a lucrativebusiness model.

2009 was the year that publishers aggressivelyaddressed these paid-content issues head-on.Associations representing the interests ofpublishers, including the World Association ofNewspapers and News Publishers (WAN-IFRA) and the Newspaper Association ofAmerica (NAA) facilitated much ballyhooedmeetings with publishers from around theworld in order to enable an astute businessmodel for newspaper companies.

The result is that in 2010, newspapercompanies are finally finding ways to chargefor high-value, highly differentiated content,and offering more commoditised content forfree. A multitude of studies, outlined in thischapter, underscore the public’s generalunwillingness to pay for content. However,

through experimentation and business acumen,newspaper companies are finding that about 10percent of their most loyal customers arewilling to pay for content. An annual, monthlyor even metered payment plan could result in areal revenue stream from the most loyal usergroups.

In 2011, The New York Times will chargeusers a flat fee for access to its Web site after acertain number of articles have been accessed.This model is the same used successfully bythe Financial Times, which charges consumersonly after they have read 10 articles free ofcharge. The number of FT.com subscribers isexpected to surpass the number of printsubscribers this year. The Financial Times hada 550,000 circulation worldwide in 2009.

Rupert Murdoch has said he will build a paywall for News Corp. titles around the world,but the details have not yet been announced,with the exception of newspapers under theDow Jones Local Media Group umbrella,owned by News Corp., rolling out paywalls inJanuary 2010. All-access to the Web site ofThe Standard-Times of New Bedford,

Massachusetts, (southcoasttoday.com) forexample, began costing US$4.60 per week inthe first half of the month.

One such entrepreneurial initiative developingthe strategy for paid content for mediacompanies is Journalism Online(journalismonline.com), led by themanagement team of media luminaries StevenBrill and Gordon Crovitz. Brill is a prolificmagazine and book author, the formerpublisher of Brill’s Content, among otherpublications, and conceived of the concept ofJournalism Online. Crovitz is the formerpublisher of the Wall Street Journal. Under his12-year leadership, WSJ subscriptionsexceeded one million, the largest newspapersubscription on the Web.

In the past year, Journalism Online has signedmore than 1,300 publishers on five continentsas affiliates. Each member benefits frommarket research that enables publishers tomake decisions about which content should becharged for; technology that enables aseamless interface with consumers to purchasecontent; and experience from the team aboutpaid content strategies.

Journalism Online’s mission is clear: tochange the consumer expectation of freecontent to a mindset of valuable, paid-forcontent.

“Until recently, consumers of journalismalways paid a reasonable price to access thenews and information they valued. TheInternet changed this bargain. Even as the Webinspired dramatic improvements in the depthand breadth of journalism, most newspublishers chose to provide journalism onlinefor free. Many readers who were happy to paya reasonable amount for news in print andother media came to expect content for freeonline as publishers came to rely almostentirely on advertising to cover their news andother expenses,” according to the company’smission statement. “Serious journalism hasalways required payments by consumers, alesson now being remembered as it becomesclear that online advertising revenue alone willnot sustain robust, independent newsdepartments, whether for newspapers oronline-only publishers. Everyone, from readersto reporters, is facing the consequences asnews organisations of all kinds are forced tocut back.”

Journalism Online’s e-commerce platformenables consumers to buy annual and monthlysubscriptions, day passes or single articlesfrom single or multiple publishers using thesame account and password. JournalismOnline markets across-network annual ormonthly subscriptions for consumers whowant to pay only one fee for content acrossaffiliate members.

“What is exciting for us is that the debate wentfrom ‘should publishers seek to charge for fullaccess?’ to ‘how to charge,’” which is a bigchange,” Crovitz said. “In the context ofjournalism, we encourage our publishingaffiliates to research deeply their brands, whatis differentiated or valuable enough to beworth paying for.”

Through the multiple affiliate memberships.Journalism Online collects data about whichstrategies and tactics are achieving the bestresults, and makes recommendations to themember publishers based on these findings.Some key themes include maintaining a balancebetween online traffic and advertising revenue.The company also helps establish improvedterms with distributors of e-readers such as theAmazon Kindle, and with search engines.

Through their experiences working withpublishers, Crovitz figures that about 10percent of a news Web site’s readers would bewilling to pay for full access. For the other 90percent, some could be converted at a laterdate, and there are models to allow them tobrowse in a limited way before hitting apaywall, such as:

• A time-metered model• 10 articles for free, and after, readers must pay• Free within a certain geography, but paymentrequired from outside the boundaries, for example,outside a country or city

Crovitz said the way these offers arepresented, and the “hook” to convert the freenews consumer to a paid customer should behandled carefully, with a thoughtful strategy.

“I like how the Financial Times customisedtheir (paid content) site. First, you get a pop-upwindow welcoming you to the site, andenumerating the reasons to subscribe,” Crovitzsaid. The site explains that you’re welcome toaccess 10 articles for free, and you will beasked to subscribe after the 10th article. Alongthe way, you are reminded of the reasons to


20

subscribe, he said. “What is quite elegant is,you will never be asked to subscribe if youlook at just 10 articles.”

Deciding what to charge for also can be tricky.Publishers must ask themselves, “which kindsof our content is different than ourcompetitors?’’ and “which content is worthcharging for?” Maybe it’s gossip, business orhyper-local content, which is sought-after, andmay not be available from another publisher.

The company seeks to debunk some of themyths of paid content: that the model must beeither paid or free, and that it’s only aboutonline content.

Paywall research: Most unwillingto payIf a paywall goes up for all content on anewspaper site, the message is clear: manyusers will go elsewhere for the same types ofcontent they can get on other sites, thefollowing studies show. On the other hand,not charging for any content is increasinglyno longer an option for many publications,whose print and ad revenues are plummeting,and where current online revenue streams,usually advertising, cannot make up for thoselosses.

Newspapers need a way to pay for thequality content they create, and manyannounced in 2009 they would begincharging in 2010 or 2011. For somenewspapers, that meant they would chargefor archives only. For others, it meant apaywall would go up for archives and localnews, such as high school sports scores orcity council election voter turnout – newsthat is not covered by any other outlet, and isunique to that newspaper. For still others, itmeant charging for valuable, real-timefinancial news.

The key to charging, as the following researchshows, is that the content being charged for isvaluable, and cannot be accessed anywhereelse, or if it can be, time is of the essence, aswith financial news. The second importantlesson is finding out how much to charge, andhow audiences prefer to pay. For some, thatmeans a monthly subscription, payable on thenewspaper Web site by credit card. For others,that means the ability to pay by article, or byday. As with any other decision a newspapermakes, knowing the audience, what it wantsand how it wants it is of utmost importance.For many, offering audiences several choiceson what they can access and how they can payseems best.

According to Harris Poll, nearly three out offour people who access a free news site atleast monthly said they would switch toanother free site if their favourite site begancharging for access. Eight percent said theywould stay, but are satisfied with access tofree headlines only. Just 5 percent said theywould pay.

Another study conducted by IpsosMendelsohn and PHD found that more than60 percent of users are not likely to pay if


21

n Myth 1: It’s an either/or proposition

• Think 88/91 (keep 88 percent of page views, 91 percent of ad revenue). • Think “hybrid” models, sampling and “freemium” strategies.• Think premium CPMs and focusing on most engaged readers.• Think optimisation of high-margin revenues.

n Myth 2: It’s only about online revenue

• It’s also about the value proposition of print.• It’s also about print subscriber acquisition and retention costs.• It’s also about keeping the direct relationship with readers.• It’s about making the Internet an asset, not the enemy.• It’s ultimately about delivering information to your best customers however they want it, now and in the future.

n The network affiliates implement their individual formulas for revenue success, including:• A hybrid, “freemium” model of free and paid-for access, with publishers seeking to convert their 10 percent most engaged online users to becoming paying subscribers.• Newspapers with print circulations of 330,000 and monthly online unique visitors of about 3 million can expect to earn about US$6 million in year one and US$12 million in year two, according to Journalism Online membership documents.• Newspapers with a print circulation of 130,000 and monthly online unique visitors of 1 million could make $2 million in year one, and $4 million in year two.• Web sites with 7.5 million unique visitors per month could make US$4 million in year one and $23 million in year two.

At the time of this report's publication, Journalism Online is in the midst of testing the technology for several affiliates, and has announced it will roll out the official version of the technology in the first quarter of 2010.

Myths of the paid model

publications begin charging for the contentonline, while only 16.5 percent said they are“extremely,” “very,” or “somewhat likely” topay.

A study conducted by Valérie-Anne Bleyenand Leo Van Hove of Vrije UniversiteitBrussel also showed that despite existingmonetization opportunities, actual adoption isstill not yet popular in Western Europe, andnewspaper Web sites still need some time tofigure out how to best adopt monetizationstrategies. From 2006 to 2009, share of thefree sites and “Fee Light” across the ninecountries increased, while that of “Fee+” siteswent down.

Also, among various possible “unbundledaccess options,” the shares varied a lot eitheracross countries or by time – indicating thereis still no universal rule for online contentmonetization.

Harris Poll: Online NewspaperUsage and Willingness to Pay

Harris Interactive conducted a survey fromAugust 26 to September 2, 2009 in the UnitedKingdom, on the topic of paid content. Itsurveyed 1,188 online users between ages 16and 64.

FREQUENCY OF USING A FREENEWSPAPER SITE

More than 70 percent of respondents said theyhave accessed free newspaper Web sites, whileless than three out of 10 have never done so.When asked how often they access the freenewspaper sites, 21 percent do so at least oncea day, while 13 percent do so about three tofour times a week and 15 percent do so aboutonce a week. This means more than half of therespondents access free newspaper sites atleast once a week.


22

X-day Pass% Day Pass%

Credit Cards Pay-per-view

11.1 11.1 11.1

25 25

12.5

18.2 18.2

9.1

20

10

20

510

10

20

13.48.5

6.1

0

20

40

60

80

100

120

2006 2008 2009

% %

55.6

33.3 33.3

2512.5

9.118.2

18.210

10 2010

12.510 10

2020

20

11

12.214.6

0

20

40

60

80

100

120

140

160

2006 2008 2009

2006 2008 2009 2006 2008 20090

20

40

60

80

100

120

140

160

180

200

0

20

40

60

80

100

120

140

160

180

200

BelgiumNetherlandsLuxembourgFranceGermanyItalySpainUKFinlandTotal

Offers of Different Unbundled Access OptionsWestern Europe, 2006-2009

11.1 11.1

33.3

45.5

45.5

18.2

10

10

10

35

20

15

25

37.5

37.5

10

20

20

23.2

17.1

11

11.1

37.5 25

12.5

54.5 54.5

36.4

1030

40

10

37.512.5

1020

20

19.515.9

11

Note: “Total” refers to all except for FinlandSource: Western European Newspaper Sites and the Swing of the Advertising Pendulum: A Tend Analysis for 2006-2009, Valérie-Anne Bleyen and Leo Van Hove © WAN-IFRA 2010

Generally speaking, men in the United Kingdomtend to access free newspaper Web sites moreoften than women. Fifty-two percent of the malerespondents do so at least on a weekly basis,compared to 46 percent of females. Only 27percent of men said they never access freenewspaper sites, versus 32 percent of women.

The frequency of using free newspaper sites isgenerally in proportion to age among heavyusers – a quarter of people between ages 16and 24 do so on a daily basis, compared to 22percent between ages 25 and 34, 21 percentbetween 35 and 44, 20 percent between 45 and54 and just 16 percent between 55 and 64. Agegroups 35-44 and 55-64 are the two with thehighest percentages of people who have never

used the sites, with 36 percent and 34 percent,respectively.

Yorkshire, London, the North West and theSouth West have the highest percentage ofpeople using free newspaper Web sites at leastweekly, which is over 50 percent. South Eastand Scotland have the highest rate of not usingit – with 38 percent and 36 percent,respectively.

WILLINGNESS TO PAY

Among those who said they access a freenews site at least monthly, when asked whatthey would do if their favourite site startscharging for access, nearly three out of four(74 percent) said they would turn away to


23

How often, if at all, do you accessa newspapers free news Web site?

Base: All British adults 16-64. This question was weighted to the online population.Source: The Harris Poll Global Omnibus J7460S1 September Pan Euro 2009, Harris Interactive © WAN-IFRA 2009

29 2732

13 12144 54

15 1415

13 15 11

21 23 20

71 73 68

0

10

20

30

40

50

60

70

80

90

100%

%

%

Total Male Female

At least once a dayAbout 3-4 times a week

Gender

Region

Age group

About once a week

About twice a monthMonthlyLess often than monthly

Never

2029

36

263415

1210 20 8

77

54 4

17 15 13 13 1912 15 13 13

14

25 22 21 20 16

80 71 64 74 66

0

10

20

30

40

50

60

70

80

90

100

16-24 25-34 35-44 45-54 55-64

36 32

22 19

34 32

21

3124

38

17 20

17

9

17

17 1012

86

11 9

7

811 8

1425

18

1225 16

9

119 11

13

19 9

10

18

722

12

23 22 28 17 17 27 13 25 28 17

64 68 78 81 66 68 79 69 76 62

0

10

20

30

40

50

60

70

80

90

100

Scotland NorthEast

NorthWest

Yorkshire Midlands Wales SouthWest

East ofEngland

London SouthEast

another free site. Eight percent said theywould stay but are satisfied with the freeaccess to headlines only. Only five percentsaid they would pay.

Seventy-seven percent of men said theywould switch to another free site, higher than71 percent of women. The percentage ofpeople staying is the same among men andwomen.

The percentage of people who would leave foranother free site does not differ a lot across allage groups – all more than 70 percent.However, the willingness to pay is highlyinversely proportional to age – 13 percent ofpeople between age 16 to 24, and 6 percent ofpeople ages 26 to 34 would pay to read, butonly 1 percent said so among age groups 35-44, 45-54 and 55-64.

The percentage of people who would turn

away is highest in the South West, Scotland,Yorkshire and the North West, where thenumber reaches eight out of 10. People inLondon and Wales are most likely to pay – 17percent and 12 percent said so, respectively. PREFERRED METHOD OF PAYING

When asked with which payment method theywould like to use to view content, 54 percentof respondents chose subscription. Twenty-sixpercent said they prefer to pay per day, and 21percent said they would rather pay per article.Men tend to like subscriptions more thanwomen, with 58 percent versus 48 percent,respectively. Women like pay per day accessand pay per article, choosing them 6 percentand 4 percent more than men, respectively.Pay by subscription is the top choice across allthe age groups. Pay per day access is mostpopular among those between ages 45 to 54,


24

You say that you access a free news Web site at least once a month.Thinking of your favourite free news Web site,

what would you be most likely to do if it began charging for access?

Base: All British adults 16-64 who access a newspaper free Web site at least monthly. This question was weighted to the online population.Source: The Harris Poll Global Omnibus J7460S1 September Pan Euro 2009, Harris Interactive © WAN-IFRA 2009

% %

12 916

5 558 88

74 77 71

0

20

40

60

80

100

Total Male Female

13 11 12 14 14

136

36 11

13 11

71 76 76 72 74

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

%

516 13 12

2013 10 12 11 114

5 126

178

25

6 4

10 6

5

138

8

83 54 81 82 68 69 84 69 63 79

0

20

40

60

80

100

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

Gender

Region

Age group

I would find another site that is free I would continue to use it and be content with free access to headlines onlyI would pay to continue reading Not sure

with more than 30 percent. Pay per article isthe least popular method.

Pay by subscription is most popular in theEast of England, Yorkshire, the South Eastand Scotland, where it was chosen by morethan 60 percent. Pay per day access isespecially popular in Wales, chosen by halfthe people there.

MAXIMUM AMOUNT OF MONEY USERS’WILLING TO PAY FOR

Among those who would prefer to pay anannual subscription, 72 percent said themaximum amount they would be prepared topay is less than £10. Another 20 percent saidthey would pay between £10 and £20, whileonly 8 percent said they would pay morethan that.

The percentage of males who would pay less

than £10 for annual subscription is slightlyhigher than that of females, with 73 percentversus 69 percent.

Younger people are more willing to pay morefor subscriptions. More than 30 percent ofthose under age 45 would pay more than £10,while 77 percent of people between 45 to 54,and 85 percent of those between 55 and 64would pay less than £10.

Among the groups preferring to pay for perday access, 25 pence seems to be mostreasonable for the majority – 71 percent ofoverall respondents choose this. When brokendown by gender, 73 percent of men and 69percent of women chose this option. Only 4percent said they would pay more than 50pence for one day access. People under age of 35 are more likely to paymore than their older counterparts. More than


25

Whether you chose to pay or if all newspaper sitesbecame paid for only, how would you prefer to pay to view content?


21 19 23

2623

29

54 58 48

0

20

40

60

80

100% %

Total Male Female

Subscription - access all areas for a longer period of time (up to a year)Per day access, all you want to read in a 24 hour periodPer article

23 2015

23 25

2923 25

33

16

48 57 60 45 58

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

16 20 1622 26

20 21 1827

18

23

3433

15

30

52

2014

26

20

61 46 51 62 44 28 59 69 47 62

0

20

40

60

80

100

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

%

Gender

Region

Age group

Whether you chose to pay or if all newspaper sitesbecame paid for only, how would you prefer to pay to view content?


21 19 23

2623

29

54 58 48

0

20

40

60

80

100% %

Total Male Female

Subscription - access all areas for a longer period of time (up to a year)Per day access, all you want to read in a 24 hour periodPer article

23 2015

23 25

2923 25

33

16

48 57 60 45 58

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

16 20 1622 26

20 21 1827

18

23

3433

15

30

52

2014

26

20

61 46 51 62 44 28 59 69 47 62

0

20

40

60

80

100

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

%

Gender

Region

Age group


26

You say that you would prefer to pay for per day access. What is themaximum amount that you would be prepared to pay for this service?

Base: All British adults 16-64 who access a newspaper free Web site at least monthly and would prefer to pay per day access. This question was weighted to the online population.Source: The Harris Poll Global Omnibus J7460S1 September Pan Euro 2009, Harris Interactive © WAN-IFRA 2009

% %

%

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

3 4 3

25 23 27

71 73 69

0

20

40

60

80

100

Total Male Female5 5 4

32 32

2412

29

61 63 76 84 71

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

10 514

4 610

2542

2426

48

7

38

917

90 64 58 76 69 52 80 62 87 76

0

20

40

60

80

100

Gender

Region

Age group

More than £150p-£126-50 pLess than 25 p

You say that you would prefer to pay an annual subscription fee. What is the maximum amount that you would be prepared to pay for this service?

Base: All British adults 16-64 who access a newspaper free Web site at least monthly and would prefer to a subscription. This question was weighted to the online population.Source: The Harris Poll Global Omnibus J7460S1 September Pan Euro 2009, Harris Interactive © WAN-IFRA 2009

% %

%

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

8 7 8

20 19 22

72 73 69

0

20

40

60

80

100

Total Male Female

8 612

6 5

27 24 2017

10

66 69 67 77 85

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

719

10 175 8 12

3225

2013

12

4

2024

3218

61 56 80 86 76 96 64 70 60 70

0

20

40

60

80

100

Gender

Region

Age group

More than £50£20-£50£10-£20Less than £10

35 percent of the younger group would paymore than 25 pence for access for one day,while more than seven out of 10 people aboveage 35 would pay 25 pence at most.Interestingly, people living in London andScotland are most likely to pay less for per-day-access. Eighty-seven percent ofLondoners and 90 percent of Scots said theywould pay less than 25 pence. One out of 10people in the North East said they would paymore than £1 for the same service. About 68 percent of respondents who prefer topay per article said they would only pay one ortwo pence per article, while only 4 percentwould pay more than 20 pence.

Males are more likely to pay more per article.Thirty-seven percent said they would pay 3

pence or more for that service, while only 27percent of women said so.

There is a distinct correlation between age andthe amount of money a person will pay perarticle. About six out of 10 people betweenages 16 and 25 said they would pay 3 pence ormore, while 44 percent of those between 26 to34 and less than 20 percent of people aboveage 35 would do so.


27

You say that you would prefer to pay for an onlinenewspaper site per article. What is the maximum amount

that you would be prepared to pay for this service?

Base: All British adults 16-64 who access a newspaper free Web site at least monthly and would prefer to pay per article. This question was weighted to the online population.Source: The Harris Poll Global Omnibus J7460S1 September Pan Euro 2009, Harris Interactive © WAN-IFRA 2009

% %

%

Scotland NorthEast

NorthWest


East ofEngland

London SouthEast

4 813

14

11

1514

16

68 63 73

0

20

40

60

80

100

Total Male Female

16

27

18

8

16

23

17 12

5

41 56 81 80 94

0

20

40

60

80

100

16-24 25-34 35-44 45-54 55-64

7

20

5

38

52

5

29 15

57

17

21 17 11

15

28

13

88 45 48 79 83 94 86 50 37 81

0

20

40

60

80

100

Gender

Region

Age group

1-2 p per article 3-5 p per article 6-10 p per article 11-20 p per article More than 20 p per article

Ipsos Mendelsohn and PHD:40 Consumer Publications' Onlineand Offline Behaviours

Between July 22 and July 27, 2009, IpsosMendelsohn and PHD collaborativelyconducted an online study in the continentalUnited States. The study is focused on onlineand “offline” reading behaviours, perceptionsof online publications and people's anticipatedfuture online print behaviours, as well as theirwillingness to pay for online print content. Itsurveyed 2,402 people above the age of 18.

The questions are developed based on thereading of each of the top 40 consumerpublications, as the graphic shows.

Among those who read the top 40 publications inthe United States in the past six months,newspapers, as well as business, gourmet andsports publications are those with the highestonline readership. More than half of those whoread newspapers do so online. For the other threecategories, the rate is more than 45 percent.

On the other hand, readers of general interestand home and living publications includingBetter Homes & Gardens, Family Circle, GoodHousekeeping, Ladies’ Home Journal, MarthaStewart Living, and Woman’s Day, tend to readthem offline more than others, with less thanthree out of 10 saying they read them online.


28

Format or Version of the Top 40 Publications Read in Past 6 MonthsBase: Adults 18 years of age or older living in the continental United States

who read in the past six months

Source: Online Print Publications and the Viability of Charging for Online Content, Ipsos Mendelsohn and PHD © WAN-IFRA 2009

61.5

49.051.7 54.4 54.759.9 63.263.364.6

71.3 71.4

24.0 35.730.5 30.0 28.623.2 22.423.821.1 18.1 16.1

14.5 15.217.8 15.6 16.716.9 14.412.914.3 10.6 12.5

0

20

40

60

80

100%

Both

Online Total 38.5% 48.3% 35.4% 28.7% 45.6% 40.1% 51.0% 36.7% 28.6% 45.3% 36.8%Print Total 76.0% 69.5% 78.9% 81.9% 70.0% 76.8% 64.3% 76.2% 83.9% 71.4% 77.6%

Ave

rag

e(4

0 p

ublic

atio

ns)

Bus

ines

s

Ent

erta

inm

ent

Gen

eral

Inte

rest

Gou

rmet

Men

’s

New

spap

er

New

swee

kly

Hom

e an

d li

ving

Sp

orts

Wom

en’s

Publications includedin the study

Source: Online Print Publications and the Viability of Charging for Online Content, Ipsos Mendelsohn and PHD© © WAN-IFRA 2009

Business

Business Week

Forbes

Fortune

The Economist

Wall Street Journal

Entertainment

People

Rolling Stone

TV Guide

Us Weekly

General Interest

AARP The Magazine

Consumer Reports

National Geographic

Reader’s Digest

Gourmet

Cooking Light

Every Day with Rachel Ray

Food & Wine

Food network Magazine

Men’s

Maxim

Men’s Health

Playboy

Newspaper

The New York Times

Washington Post

USA Today

Newsweekly

Newsweek

Time

U.S. News & World Report

Home and living

Better Homes & Gardens

Family Circle

Good Housekeeping

Ladies’ Home Journal

Martha Stewart Living

Woman’s Day

Sports

ESPN The Magazine

Sports Illustrated

Women’s

Cosmopolitan

Glamour

Lucky

O. The Oprah Magazine

Vogue

WILLINGNESS TO PAY

When asked if the publications start to chargefor the content online, the majority of therespondents (over 60 percent) said they are notlikely to pay – 42.8 percent said they wouldextremely unlikely to pay, while 12 percentsaid it’s “very unlikely” and 9.5 percent“somewhat unlikely.”

Only 16.5 percent said they are “extremely,”“very,” or “somewhat likely” to pay.

VERSION PREFERENCE

Among those who read both online and offlinepublications, home and living, general interest,entertainment and sports are the categorieswhere print is the preference of the largestpercentage of readers, with more than four outof 10 saying so. Gourmet publications andnewsweeklies are the only two where peopleprefer to read them online rather than in print,with preferences accounting for 39.8 percentand 35.2 percent, respectively.


29

If Magazines and Newspapers Charged for Their Online Contentin the Future, How Likely They Would Be to Pay for the Content?


6.8

42.8

12.7

9.5

11.6

8.4

5.9

2.2

0% 5 10 15 20 25 30 35 40 45

Did not know

Responded extremely unlikely

Responded very unlikely

Responded somewhat unlikely

Responded neither likely nor unlikely

Responded somewhat likely

Responded very likely

Responded extremely likely

Only 16.5% said extremely,very, or somewhat likely.

Version Preference Base: Those who used both versions of same publication


0

20

40

60

80

100%

37.031.5

43.7 43.8

26.4

38.635.0

23.6

44.0 42.436.3

28.7 31.324.6 23.7 39.8 27.2

34.3

35.220.5

27.629.8

34.4 37.2 31.7 32.5 33.7 34.2 30.8 41.2 35.5 30.0 33.8

PrintedOnlineNo Preference

Ave

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0 p

ublic

atio

ns)

Bus

ines

s

Ent

erta

inm

ent

Gen

eral

Inte

rest

Gou

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Men

’s

New

spap

er

New

swee

kly

Hom

e an

d li

ving

Sp

orts

Wom

en’s

However, there are still a fair number ofrespondents showing no preference – morethan 30 percent across categories.

WHAT WOULD YOU DO IF PRINT IS NOTAVAILABLE?

The study also shows that the online transitionfrom print is not a determined mindset amongprint readers if the printed version is notavailable. More than 60 percent said theywould find something else to do or switch to

another publication, while only 37.9 percentwould use the Web site.

Outsell: Online News SourceAccessibility and Willingness to Pay

USAGE OF NEWS SOURCES

The usage of traditional news sources, such asTV, radio, print newspapers and newsmagazines, have been in decline from 2006 to2009, whether among regular news users or


30

What Would You Do If Printed Version Was Not Available?Base: Those who read printed version of publications


0

20

40

60

80

100%

37.9 37.5 37.741.5 40.9 40.6 41.3

33.5 32.9

46.1

36.0

31.235.6

28.5 26.7 28.9 31.8 33.633.7 33.0

23.6 31.7

30.9 26.9 33.8 31.9 30.2 27.6 25.1 32.7 34.1 30.4 32.3

Use Web siteRead another publicationFind something else to do

Ave

rag

e(4

0 p

ublic

atio

ns)

Bus

ines

s

Ent

erta

inm

ent

Gen

eral

Inte

rest

Gou

rmet

Men

’s

New

spap

er

New

swee

kly

Hom

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d li

ving

Sp

orts

Wom

en’s

Power News Users: News Sources, U.S.

Note: Power news users are those who access the news more than once a day. Source: Outsell, Inc., 2009 © WAN-IFRA 2009

%

87

70 68

53

40 39

10

82

70

58

41 42 40

5

26

60

10

20

30

40

50

60

70

80

90

100

TV,cable,

satellite

Radio Printdaily

newspapers

Google,Yahoo!,

AOL

Onlinenewspapers

Otheronlinesites

Printnews

magazines

TV stationWeb sites

Printweekly

newspapers

2006 2009

power news users, according to an Outsellstudy, conducted in the United States. Powernews users are those who access the newsmore than once a day.

Among power news users, who access thenews more than once a day, television is stillthe top choice, but the percentage slipped from87 percent in 2006 to 82 percent in 2009.

Big online portals, such as Google, Yahoo! andAOL, remain flat with 70 percent reach. Radiodropped from 68 percent to 58 percent, andprint newspapers dropped from 53 percent to41 percent, respectively. Print news magazinesalso declined from 10 percent to 5 percent.

Online newspapers and other online sites wereup a little, to around 40 percent in 2009.

Among those regular new users, TV is also ontop with 52 percent reach in 2009, radio with40 percent, print newspapers with 37 percentand print news magazines with 4 percent. Alldropped from 2006.

Big online portals were up a little, surpassing40 percent. Online newspapers and other newssites slipped a little, unlike the gain amongpower news users.

HOW TO ACCESS ONLINE NEWS

According to Outsell, individual news sources,including online newspaper sites, beat othersas the top method for how news readers accessonline news, with 48 percent, followed byspecific news portals’ 35 percent, and searchengines’ 11 percent.

Power news users, compared to regular newsusers, tend to access online news throughspecific news portals more, but not searchengines.

Links to e-mailed stories, RSS feeds and linksto stories through social networks onlyaccounted for a very small portion.

WHAT IF ONLINE ACCESS IS RESTRICTEDTO PAID PRINT SUBSCRIBERS?

If online access is restricted to paid printsubscribers only, three out of four respondentssaid they would turn away and go to another


31

Regular News Users: News Sources, U.S.Use at least daily

Source: Outsell, Inc., 2009 © WAN-IFRA 2009

%

64

49 4638

22 22

9

52

40 3741

20 18

413

60

10

20

30

40

50

60

70

80

90

100

TV,cable,

satellite

Radio Printdaily

newspapers

Google,Yahoo!,

AOL

Onlinenewspapers

Otheronlinesites

Printnews

magazines

TV stationWeb sites

Printweekly

newspapers

2006 2009

How to Access Online News2009, U.S.


Total Powernews users

Regularnews users

%

48 47 48

35 38 32

11 9 13

0102030405060708090

100

Links to stories through social networksRSS readerLinks to e-mailed storiesSearch engineSpecific news portalIndividual news source

free source, while only 10 percent wouldsubscribe or renew a print subscription whichincludes online access. The percentage of powernews users who would pay for print subscriptionis a little higher than that of regular newsusers, with 11 percent versus 9 percent.

WILLINGNESS TO PAY FORARCHIVES/LOCAL NEWS & ARCHIVES

Regarding the amount of money they would bewilling to pay for local news and archives, themajority (77 percent) said they would only payup to US$5, while another 20 percent said they

would pay between $5 and $10. Less than 3percent would pay more than $10.

About three out of four power news userswould pay only up to $5 for local news andarchives, while eight out of 10 regular newsusers would do so.

Interestingly, 5 percent of regular news userswould pay more than $10 for local news andarchives, while none of the power news userswould do so.

WILLINGNESS TO PAY AN “ITUNES FORNEWS” TYPE OF SERVICE

An iTunes-like service for news does not yetseem to be a developed idea with consumers.More than nine out of 10 people in each group– total respondents, power news users orregular news users – said they would paynothing when that payment form was applied.

Boston Consulting Group:Willingness to Pay for Online News

In October, 2009, The Boston ConsultingGroup (BCG) conducted a survey of 5,000consumers in nine countries, focusing on theirwillingness to pay for online news.

AMOUNT CONSUMERS ARE WILLING TOPAY FOR ONLINE NEWS

Heavy print newspaper readers, who currentlyspend more than US$5 a month on printnewspapers, are more likely to pay more foronline news, compared to the light or non-printnewspaper consumers, according to the study.


32

What do you do if online accessis restricted to paid printsubscribers? 2009, U.S.



Regularnews users

%

75 73 7610 11 9

0102030405060708090

100

OtherPay a single fee for access to multiple titlesPay a small amount to gain online access onlySubscribe/renew a print newspaper subscriptionthat includes online accessGet local news from a free source

Amount of Money Willing to Payfor Archives/Local News

& Archives, 2009, U.S.



Regularnews users

%

77 7480

20 26 15

0102030405060708090

100

Up to $5$5 to $10$11 to $15$16 to $25More than $25

Amount of Money Willing to Payfor “iTunes for News”

Type of Service, 2009, U.S.



Regularnews users

%

93 92 95

0102030405060708090

100None Up to $5 $5 to $10

In Italy and Spain, heavy print newspaperconsumers said they are willing to pay $8 amonth for online news, higher than Germany’sand France’s $7, the $6 consumers are willing topay in the United Kingdom and United States,and the $5 in Norway, Finland, and Australia.

Across all the countries surveyed, light or non-print newspaper consumers would only lbewilling to pay up to $3.

WILLINGNESS TO PAY OR HAVECURRENTLY PAID FOR ONLINE NEWS

Respondents in Finland are more willing topay for online news than any other country,

with 66 percent. This was followed by 63percent in Germany, 62 percent in Italy and 60percent in Norway. Respondents in Australia,the United States and United Kingdom wereleast willing to pay – all at less than 50percent.

Italy had the highest percentage of consumerswho currently pay for online news, at 45percent. France and Finland followed with 32percent. Australia, the United States andUnited Kingdom were last in this category aswell, with less than 20 percent.

In the United States, when asked whether theywould pay for an online news subscription,


33

How Much Are You Willing to Pay for Online NewsLight or non-print newspaper consumers vs. heavy print newspaper consumers

Note: Light or non-print newspaper consumers – Respondents who currently spend less than $5/month on print newspapers, Heavy print newspaper consumers – Respondents who currently spend > $5/month on print newspapersSource: BCG Multi-Country Survey on Online Paid Content, BCG analysis, November 2009 © WAN-IFRA 2009

3

2

3

2

3

2 2 2 2

8 8

7 7

5 5

6 6

5

0

1

2

3

4

5

6

7

8

9US$

Italy Spain Germany France Norway Finland UK US Australia

Light or non-print newspaper consumersHeavy print newspaper consumers

Consumers Willing to Pay Vs. Consumers who Already Payfor Online News

Source: BCG Multi-Country Survey on Online Paid Content, BCG analysis, November 2009 © WAN-IFRA 2010

6663 62 60

56 5449 48 48

32

25

45

20 21

32

1316

12

0

10

20

30

40

50

60

70%

Finland Germany Italy Norway Spain France Australia US UK

Who would be willing to pay for online newsWho currently pay for online news

only 15 percent of respondents said theywould do so, while 85 percent said they wouldpay nothing.

However, when asked how much they wouldspend to get online news, 52 percent said theywould not pay, 40 percent said they would paybetween $1 and $10 and 8 percent said theywould pay more than that.

In the United Kingdom, 88 percent said theywould pay nothing a month for an online newssubscription. However, 45.2 percent said they

would pay between £1 and £10 a month to getonline news, 2.8 percent would pay more thanthat and 52 percent would pay nothing.

INTEREST IN ACCESSING DIFFERENTTYPES OF ONLINE NEWS

On average, the three types of online news thatconsumers find most interesting are:• local and community specific news• news archives• special coverage, breaking news andinvestigative reporting


34

How much do you spend per monthon any online news subscription?

How much per month are you willing to spend to get online news?

5

5

5

85

0% of answers % of answers20 40 60 80 100

More than 10 US$

6 to 10 US$

1 to 5 US$

Nothing

4

4

11

12

17

52

0 10 20 30 40 50 60

More than 15 US$

11 to 15 US$

7 to 10 US$

4 to 6 US$

1 to 3 US$

Nothing

Consumers Willing to Pay vs. Consumers Who Are Already Payingfor Online News, U.S.


15%48%

How interested would you be in accessing each of the following typeof online news?

Note: Average is the average score (% interested/strongly interested) of 9 countriesSource: BCG Multi-Country Survey on Online Paid Content, BCG analysis, November 2009 © WAN-IFRA 2009

67

63

63

55

55

54

51

39

38

38

37

72

57

73

53

54

61

53

43

48

42

43

0% 10 20 30 40 50 60 70 80

Local and community specific news

Unique Convenient Timely

News archives

Special coverage, breaking news,investigative reporting

Personalised online newspaperfrom different sources

Subject specific in-depth editorial

Continuous news alert service(e.g. real time delivery of breaking news)

Customised daily news service(e.g. delivery by 9AM everyday)

Sport news

Classified advertising and local listings

Entertainment, show business

Business, financial news Average

% in

tere

sted

/ s

tron

gly

inte

rest

ed

U.S.

More than 60 percent of all respondents saidthey are interested or strongly interested inthose categories.

For American respondents, the top three are:• special coverage, breaking news andinvestigative reporting• local and community specific news• continuous news alert service

These categories also drew interest from morethan 60 percent of respondents.

More than half of the respondents also saidthey were interested in a personalised onlinenewspaper from different sources, subjectspecific in-depth editorials, and a customiseddaily news service.

According to BCG, these leading types ofservices can be categorised into three areas:services that are unique, convenient and timely.

SOURCES FOR NEWS AND INFORMATION

When asked about main sources for news andinformation, 65 percent of respondents saidthey get their news on TV networks and 56percent said so for cable news. Online portalsand TV station Web sties came in next, with 51and 50 percent, respectively. Regional/localnewspaper Web sites were ranked in the 5thspot with 36 percent, while national newspaperWeb sites were 8th with 30 percent.

However, printed daily newspapers, eithernational or regional/local, lagged behind withonly 11 percent.

PREFERRED SOURCES FOR ONLINE NEWS

However, among all the online news sources,newspaper sites were on the top. Fifty-eightpercent of all respondents in the nine surveyedcountries said they preferred national


35

What are your usual sources for news and information?

Note: Average is the average score (% interested/strongly interested) of 9 countriesSource: BCG BCG Multi-Country Survey on Online Paid Content, BCG analysis, November 2009 © WAN-IFRA 2009

65

56

51

50

35

36

33

30

18

11

11

0% of answers 10 20 30 40 50 60 70

TV networks

Cable news TV

Online portals

TV station Web sites

Radio

Regional/local newspaper Web sites

Social networking sites

National newspaper Web sites

Free daily newspaper

National daily newspaper

Regional/local daily newspaper

Free sourcesNewspapersOthers

Preferred Sources for Online News

Note: Average is the average score (% interested/strongly interested) of 9 countriesSource: BCG Multi-Country Survey on Online Paid Content, BCG analysis, November 2009 © WAN-IFRA 2009

58

45

43

35

20

18

16

54

58

21

33

19

43

28

0% 10 20 30 40 50 7060

National newspaper Web sites

Regional/local newspaper Web sites

TV station Web sites

Online portals

Online content stores/ purchasing sites

Shared Web sites with multiplenewspaper titles available

Social networking sites Average

% interested/strongly

interested

U.S.


36

What content?

74

63 60

72

56 55

0

10

20

30

40

50

60

70

80

90

100%

Local news/info Subject-specificeditorial content

of interest

Businessnews

Entertainementand showbusiness

How to pay? Via which billing method?%

On what device?%

87

69

46

93

56 53

0

10

20

30

40

50

60

70

80

90

100

PC TV screen Smartphone Personalisedprinted form

deliveredto home/work

605250

65

0

10

20

30

40

50

60

70

80

90

100

Monthlysubscription

Bundlesubscription

Nobundleoffer

6371

0

10

20

30

40

50

60

70

80

90

100

Credit cardpayment at thenews Web site

Online paymentprovider

(e.g. Paypal)

Different Preferences for Online Access and Payment:Business Use vs. Young and Personal Use, U.S.


Business use Young and personnal use

newspaper Web sites, versus 54 percent ofU.S. respondents saying so. Fifty-eight percentof U.S. respondents said they preferregional/local newspaper Web sites, while 45percent of all respondents said so.

TV station Web sites were next, a choice of 43percent of all respondents, followed by onlineportals, with 35 percent.

A shared Web site with multiple newspapertitles available is another preferred sourcepopular in the United States, a choice of 43percent of U.S. respondents.

PREFERENCES FOR ONLINE ACCESSAND PAYMENT: BUSINESS USEVS. PERSONAL USE

BCG also found that there are differentpreferences for online access and paymentamong user groups in the United States.Business users prefer local news and subject-specific editorial content of interest more thanyoung users or those looking for news forpersonal use. Six out of 10 business users lovebusiness news, while 55 percent of young andpersonal users love entertainment and showbusiness.

In terms of devices, more young andpersonal users prefer a personal computerover their business counterpart. Morebusiness users, however, like TV screens.More than half of the young and personalusers like the idea of having a personalisedprinted form delivered to their home/work,while 46 percent of business users are fondof smartphones.

In addition, six out of 10 business users andhalf of the young and personal users likemonthly subscriptions. More than half ofbusiness users like bundle deals, while 65percent of young and personal users do notlike these.

In terms of billing methods, 63 percent ofbusiness users like the option to pay by creditcard on newspaper sites, while more thanseven out of 10 young and personal usersprefer online payment providers, such asPayPal.

Based on the above findings, in order to meetthe needs among different customer segments,“there will be many hybrid models foraccessing and paying for the content,” theBCG study stated.

Valérie-Anne Bleyen and Leo VanHove, Vrije Universiteit Brussel:Western European Newspaper Sites

Valérie-Anne Bleyen and Leo Van Hove atVrije Universiteit Brussel conducted a study of87 newspaper Web sites in nine WesternEuropean countries in 2006, 2008 and 2009.

SHARE OF FREE VS. FEE NEWSPAPER SITE

The study categorised the sites into thefollowing groups: free, fee light and fee+. “Feelight” refers to newspaper sites where all thenews, columns and archived articles (ifavailable) are free, and where the PDF versionis the only paid-for content on the site. “Fee+”,on the other hand, refers to sites that offersomething other than a PDF against payment.

According to the study, the share of the freenews sites across the nine countries increasedfrom 19.5 percent in 2006 to 25.6 percent in2008. However, in 2009 the growth of free


37

n FreeIn our taxonomy, a free website denotes that all the news1, columns and archived articles (if available) can beconsulted for free on the website.

n FeeIn contrast to ‘free’, ‘fee’ means that some content is charged for on the website. This may be limited to a few columns, the archive or – ultimately – all content. We further divided this category into ‘fee light’ and ‘fee+’. Indeed, some sites offer content completely for free in HTML format, and solely try to monetise by means of a charged-for PDF version of the paper of the day.

n Fee LightThis category contains the newspaper sites where all the news, the columns and the archived articles (if available) can be consulted free of charge, and where solely the PDF version is offered against payment.

n Fee+These sites also offer something against payment, but either something other than a PDF version, or something more.

1 In practice, newspapers often offer the news on their website in abridged form, providing, for instance, only the headlines or a selection of articles. In other words, in these cases the online content in HTML format does not completely cover everything in the print version of the newspaper. When a newspaper’s website is categorised as ‘free’ and considered to be completely gratis, this thus does not necessarily imply that the newspaper is giving away its entire print content on the Internet.Source: Western European Newspaper Sites and the Swingof the Advertising Pendulum: A Tend Analysis for 2006-2009, Valérie-Anne Bleyen and Leo Van Hove © WAN-IFRA 2010

Definitions of Free and FeeNewspaper Sites

sites seemed to slow, as it only increasedslightly to 26.8 percent.

Luxembourg, Spain, Belgium and France arethe countries with the biggest growth of freesites. In Luxembourg, the amount of free sitesjumped from 33.3 in 2006 and 2008 to 66.7 in2009. In Spain, the figures boosted fromnothing in 2006 to 37.5 percent in 2009.

In Belgium, they grew from 11.1 percent in2006 to 22.2 percent in 2008. In France, thenumbers went up from 9.1 percent in 2006 to18.2 percent in 2008.

In the Netherlands and Germany, however, thenumbers went down, and they fluctuated in theUnited Kingdom and Italy.

Regarding “Fee light” sites, the average sharewent up from 23.2 percent to 34.1 percent in2008, and 39 percent in 2009. The numberswent up in the United Kingdom, Spain, Italy,France, the Netherlands and Belgium, butfluctuated in Luxembourg.

“Fee+” sites, however, lost in share from 57.3percent in 2006 to 40.2 percent in 2008 and34.1 percent in 2009. The numbers dropped inLuxembourg, Spain, Italy, France andBelgium, but fluctuated in the Netherlands.

ACCESS OPTIONS ON NEWSPAPER SITES

Newspaper sites have many options on howthey can monetize their online content.Besides the traditional subscription method,they can also offer the news in smallerpackages and charge different prices.

According to the study’s definition, “onlinesubscriptions” is used in a broad sense here,defined as “encompassing both subscriptions tothe Web site and so-called PDF subscriptions(subscriptions to the e-paper).” The unbundledaccess options, on the other hand, are a(n) (X)day(s) pass, a credit card and/or pay-per-view.

The study also showed the percentage of onlinenewspaper sites that offer online subscriptionsversus unbundled access options. Both includethose that offer a combination of the two, causingthe percentages to not add up to 100 percent.

The overall percentage of sites offering onlinesubscriptions (excluding Finland) went down alittle, but still stayed around 70 percent. InGermany, the Netherlands and Finland, morethan 80 percent of the newspaper sites in 2009offered online subscriptions, while the sharewas only 33.3 percent in Luxembourg.

Unbundled access options, however, droppedmore from 47.6 percent in 2006 to 32.9percent in 2008 and 2009. In Spain, the figurewas 75 percent in 2006 but shrunk to 37.5percent in 2008 and 2009. In the Netherlands itdecreased from 62.5 percent in 2006 to 50percent in 2008 and 25 percent in 2009.

UNBUNDLED ACCESS OPTION OFFERS

When breaking down “unbundled accessoptions” into four groups, average shares(excluding Finland) of X-day passes, creditcards and pay-per-view were all on the decline


38

Free%

Fee Light%

Fee+%


0

50

100

150

200

250

300

0

50

100

150

200

250

300

350

400

0

100

200

300

400

500

600

2006 2008 2009

2006 2008 2009

2006 2008 2009

Offers of Free vs. “Fee”Newspaper Sites

Western Europe, 2006-2009

Source: Western European Newspaper Sites and the Swing of the Advertising Pendulum: A Tend Analysis for 2006-2009, Valérie-Anne Bleyen and Leo Van Hove © WAN-IFRA 2010

11.1 22.2 22.225 12.5 12.5

33.3 33.366.7

9.1 18.218.2

20 101030 353025

37.5

20

40302020

19.5

25.626.8

33.3 33.3 44.437.5 37.5

5016.766.7 33.39.1

18.2 27.340

40 4015

30 40

25

25 37.5

20

4040

4040

23.2

34.139

55.6 44.4 33.337.5 50 37.5

50

81.863.6

54.5

4050

50

55

3530

75

5025

60

2030

4040

57.3

40.234.1

from 2006 to 2009. Day passes was the onlyoption that increased, from 11 percent in 2006to 14.6 percent in 2009.In France, pay-per-view and credit cards usedto be quite popular, with 54.5 percent and 45.5percent share in 2006, respectively. Theydropped, however, to 36.4 percent and 18.2percent in 2009.In Belgium, day passes used to be adopted bymore than half of the sites surveyed, but thepercentage declined to one-third after 2008. Pay-per-view gradually gained share inGermany, up from 10 percent in 2006 to 40percent in 2009.

PROPORTION OF FREE VS. PAID ARCHIVES

The average share of newspapers offering freearchives (excluding Finland), according to thestudy, was on the rise over the past few years,up from 47.6 percent in 2006 to 52.4 percentin 2008 and 61 percent in 2009.


39

n Day pass and X-days passA day pass gives complete access to the website for 24 hours. One can thus consult all the online articles for one day.1 This is a convenient way to search the archive for relevant articles. A variant on the day pass method is the X-days pass. This option gives access to the site for X number of days. Some newspaper sites allow browsing within different PDF-versions with these access options. If the site offers this possibility, we consider it to offer a(n) (X-) day(s) pass. We do so because in many cases, other (paid-for) sections of the website can be accessed with this same (X-) day(s) pass.

n Credits-‘card’ (or wallet)Here the visitor of the site buys X credits at a certain price. With this card2 he subsequently pays one or more credits per article (often depending on the length of the article), after which the amount is deducted from the card’s balance. This access option permits the reader to select individual articles – just as in the case of ‘real’ pay-perview – but since one has to buy a minimum of X credits, one in fact has to buy a bundle of articles. However, the reader does decide on the composition himself. This is in fact an example of ‘customised bundling’3 of articles. Some newspapers also offer a credits-card for the purchase of online PDF-versions of the newspaper (e.g. 9� for 10 credits, where each PDF-version costs 1 credit). This is – under no condition – equivalent to real pay-per-view as it concerns the entire newspaper, rather than individual articles. This is again a form of ‘customised bundling’ – but now on a more aggregated level: one buys a bundle of X PDF-versions at a discount, and this bundle can be redeemed at will.

n Pay-per-viewThis access option gives the opportunity to purchase and pay for articles on an individual basis. The reader for instance screens the archive, finds the relevant article and pays for it on a per-unit basis. Another example is the purchase of a column on a per-unit basis. Another way to explain the difference between a credits-card and payper-view is that the latter implies pay-as-you-go, whereas a credits-card is in fact (partly) prepaid. The same remark as for a credits-card holds here; if one can buy a PDF-version per unit on the site, this is not the same as pay-per-view. Since under no circumstances, it concerns the purchase of articles on an individual basis.

1 Again we stress that it is perfectly possible that not all the printed articles are available online.2 This ‘card’ is actually a kind of electronic wallet that keepstrack of the online balance.3 ‘Customised bundling’ is a specific form of packagingwhereby thefirm determines only the size and the price of the bundle it will offer to customers, and the customers then decide on the contents. A music shop, for instance, can offer 3 CDs (chosen personally) for 15.Source: Western European Newspaper Sites and the Swingof the Advertising Pendulum: A Tend Analysis for 2006-2009, Valérie-Anne Bleyen and Leo Van Hove © WAN-IFRA 2010

Descriptions of UnbundledAccess Options

Online Subscriptions%

Unbundled Access Options%

0

100

200

300

400

500

600

700

800

2006 2008 2009

0

50

100

150

200

250

300

350

400

450

2006 2008 2009


Offers of Online Subscriptionsand Unbundled Access options

Western Europe, 2006-2008


88,9 77,8 77,862,5 87,5 87,566,7 66,7 33,381,8 72,7 72,7

80 90 90

70 65 70

87,5 7562,5

80 60 70

80 8076,8

73,1 72

55,6 44,4 33,3

62,550

25

33,3

63,6

63,654,5

40

40 70

35

20 20

75

37,5 37,5

30

10 2040 40

47,6

32,9 32,9

Free archive are still popular in Luxembourg,the United Kingdom, the Netherlands, Spain,Italy and Finland, with more than six out of 10sites adopting it.

In France, paid archives still had a 54.5percent share, but that number is down overthe past few years. Germany is the onlycountry increasing its share of paid archives,from 40 percent in 2006 to 60 percent in 2009.


40

X-day Pass% Day Pass%

Credits Cards Pay-per-view

11.1 11.1 11.1

25 2512.5

18.2 18.2

9.1

20

10

20

510

10

20

13.48.5

6.1

0

20

40

60

80

100

120

2006 2008 2009

% %

55,6

33,3 33,3

2512,5

9,118,2

18,210

10 2010

12,510 10

2020

20

11

12,214,6

0

20

40

60

80

100

120

140

160

2006 2008 2009

2006 2008 2009 2006 2008 20090

20406080

100120140160180200

020406080

100120140160180200


Offers of Different Unbundled Access OptionsWestern Europe, 2006-2009

11.1 11.1

33.3

45.5

45.5

18.2

10

10

10

35

20

15

25

37.5

37.5

10

20

20

23.2

17.1

11

11.137.5 25

12.5

54.5 54.5

36.4

1030

40

10

37.512.5

10 20

20

19.515.9

11

Free Archives% Paid-for Archives%

N. A.%

0

100

200

300

400

500

600

700

0

50

100

150

200

250

300

350

400

010203040

5060708090

2006 2008 2009 2006 2008 2009

2006 2008 2009

The Proportion of Free vs. Paid-for ArchivesWestern Europe, 2006-2008


44.4 33.3 44.462.5 62.5 7550 66.7

83.318.2 27.345.560 504045 556050 5075

6080

806060

47.6

52.4

61

55.6 44.4 33.3

37.5 37.5 25

50

63.6

72.754.5

4050

60

4035

30

37.550

25

2010

20

40

40

42.7 39

32.9

22.2 22.2

33.3

16.7

18.2

15

10

1012.5

20109.88.5

6.1


ITZBelden: Paid Access Models:Practices and Profiles

Most newspaper companies are still in theearly phases of charging for access to content,with the most common approach being theonline e-edition. The latest report fromITZBelden, 2010 Paid Access Models:Practices and Profiles, examines the e-editionpricing and its effect on “uptake,” or thenumber of people who buy, and yields insightsrelevant to the pricing of paid-access sites.

Produced by ITZBelden, the report was donein partnership between Belden Interactive andITZ Publishing, and is an outgrowth of workdone by ITZBelden for the American PressInstitute.

The report examines both print replica e-editions and paid Web sites, and also suggeststhat regardless of obstacles to charging forcontent, opportunities may be greater thanconventionally thought.

THREE TYPES OF ONLINE WEB SITE USERS

According to the ITZBelden analysis ofaudience behaviours, there are three maintypes of online users:

• Fly-by visitors: Visitors visit a site only onetime a month, with no previous regular use ofthe site. These visitors are typically driven by aspecific story, often from search engines. Thenumbers of this type will fluctuate a lot everymonth at any site, but typically account for atleast 25 percent to 35 percent of all monthlyvisitors. Although making up the relativelylarge proportion, they typically contribute lessthan 5 percent of all page views. Fly-bys willhave less financial significance for a site thanthe loyalists, below.

• Incidental loyalists: Visitors who access asite at least one day per month, and have doneso for more than one month. They visit fromone to three times on a monthly basis,typically driven by interest in a specific story,an ad or some other content. Incidentalloyalists account for between 3 percent and 10percent of daily visitors, about five to six outof 10 loyalists, or 30 percent to 40 percent ofall visitors monthly. In general, this groupgenerated less than 5 percent of all page viewsin any given month.

• Core loyalists: Visitors access a site at leastone time, one day per week, and have done so

for more than one month. A core loyalist visitsa site an average of 20 times a month and twoto three times per day. They make up four tofive out of 10 loyalists and 25 percent of allvisitors to a news site, but are responsible for90 percent of page views. They are the primarymarket target for paid subscriptions and otheronline products.

Fly-by readers are least likely to be interestedin subscribing. They are search-driven andmay not be local or consider themselves partof a local community. However, they arestrongly attracted to the site’s content, andtypically “big news” stories. This group ismost likely to pay for single stories and daypasses, ITZBelden reported.

Incidental loyalists also access a site forspecific reasons, and may be more local-focused compared to fly-bys, visiting for newson an election, a fire or a crime on their block.Although they make up a large proportion ofvisitors in a month, they are unlikely to buy amonthly subscription due to their limitednumber of visits, which is about one to threetimes per month. Single day, session or storypasses may be most interesting to them.

Core loyalists have the highest siteconsumption and are the key prospects forpaid access, especially subscription, eithermonthly or annual. However, according to thestudy, not all core loyalists will convert to acontinuing monthly payment. The history ofpaid access shows that only the most engaged


41

Pageview Contributions toNewspaper Sites, by User Type

Pageview Contributions toNewspaper Sites, by User Type

Source: “Paid Access Models: Practices and Profiles,” produced byITZBelden, a partnership between Belden Interactive and ITZ Publishing, January 2010. The report was an outgrowth of work done by ITZBelden for the American Press Institute. © WAN-IFRA 2010

Incidentalloyalists

3%

Coreloyalists

90%

Unidentified1%

Fly-bys6%

readers, core loyalists included, are the trueopportunity for conversion to paidsubscribers.

Monthly and annual subscriptions are themost popular choice for most news sites,especially for those offering non-e-editions.However, ITZBelden found that resistance tosubscriptions and a strong preference for freeaccess exist among a fair proportion of sitevisitors, even including core loyalists, whichindicates the opportunity for alternativepayment solutions, including day passes orstory-based paid access.

According to Belden Interactive’s research,there is a significant overlap between theonline and print audience. Users usuallyconsider the Web and print as distinct media,each with its specific uses, advantages anddisadvantages.

WHAT WOULD YOU DO IF NEWSPAPERSITES BEGIN CHARGING?

According to Belden Interactive surveys,when asked which media they would turn toif a site began charging, nearly eight out of 10site users said they would turn to other localonline sites, while 44 percent said they wouldswitch to other regional or national onlinesites, and 42 percent would choose TVinstead. “Returning” to a print copy, either aprint version of the newspaper or anotherpaper, is not the top choice.

Some respondents would turn to other onlinesources. For example, 56 percent said theywould turn to local TV station sites, while 45percent said they would find other newspapersites.

The study also found that some visitorsindicate strong resistance to paying forcontent. Forty-two percent said if thenewspaper site starts charging, they wouldjust stop visiting the site, while 37 percentwould still read as much as they can for free.Only 18 percent said they would pay the fee.


42

Which Media Would You Turn toif the Newspaper Site Began Charging?

Example market results

Source: Belden Interactive Local Market Research, “Paid Access Models: Practices and Profiles,” produced by ITZBelden, a partnership betweenBelden Interactive and ITZ Publishing, January 2010. The report was an outgrowth of work done by ITZBelden for the American Press Institute© WAN-IFRA 2010

Switch to media Switch to online

79

44

42

37

29

14

4

7

0% 20 40 60 80 100

Other local Internet sites

Other regional ornational Internet sites

Television

Radio

Print edition ofclient newspaper

Print edition of anyother daily newspaper

Other

Don’t know

56

45

30

26

20

15

1

5

0% 10 20 30 40 50 60

Local TV station sites

Other areanewspaper sites

Cable sites(CNN.com, etc.)

Local radio sites

Network or cableTV sites

Other sites

Would not useonline sources

Don’t know

What Would You Do if the LocalSite Began Charging?

What Would You Do if the LocalSite Began Charging?

Source: Belden Local Market Surveys 2009, “Paid Access Models: Practices and Profiles,” produced by ITZBelden, a partnership between Belden Interactive and ITZ Publishing, January 2010. The report was an outgrowth of work done by ITZBelden for the American Press Institute. © WAN-IFRA 2010

42

37

18

3

0% 5 10 15 20 25 30 35 40 45

I would stop visitingLOCALSITE.com

altogether

I would read as muchas I can for free

It would dependon the fee

Don’t know

PRICING BENCHMARK

According to Belden Interactive’s pricingstudies at six free sites, visitors indicatedwhat they think a reasonable price for accesswould be. The preferred pricing range formonthly subscriptions was between US$5 and$6, and it would be too expensive if itexceeded $8.07, they said.

For single day passes, ideal range is around$1 to $1.50, and more than $2.20 would betoo expensive. For a single story, between$0.50 and $1 is ideal, and more than $1.42would be too much for visitors.

These numbers are very close to price rangeswidely used or under consideration across theindustry.

In order to calculate implied values,ITZBelden made the assumption that thereader's suggested rate for a single story is$0.50 and $1.50 for a day pass.

Users’ behaviours showed that a core loyalistvisits news and information sites some 20days per month, about two to three times aday, which means 40 and 60 total usersessions per month. In addition, most usersaccess about three stories per session. Thisindicated that the single story price to thesingle day price would be 1:3, which isconsistent with readers’ suggested pricing -$0.50 for a single story and $1.50 for a daypass.

With average core loyalist visits of 20 daysper month, the price relationship between aday pass and a monthly fee would be 1:20.This means the monthly subscription would

cost $30 as the day pass is $1.50. However,the study showed users thought about thisprice relationship in a completely differentway, suggesting a monthly price point in therange of $5 to $6, which is highlydisproportionate, or deeply discounted.

“When discussing paid access, visitors almostinvariably refer to the cost of a monthly printsubscription. The common presumption isthat the cost of online access to news shouldreflect a substantial discount from print price.The argument is that because it costs less topost to the Web, online delivery should beless,” the ITZBelden report states.

This thought process is reflected in the chartabove, where the desired or expected pricefor a monthly online subscription is 50percent to 75 percent off that of print. Thus, ifa monthly print subscription charges $15 to$20, the $5 to $6 users suggested for onlinerepresents a deep discount.

However, the reader-suggested prices for asingle day pass and single story/session don’texactly reflect the same discount, but is ratheruniformly higher than single print copyprices.

“The price points given by readers for dayand story passes are value driven, rather thancost driven, when compared to the suggestedprices for monthly passes,” according to thereport.


43

Price Points for Paid AccessPrice Points for Paid Access


4,65

1,110,66

6,60

1,661,03

8,07

2,201,42

0123456789$

Monthlysubscriptions

Single day Single story

BargainGetting expensiveToo expensive

Implied Monthly Value:Newspaper Site Subscription

Implied Monthly Value:Newspaper Site Subscription


0.5 1.5

30.0

5.50

5

10

15

20

25

30

35$

Story Day Impliedmonthly

value

Monthlypricegiven

APPENDIX

Changing Models: A GlobalPerspective on Paying for ContentOnline

Nielsen conducted a global survey of morethan 27,000 consumers in 52 countries, askingfor their opinions on paying for online content.The survey was conducted during the autumnof 2009, covering nations in five geographicalregions, including the Asia Pacific region,Europe, Middle East/Africa/Pakistan (MEAP),Latin America and North America.

When asked if free online content shouldremain free, the majority (85 percent) of allthe respondents said they strongly agree oragree, while only a small group expressedtheir disagreement, according to the Nielsenreport “Changing Models: A GlobalPerspective on Paying for Content Online,”released in February 2010.

To break down by region, Latin Americanshad the highest percentage of respondentssaying they “agree” or “strongly agree,” withmore than nine out of 10 saying so.Respondents from Asia Pacific countries hadthe lowest percentage, yet they still reached80 percent.

Online content for which consumers aremost willing to pay, or have already paid,are those which are usually paid for offline,such as movies, music, games and currenttelevision shows. They always cost a lot toproduce.

On the other hand, consumers are least likelyto pay for what is “essentially homegrownonline,” that is, content produced at a fairlylow cost, such as social communities,podcasts, and consumer-generated videos andblogs, according to the study.


44

Newspaper Sites that Have Greater than 1% Uptake

Note: Online uptake, or take rate, refers to online-only paid subscribers as a percentage of current daily print circulation. ITZBelden Engagement Index, a ratio of page views to newspaper circulation. Site scores typically range from 20 to 200, with 100 being the average.Source: “Paid Access Models: Practices and Profiles,” produced by ITZBelden, a partnership between Belden Interactive and ITZ Publishing, January 2010. The report was an outgrowth of work done by ITZBelden for the American Press Institute. © WAN-IFRA 2010

Enterprise

Financial Times, FT.com (London, England)

1- Key West Citizen (FL)

2- Le Devoir (Montreal, QC)

3- Herald Times (Bloomington, IN)

4- TDN.com Longview (WA)

5- Bend Bulletin (OR)

6- El Dorado News Times (AR)

7- Post Register (Lewiston, ID)

8- Petoskey News Review (MI)

9- The Gaston Gazette (Gastonia, NC)

10- Norwalk Reflector (OH)

11- St Petersbourg Times, TampaBay.com (FL)

12- The Lima News (OH)

13- Camden News (AR)

14- Banner News (Magnolia, AR)

15- Kingsport Times News (TN)

16- The Daily Record (Ellensbourg, WA)

17- The Holland Sentinel (MI)

18- Arkansas Democrat Gazette (AR)

19- The Newport Daily News (RI)

20- Gazette (Colorado Springs, CO)

21- News & Messenger (Woodbridge, VA)

22- Record Courier (Kent & Ravenna, OH)

23- Johnson City Press (TN)

24- Albuquerque Journal (NM)

25- Standard Examiner (Ogden, UT)

26- The Indiana Gazette (PA)

Dailycirculation

412,850

9,600

26,552

25,000

21,500

32,682

9,800

22,000

9,789

24,779

9,056

260,700

30,500

4,342

4,100

36,000

5,523

17,786

184,581

11,465

89,000

15,580

16,400

29,386

101,810

60,345

15,282

Monthlyonline fee ($)

18.15

12.00

(Cdn) 17.00

5.95

7.50

8.00

4.95

6.00

10.00

6.50

2.91

4.99

4.95

4.95

4.95

5.99

5.00

5.00

5.95

35.00

1.00

8.67

4.95

11.50

17.25

6,50

12.95

Uptake % dailyCirculation (%)

29.360

13.020

9.415

8.400

3.882

3.607

2.980

2.873

2.840

2.793

2.617

2.751

2.570

2.533

2.171

2.092

2.082

1.928

1.901

1.744

1.685

1.605

1.268

1.154

1,113

1.061

1.014

Pageviews

2,300,000

2,043,046

2,315,350

2,900,000

3,000,000

951,087

176,072

484,000

721,058

2,696,379

850,000

21,747,230

1,500,000

56,736

1,791,189

425,000

1,084,000

5,700,000

248,648

4,230,000

1,531,612

775,732

899,387

2,500,000

672,682

1,251,789

ITZBeldenindex

199

213

87

132

139

29

18

22

74

109

94

83

49

14

50

77

61

32

22

48

98

47

31

25

11

82

WILLINGNESSTO PAY FOR CONTENT,BYTYPE

Music and games are the top two types ofcontent with the highest percentage of globalrespondents who “have already paid” for them;more than 15 percent said so. Theatricalmovies come next, with more than 10 percent.

These three types of content are also on top interms of percentage of respondents who “havealready paid” or “would consider paying” forthem, all exceeding 50 percent.

There is a clear correlation between percentageand age – younger people are more likely tohave paid, or consider paying compared to theolder age groups, according to the Nielsen study.

The willingness to pay for different types ofcontent varies by region. For theatrical movies,Asia Pacific and Latin American countrieslead – with 13 percent and 12 percent ofrespondents saying they “have already paid”and 48 percent and 52 percent saying they“would consider paying,” respectively.


45

%

0

20

10

30

40

50

60

70

80

90

100

Total Asia Pacific Europe Middle East/Africa/Pakistan

Latin America North America

Agree No opinion Disagree

Should Free Online Content Remain Free?

Source: The Nielsen Company, “Changing Models: A Global Perspective on Paying for Content Online,” February 2010 © WAN-IFRA 2010

Percentage of Global Consumers Who Have Already Paidor Would Consider Paying for:

Source: Nielsen Online, “Nielsen Global Online Consumer Survey,” July 2009 © WAN-IFRA 2010

Theatricalmovies

Music

Games

Professionallyproduced videos

Magazines

Newspapers

Internet-onlynews sources

Radio (music)

Socialcommunities

Podcasts

Radio(news/talk)Consumer-

generated videos

Blogs

Have already paid Would consider paying

0% 10 20 30 40 50 60 70

Theatricalmovies

Music

Games

Professionallyproduced videos

Magazines

Newspapers

Internet-onlynews sources

Radio (music)

Socialcommunities

Podcasts

Radio(news/talk)Consumer-

generated videos

Blogs

Under 20 40 to 44 65 and older

0% 10 20 30 40 50 60 70


46

Willingness to Pay for Content – The Top Tier, by Region

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe

Middle East/Africa/Pakistan

Latin America

North America

Professionally produced videos (including current TV shows)

*Not a top tier content type, despite being professionally produced at a high level of quality cost.Source: Nielsen, “Changing Models: A Global Perspective on Paying for Content Online,” February 2010 © WAN-IFRA 2010

Have already paid for Would consider Will not pay

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Theatrical movies

11

13

9

11

12

9

46

48

43

38

52

43

43

38

48

51

36

48

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Music

16

15

15

14

17

20

41

46

40

33

44

32

43

39

45

53

38

48

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Radio (music)*

5

6

5

6

7

3

27

33

21

24

33

20

67

61

74

69

60

76

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Games

16

18

13

16

15

15

35

39

31

38

37

32

49

43

56

47

47

54

8

11

6

11

9

5

42

47

37

43

51

34

50

42

57

46

40

61

Middle East/Africa/Pakistan (MEAP) have thehighest percentage of those who “will notpay,” according to the study, with 51 percentsaying so.

In terms of music, two out of 10 North Americanrespondents said they have already paid for aservice, highest among all regions. MEAPcountries have the highest percentage sayingthey will not pay, at more than 50 percent.

Respondents from the Asia Pacific region aremost likely to have already paid or wouldconsider paying for games; 18 percent and 39percent said so, respectively. European andNorth American respondents are least likely topay; 56 percent and 54 percent said so,respectively.

Regarding professionally produced videos(including current TV shows), Asia Pacific andLatin American countries have the highest

percentage of respondents who have alreadypaid or would consider paying. Eleven percentand 9 percent said they’ve already done so,while 47 percent and 51 percent wouldconsider doing so, respectively.

Radio (music), compared to other types, is stillnot the medium most people would pay for –only less than 10 percent have already done soacross all regions, while more than six out of10 said they would not pay for it.

When asked “If I already subscribe to anewspaper, magazine, radio or televisionservice, I should be able to use its content forfree,” 78 percent of global respondents agreed.

A higher percentage of people in the Americasbelieve in this statement compared to otherregions; 83 percent said so. The Asia Pacificregion, on the other hand, has the lowest; 76percent of respondents said so.


47

78

76

79

81

83 83

7879

72

74

76

78

80

82

84%


LatinAmerica

NorthAmerica

Men Women

If I Already Subscribe to a Newspaper, Magazine,Radio or Television Service, I Should Be Able to Use

its Online Content for Free, by Group

Source: Nielsen, “Changing Models: A Global Perspective on Paying for Content Online,” February 2010 © WAN-IFRA 2010

%

79

75

81

78

81

85

78

81

70

72

74

76

78

80

82

84

86


LatinAmerica

NorthAmerica

Men Women

I Will Stop Using a Web Site If I Have to Pay for the Content BecauseI Can Find the Same Information on a Free Site, by Group


There is no significant difference by genders –79 percent of women and 78 percent of men agree.

Nearly eight out of 10 (79 percent) ofworldwide respondents said they agree withthe statement “I will stop using a Web site if Ihave to pay for the content because I can findthe same information on a free site.”

North Americans are most likely to do so,while people in Asia Pacific countries are least

likely; 85 percent and 75 percent said so,respectively.

Females tend to be more likely to believe theidea than males, with 81 percent versus 78percent.

VALUE OF NEWS: NEWS SOURCES

In terms of online news content, more thanhalf of global respondent in general said they


48

The Value of News: News Sources, by Region



8

10

6

13

12

6

34

36

32

35

40

27

58

54

62

52

48

66

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Newspapers

10

12

7

14

13

6

39

44

35

40

44

31

52

44

58

46

43

63

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Magazines

5

7

4

9

6

2

31

37

28

33

37

22

63

56

68

57

56

76

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Internet-only news

4

5

3

7

4

3

22

29

17

25

30

13

73

66

80

68

66

84

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Radio (news/talk)

will not pay. Radio (news/talk) was on top,with 73 percent saying they will not pay.Online-only news and newspapers followed,with 63 percent and 58 percent, respectively.

Europe and North America stand out as havingthe highest percentage of people who “will notpay” across different online news sources,while the Asia Pacific region and LatinAmerica lag behind with the lowestpercentage.

PAYMENT METHOD AND SYSTEM

When breaking down to online paymentmethods, more than half of respondents ingeneral agree that they would rather pay forindividual pieces of content (micropayment)instead of subscribing to an entire Web site.

Only respondents in North America andfemales have the lowest percentage agreeingon that, with less than 50 percent.

Ease of a payment system's use is anotherfactor impacting people in whether they willpay for online content. More than four out of10 respondents worldwide said they will bewilling to pay for content on the Internet if thepayment system is easy to use. The percentageis especially high in Asia Pacific and MEAPcountries; more than half of those respondentssaid so.

North Americans are least likely to changetheir minds due to the payment system – onlyless than three out of 10 said they agree theabove statement.


49

%

0

20

10

30

40

50

60


LatinAmerica

NorthAmerica

Men Women


I Would Rather Pay for Individual Pieces of Content (Micropayments)Instead of Subscribing to an Entire Web Site, by Group


%

0

20

10

30

40

50

60



LatinAmerica

NorthAmerica

Men Women

I Am Willing to Pay for Content on the Internetif the Payment System is Easy to Use, by Group


QUALITY OF ONLINE CONTENT

When asked if the quality of content on theInternet will decline unless companies cancharge for it, about 35 percent of globalrespondents agreed, while another 30 percentdisagree.

People in Asia Pacific countries are mostlikely to agree on this statement; 45 percentsaid so. In North America, on the contrary,more than 45 percent disagree.

RIGHT OF COPYING AND SHARINGCONTENT

More than 60 percent of respondentsworldwide said if they pay for content online,they should have the right to copy it and shareit with others, while less than 10 percentdisagree.

Europe is the only region with the percentageof agreement at less than 60 percent.


50

%

0

20

10

30

40

35

25

15

5

45

50



LatinAmerica

NorthAmerica

Men Women

The Quality of Content on the Internet Will DeclineUnless Companies Can Charge for It, by Group


%

0

20

10

40

60

30

50

70

80



LatinAmerica

NorthAmerica

Men Women

If I Pay for Content Online, I Should Have the Right to Copy Itand Share It with Others, by Group


PEER-TO-PEER CONTENT/SOCIAL MEDIA

Respondents are less likely to pay for peer-to-peer content and social media, compared toother types of content. More than 70 percent ofrespondents worldwide said they will not payfor social communities, podcasts or consumer-

generated videos. Eight out of 10 said theywill not pay for blogs.

Europe and North America stand out againwith the highest percentage of “will not pay”responses across different types of peer-to-peercontent.


51

Peer-to-Peer Content – Social Media, by Region



0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Social communities

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Podcasts

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Consumer-generated videos

0% 10 20 30 40 50 60 70 80 90 100

Total

Asia Pacific

Europe


Latin America

North America

Blogs

4

6

4

8

4

1

24

30

18

31

27

14

72

64

78

62

70

84

3

4

3

6

2

3

25

30

20

31

29

18

72

66

77

62

69

79

3

4

3

6

3

2

21

27

16

26

25

13

75

69

82

68

72

85

3

5

2

5

2

1

17

22

13

24

19

10

80

73

85

71

78

89

ADVERTISING

In general, nearly 50 percent of globalrespondents said they are willing to acceptmore advertising online in the future tosupport the cost of content. The percentage isespecially high in Asia Pacific and MEAPcountries, with more than 55 percent sayingso. In Europe, the percentage is the lowest –less than 40 percent.

On the other hand, when asked if there shouldbe no advertising on Internet content thatconsumers have to pay for, more than six outof 10 said yes. In North America thepercentage is the highest, more than 70percent, while it is lowest in Latin Americaand MEAP, at less than 60 percent.


52

0

10

20

30

40

50

60%


LatinAmerica

NorthAmerica

Men Women

I Am Willing to Accept More Advertising on the Internetin the Future to Support the Cost of Content, by Group


0

10

20

30

40

60

50

80

70

%


LatinAmerica

NorthAmerica

Men Women

There Should Be No Advertising on the Internet Contentthat I Have to Pay for, by Group


New revenue streams are no longer in the future– they are here and now, and newspapersaround the world are putting them in place andplanning the next phases of their development.

Publishers are taking a long, hard look attheir businesses and making decisions onwhether to put up paywalls around their mostunique, high quality content. They are alsodeveloping and launching mobileapplications, and deciding whether theirmobile apps will be paid or ad-supported.They are making deals with search engines oreven launching their own, and finding newcontent models to give added value to theirown in-house content creation. The dust ofthe global economic recession andadvertising revenue downturns is settling, andthe forward-thinking newspapers whocontinued thinking, innovating and executingtheir plans have set themselves up forsuccess.

Paid Content: Online & Mobile

As 2009 came to a close, perhaps the biggestquestion facing publishers was the issue of

whether to charge for online content, and if so,which content to charge for, and how much?

According to a PricewaterhouseCoopers studyof 11 countries in North America, Europe andAustralia, consumers said they are willing topay 62 percent of the price of a traditionalnewspaper for online news, but with one catch:they are willing to pay “if there are no freealternatives.” The value proposition is allabout unique, useful information.

“This means there must be a possibility fornewspaper companies to develop a propositionfor your audience that is economically viable.Of course, if there are still free alternatives, itwill be quite hard to do so. But if you have agood proposition, it certainly is possible to getpaid for an online proposition,” said Mariekevan der Donk, senior manager of entertainmentand media at PwC in the Netherlands.

The value proposition is obviously highest forfinancial news. The same survey found peopleare willing to pay 98 percent of what they payfor a traditional paper, or 98 cents on the euroor dollar. Sports comes next, at 77 percent.

3. New Content and RevenueModels


53

UNITED STATES: DOW JONES& THE NEW YORK TIMES

Perhaps the most visible move into putting uppaywalls has been Rupert Murdoch’s chargeinto the paid arena. The Wall Street Journal,which News Corp. bought in December 2007,has successfully charged a subscription fee forvaluable online financial news and informationfor years, and in December 2009, Murdochannounced paywalls would go up in January2010 at News Corp.– owned Dow Jones Local

Media Group, which operates communitymedia franchises in California, Massachusetts,Maine, New Hampshire, New York, Oregonand Pennsylvania.

The San Joaquin Media Group and SouthCoastMedia Group, part of the Dow Jones LocalMedia Group, rolled out partial paywalls inearly January. At SouthCoast sites, for example,registered members can view 10 articles andvideos for free each month, while unregisteredusers can view three free items each month.


54

All-access to SouthCoastToday.com via personal computers and mobile costs US$4.60 per week.First time subscribers are charged $3.37 per week when they buy a one-year subscription.

Subscriptions Micropayments Productionservices

Banneradvertising

Behaviouraladvertising

Advertisingnetworks

New printproducts

Distributionservices

Printinsourcing

Mobile textadvertising

Mobilebanners

Smartphonemultimedia

ads

Socialnetworking

Nichenewspapers

Cross-mediaadvertisingMagazines

Searchkeyword

advertisingE-Commerce AuctionsPrintcasting Freemiums Upsells

Self-serviceadvertising

Mobile TVadvertising Video games Wine and

affinity clubsAdvergaming Casino andbingo games

Adult photosand videos

Collectorbooks

Coupons Web TVadvertising

Events andconferences

Web radioadvertisingText alerts

Consortiums Broadcasting

Freenewspapers

Advertorials Websitesponsorships

E-readersubscriptions

Exclusiveoffers

Crowd-funding

Databasemining

iPhoneapplications

Partnerships Readerdonations

Outsourcingoperations

Archives

Endowments Trusts Governmentalsubsidies

FoundationgrantsCooperatives Not-for-profit

statusContent

networks

Source: Shaping the Future of the Newspaper © WAN-IFRA 2010

The New Revenue Model Mosaic

At SouthCoastToday.com, weekly all-access tothe site via computer and mobile costsUS$4.60. Registered users that don't havesubscriptions can view 10 articles for free permonth, but with limited access to obituariesand photo galleries and no access to highschool sports scores and statistics or e-mailnewsletters, text alerts and the e-newspaper.Les Hinton, CEO of Dow Jones & Co., toldthe 2009 World Newspaper Congress thatnewspapers should charge for online news aswell as find more ways to improve advertisingsales, not rely on just one or the other to payfor content creation. In the past, when theInternet was in its infancy, newspapers were“taken in” by the idea of free content online,and didn't ask enough questions before givingeverything away for free, he said.“It was a new dawn, we were told. A newepoch, a new paradigm. And we just didn't getit. Like an over-eager middle-aged dad,desperate to look cool, we ended up dancingobediently to other people's tunes. For a while.You can almost hear the music - an algorithmand blues soundtrack - accompanying theharbingers of the new economy with the newrules of the new age. Their rules. These digitalvisionaries tell people like me that we justdon't understand them. They talk about thewonders of the interconnected world, about thedemocratisation of journalism. The news, theysay, is viral now - that we should be grateful.Well, I think all of us need to beware of geeksbearing gifts,” Hinton said. “Free costs toomuch. Good content is valuable. That hasn'tchanged. It never will.”In late January 2010, The New York Timesannounced it will launch a metered paid model onits Web site at the beginning of 2011. Under theplan, users who access more than a certain numberof articles each month will be prompted to pay a flatfee for additional access, while print subscriberswill be given full access to online news.“This process of rethinking our business modelhas also been driven by our desire to achieverevenue diversity that will make us lesssusceptible to the inevitable economic cycles,”Janet Robinson, president and CEO of TheNew York Times Company, said in astatement. “We are also guided by the fact thatour news and information are being featured inan increasingly broad range of end-userdevices and services, and our pricing plans andpolicies must reflect this vision.”

According to Nielsen Online, NYTimes.comwas seventh in the top 10 current events andglobal news Web sites, ranked by uniquevisitors in December 2009.

“Our new business model is designed toprovide additional support for The New YorkTimes' extraordinary, professional journalism,”Arthur Sulzberger, Jr., chairman of The NewYork Times Co. and publisher of The NewYork Times, said in a statement. “Ouraudiences are very loyal and we believe thatour readers will pay for our award-winningdigital content and services.”

A number of staff changes have also been madeto drive The Times' paid content model. PaulSmurl, former vice president for advertising, hasbeen named vice president of NYTimes.compaid products. He will oversee the rollout andperformance of the paid content model, plusexisting crossword subscriptions and mobilegaming products. In the future, he will overseethe addition of other paid content products.

MEXICO: GRUPO REFORMA

Mexican newspaper Grupo Reforma publishes10 daily newspapers in five cities, includingReforma in Mexico City, El Norte inMonterrey and Mural in Guadalajara. Averagecirculation of each of its newspapers is 1.4million. As users increase online, GrupoReforma has put up paywalls, attracting about107,000 online subscribers.

The subscription to the Web sites offers usersnot only news and information, but exclusivejob advertisements as well.

On its Web sites, users can search through


55

1. Yahoo! News: 39,917,000 (0.0%)

2. CNN Digital Network: 36,343,000 (2.3%)

3. MSNBC Digital Network: 32,236,000 (-20.1%)

4. AOL News: 24,811,000 (30.8%)

5. Fox News Digital Network: 16,573,000 (20.3%)

6. Tribune Newspapers: 15,844,000 (-5.3%)

7. NYTimes.com: 14,849,000 (-18.4%)

8. Google News: 13,541,000 (26.1%)

9. ABCNEWS Digital Network: 12,084,000 (5.8%)

10. Gannett Newspapers and Newspaper Division: 11,842,000 (3.2%)

Source: Nielsen Online © WAN-IFRA 2010

Top 10 Current Events & Global News Destinations

December 2009, uniques,with year-on-year comparisons


56

sections and view titles and the first part ofsentences of each article, but cannot go anyfurther until a username and password havebeen entered.

Grupo Reforma began making the switch fromfree to paid content online in 2002, and nowgives print subscribers free access to all of itsWeb sites. Those who subscribe to online-onlypay 80 percent of the newsstand price.

Community editorial boards, which have about900 people sitting on them each year, wereused as focus groups to decide how to makethe transition from free to paid online content,according to Stanford Business Magazine.

“We thought we would lose 90 to 95 percent ofour online readers, but working with theboards, we lost only about 25 to 30 percent,”said Jorge Meléndez, vice president of newmedia for the company. “And you know what?Our Internet advertising revenues actuallywent up that year!”

GERMANY: AXEL SPRINGER

In Germany, the country with the highestnewspaper consumption in Europe,newspapers also made the mistake of notcharging for online content from thebeginning, said Andreas Wiele, member of theboard of Axel Springer AG and president ofBILD Division and Magazines. And while thepast can't be changed, what publishers dotoday will shape the future of mobile andonline, and that is exactly what Axel Springeraims to do. The company has set its sights on

becoming Europe's best-integrated multimediagroup, and to do that, it must continuetransforming its offerings and strategies.

Axel Springer's digital strategy is based onthree core competencies: content portals,marketplaces and marketplaces, Wiele said,noting that Axel Springer is switching to a paidmodel on mobile. Consumers “pay forringtones and text messages – why shouldn'tthey pay for our great content?”

Axel Springer plans to charge for its onlinenewspaper content, beginning with paidiPhone applications for flagship tabloid Bildand for quality newspaper Die Welt. The Bildapp will cost €0.79 in the first month and€1.59 for each following month. Die Welt'sapp will cost €1.59 for the first month, butmay increase to €4.99 for each month after.

“I see no justification, neither democratic normarket-related, for content to be generally freeon the Internet,” Mathias Döpfner, CEO ofAxel Springer, told the Wall Street Journal inDecember 2009. “For centuries, people have beenwilling to pay for things of interest to them.”

Döpfner pointed out that it is important forpayment to be quick and easy, and althoughthe process of instituting paywalls is not easy,“suffering always helps bring about change.”

Of Axel Springer's total €2.7 billion revenue,€500 million is from the digital world. Thepaid content strategy is in its infancy, so it'sstill in small amounts, but that amount cangrow, Wiele said.

In the past, “circulation and their revenueswere always high,” he said. “We had amonopoly in the way we gathered editorialcontent, and the ads could be sold accordingly.It was a beautiful world, a beautiful time.Those days are over. We must transform ordie.”

Wiele said although the company has a strongfocus and belief in the power and future ofdigital, it is important to keep print in mind aswell. The print circulation of Computer Bild,Europe's largest computer magazine, has beenhelped by having a free Web site; however, itis important for the print version to offer moredepth and different content than the Web site,he said. Using the online version to supportprint, and print to support the online version, isan important strategy that has lead to successfor the niche publication.

“The computer magazine's print circulationwas declining, but we launched a Web site,[and] circulation has been up between 2 and 6percent per year. In 2009, the print computer

magazine is selling more, and the online site isdoing well. The computer magazine readerwill look for info online, and we want him tofind it on our site. If he doesn't, he will go to acompetitor's site and will end up dropping hismagazine subscription to switch to thecompetitor,” he said.

UNITED KINGDOM: THE GUARDIAN &DAILY MAIL AND GENERAL TRUST

The Guardian is dipping its toe into paidcontent, and with the launch of its paid mobileapplication on December 14, 2009, is showingthat income from mobile apps is an importantnew digital revenue stream.

The Guardian's app costs £2.39, and in the first48 hours after its launch, the UK newspapermade £20,000, shooting to the top 10 list ofpaid news apps on Apple's Web site. By theend of December, users had downloaded italmost 69,000 times; at that rate, income fromthe app alone could reach £1.97 million a year.

However, Apple does get a 30 percentcommission, so for every app downloaded,Apple gets about £0.71 and the amount TheGuardian receives is £1.68. Also, just over amonth after its launch, The Guardian app wasno longer on Apple's top 10 list of paid newsapps.

The Guardian has also created a special pageon its Web site to promote the app, offeringtutorials and information. Users can downloadthe app, ask questions and leave comments andfeedback on how to improve the app.

“We are thrilled with our download figures forthe first month of the app. The feedback wehave received from users has been excellent,yet also extremely informative in terms offeatures and functionality that can be improvedin the future. Over the Christmas break the appbecame available in many areas of mainland


57

Europe, as well as in Canada and Australia forthe first time, so we hope our global audienceswill enjoy using the app as well,” Emily Bell,director of digital content for Guardian News& Media, said in a statement.

The app was designed by an in-house team andbuilt by mobile enabling technology firm2ergo. Users can personalise features, andbrowse content offline.

Just days after The Guardian launched itsiPhone app, Daily Mail & General Trustannounced it is planning to be “the leadingmobile publisher of applications in Europe,”and will unveil at least 15 new apps in 2010,half of which are expected to be out in the firsthalf of the year. This includes apps for MailOnline, Metro.co.uk, Motors.co.uk and others.

Unlike The Guardian's app, DMGT apps willbe free and supported by ads.

“People will pay for convenience and scarcecontent. But I don’t think they will pay foreverything. Mobile advertising is very new butis now something that people are starting totake seriously,” Richard Titus, chief executiveof Associates Northcliffe Digital, DMGT'sdigital division, told the Financial Times.

ITALY: RCS QUOTIDIANI SPA

Corriere della Sera and La Gazzetta delloSport entered the paid smartphone applicationsmarket, launching apps for both the iPhoneand BlackBerry in 2009 as part of RCS DigitalSpA's multimedia development strategy.

On the iPhone, the apps were made availableat a promotional price of €2.39 untilNovember. After that, a subscription systemwas introduced, along with increasedfunctionality. Both were priced at US2.99,according to BlackBerry's Web site.

The Corriere della Sera app provides userswith breaking news, world news, financialnews, local information, GPS for Italian pointsof interest, personalised weather for Italian andinternational locations, and video editions ofnews, economy and weather newscasts.Readers can also save content on their mobilesto read offline.

La Gazzetta dello Sport offers breaking sportsnews, live news on sports matches, top sportsphotos, personalised information on favouritefootball teams, league tables and fixtures, andvideo editions of sports news casts.

Growing Mobile Opportunities

THE IPAD

After months of speculation and hype about atablet-like device, Apple CEO Steve Jobsfinally unveiled the iPad on January 27, 2010.Unlike other e-readers currently on the market,the iPad is able to deliver publicationsvirtually as they were designed to be read inprint, only with the added bonuses of the Web,like video and photo slideshows.

The iPad is seen as a giant leap forward in therealm of e-readers, and publishers looking fornew revenue streams have high expectations.A new platform on which to start afresh iswhat newspapers have been looking for, andan opportunity print media must act onquickly.

One of Apple's media partners participating inthe iPad unveiling, The New York Times, wasthe first newspaper to create an app for theiPad. The newspaper had just three weeks tocreate the application.

“We want to create the best of print and best ofdigital, all rolled up into one,” MartinNisenholtz, senior vice president of digitaloperations for The Times, said at the event.

As The Times gears up to put its contentbehind a paywall in 2011, online subscriptionsare expected to include mobile access, whichmeans access on the iPad, but not access on e-readers like the Amazon Kindle. In thisrespect, the iPad seems to be more similar to asmartphone or laptop, and less like an e-reader,part of a third, tablet niche.

“When you have a device that is thisconvenient and fun for consumers to use, youcan get a lot more people interested in payingfor and engaging with the content. Big media


58

companies should be all over this like a cheapsuit,” Trip Hawkins, a founder of ElectronicArts and now chief executive of DigitalChocolate, which makes games for mobilesphones, told The Times the day before theiPad's launch.

Consumers expect to and are willing to pay formobile access, which is the main reason manybelieve the iPad will provide a previously non-existant revenue stream. Emerging revenuefigures for paid iPhone apps suggest users arewilling to pay for mobile content, and the iPadis viewed as a next step. However, as the iPadhas capabilities similar to a laptop, it is alsopossible that consumers will expect to get theirnews for free, as they do on their personalcomputers and laptops.

One industry poised to capitalise on the iPadare book publishers. With the launch of thedevice also came the launch of the iBooks app.The free app can be downloaded from the AppStore, and users can then buy books from thebuilt-in iBookstore. When a user buys a book,it is displayed on the user's personalBookshelf, and users can then tap to beginreading.

Newspapers and magazines, in turn, couldlaunch an iNewsstand, using the same concept,only with the latest issues awaiting them ontheir own personal news racks. Newspapersand magazines could sell weekly, monthly oryearly subscriptions, and could also offer away to pay daily.

Apple has created the iPad, and it's now up tonewspapers to turn it into a revenue stream, forthis current generation of iPads, and all theones launched by other companies in the sameniche in the future.

Search

SINGAPORE PRESS HOLDINGS

Singaporewww.sph.com.sgwww.rednano.sg

When the Internet was in its infancy, “we justfollowed everybody else, like a sheep in aherd, and did not charge, so now we have tomake up for our mistakes,” said Paul Jansen,CEO of SPH search at Singapore PressHoldings. Deciding on whether to transition toa paid publication was especially difficultbecause SPH wanted to charge for content butdidn't know how much, how or when tocharge.

“I rushed to put things on the Internet – therewere less than 15 newspapers on the Internetwhen we started. After a year, I thought weshouldn't give it all away for free, and toldmanagement we should charge for content.They said we should see what will happen, andwe've all seen. That was 1996,” he said.

As the powers of search engines increased,SPH did not want to miss out again, and in2008 turned the tables on the search giants bylaunching Rednano.sg, a local search anddirectory offering.

“The whole problem with search is not that itis taking away our revenue, it is understandingour customers better than we do,” Jansen said.“We all happily decided to accept Google ads,and we each take a percentage. But whatGoogle really gets is a deeper understanding ofthe user. When we launched [Rednano], wesaid we wanted to do search, and wanted toreach out to outside content. There are peopleout there who say they're not part of the SPHfamily, and want to link to us and then use usto increase their link authority. What is veryimportant to us is using all of these efforts andreach out to people generating content.Demographic data is important. We focus onwhat you do, rather than who you are. We can


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find out more about you, depending on whatyou do, what you click on and what you type.”

Search results on Rednano are all on one page,and have local context, which increasesrelevancy, he said, noting that 81 percent ofSingaporeans have said they want a highlylocalised site, while 56 percent said they needmore Singapore information.

What differentiates Rednano from Google orYahoo is how local it is – an online and mobiledestination for anyone seeking accurate,relevant and timely information aboutSingapore.

“Global search engines have no or weakdirectory. Local directories have no or littlereal-time news and reviews. Local mapservices have paucity of non-directionalcontent ... No matter where you are, if you'relooking for something related to Singapore,come to us,” Jansen said. “It's all about whatdo you want to do, not who you are. If youwant to know what Obama ate for breakfast orwhere he ate breakfast, go to Google. But ifyou want to know where to eat in Singapore,come to us.”

Social Networking

FACEBOOK AND TWITTER

Social networking sites, especially Facebookand micro-blogging service Twitter, have seenenormous growth over the past few years, andnews outlets are using the two to attract awider audience, keep dedicated readers closeand distribute stories to a wider audience.

The Austin American-Statesman and The NewYork Times are experimenting with new waysto generate ad revenue using both socialnetworking sites, and are discovering thatbenefits can be two-fold: news outlets gain newsocial networking audiences, while advertisersgain a new way to engage consumers, PoynterOnline reported. Meanwhile, smallerbusinesses that have less advertising dollars tospend are able to target consumers in a newer,more cost-effective way.

At The Austin American-Statesman,advertisers can pay for tweets on two of thenewspaper's Twitter accounts, @Austin360and @Statesman. Two advertisers, a restaurantand haunted house, paid US$300 each per dayfor a few days in autumn 2009, and were giventwo 124-character tweets per day, one in themorning and one in the afternoon.

Most followers found the ads to be non-intrusive, said Robert Quigley, the newspaper'ssocial media editor. This is likely because hestipulated that the adverts must be action-related, such as giving a special offer thatbenefits readers, as opposed to just an ad.

“We just thought this would be the sweet spotfor things people would actually be interestedin. What we wanted to avoid was a used car ad– a lot of the traditional advertisements wehave in print or online – that we just didn'tthink would work with this audience,” he said.

One challenge is to get advertisers tounderstand just how big of an audience somenews outlets have on Twitter and Facebook, hesaid. Another challenge is balancing ads sothey're helpful, and don't make followers feelthey're being overwhelmed with ads, or liketheir opinion isn't valuable.

The New York Times has begun sellingpackaged advertisements that appear to userswho enter NYTimes.com via Twitter andFacebook. Although social media is not a largemoney maker yet, it is likely an importantrevenue stream to put in place, Denise Warren,senior vice president and chief advertisingofficer of The New York Times Media Group,told Poynter.

Advertisers are “looking for creative ideasaround social media. It's definitely somethingthat's gaining more interest than it did six ornine months ago,” she said. “It's no secret thatthe consumer is interested in socialcommunities and networking. Takingadvantage of that is at the forefront of it all.”

Foreign News Services

ASSOCIATED REPORTERS ABROAD

Berlin, Germanywww.ara-network.com

As economic hardships have taken their toll onnewspapers in the West, foreign bureauxacross Europe have been folding one by one,


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causing the demand for freelancers toskyrocket. Journalist Jabeen Bhatti, who beganfreelancing in Berlin a few years ago, saw herworkload increase as newspapers struggled tocontinue covering news even as their reporterswere being sent elsewhere or laid off.

“Major papers that used to have several bureauxsuddenly just had one person in Europe. Also,freelancers started to get overloaded,” Bhattisaid. “Stories weren't getting done because oflack of time, and at the same time, as afreelancer, you never want to say 'no.'”

Requests from editors continued to increase,and as Bhatti found herself trying to connecteditors with freelancers, she discovered shecouldn't find enough qualified reporters.

“At one point, a friend of mine who is atechnical editor ended up covering a majorevent for a British newspaper and came to mefor Journalism 101 in an hour. I thought,'there's got to be something we can do.' I spoketo a friend in [Washington] D.C. and itreminded me of what it was like to be on ateam,” she said. “I thought, 'maybe we coulddo this in an organised fashion.'”

Bringing the newsroom model to the foreigncorrespondent seemed like just the way tobetter connect editors with qualifiedjournalists, and so the idea of AssociatedReporters Abroad was born.

In December 2007, Bhatti found partners inMichael Levitin, Harald Franzen and ThomasMarzahl, each of which brings their ownspecialties to the table. Franzen is German, butspeaks English like a native, is a photographerand has a business background. Marzahl hasradio, print and wire experience and Levitin hasa background in magazines. Sumi Somaskanda,a U.S. native who specialises in video, joinedthe group at the beginning of this year.

Other than the five partners, ARA is currentlyworking with more than 20 journalists, butadds new people often, Bhatti said.

ARA officially launched in October 2009, andis currently focused on working withnewspapers in English-speaking countries.“We have to find out who is interested, andthen we'll move on to the rest of the world,”she said. “It's been a lot of work, and weunderstand it's going to take time. Wepromised ourselves very early on – we'll growslowly and not bite off more than we canchew. We'll grow slowly, but well.”

Editors can contact ARA to assign a story to afreelancer, and once the freelancer has coveredthe story, ARA editors send the edited versionback to the publication. It saves editors thetime of searching for a quality freelancer, andhelps freelancers manage their workloads. Atthe same time, the assigning publication canwork directly with the journalist while alsoreceiving clean copy.

Freelancers also pitch stories to ARA, whichhelps shop story ideas around to differentmedia outlets. ARA tells journalists that “'we'lltry to sell it for you,' but we won't pay youuntil” it's sold, she said. “The people that havebeen applying and that I'm choosing areexperienced correspondents. Our credibility ison the line, and I'm not interested in peoplejust out of school. If you just arrived inRomania, for example, how will you identify astory? Our correspondents have beenfreelancers for awhile.”

Bhatti said the rates ARA charges for articles,photos and video aren't locked in, and mostpublications already have rates for freelancers,which ARA tends to work with.

“This really depends on the news outlet. Wedon't have rates on our Web site because itdepends on the newspaper,” she said, butpointed out that quick spot reporting that can

News stories offered to English-language publications by Associated Reporters Abroad.

be done in a day is obviously cheaper than alonger piece that takes more research.

Rates for photos and video are pretty standardas well, she said. ARA keeps 15 percent if thestory is pitched by the reporter, and 20 percentif it is assigned by a news outlet to the reporter.

“We do editing and fact checking. It's the bigreason to go through us – we will fact check it.Things like Jayson Blair don't happen,” Bhattisaid. “At the end of the day, if we get ahorrible story, then we do it. We deliver nomatter what.”

Even though newspapers are being forced todownsize, that doesn't mean the outside worldis any less important. “The wires are great forwhat they do, but they don't offer that manyfeature or news analysis stories. They'rewritten in a very wire way, and magazinesdon't like them at all. Newspapers want to beable to tailor the story to themselves. We're themiddle way between having your owncorrespondent and having wires.”

Currently, ARA correspondents are spread outcross Europe, with a few more in the MiddleEast and northern Africa, and possibilitiesopening up in Asia and Latin America. Aweekly e-mail of story pitches began inJanuary 2010, and news outlets can sign up atARA's Web site to be on the mailing list, andalso view the list directly on the site.

“This is a globalised world. For people tosurvive in that, they have to understand therest of the world too. We're not a charity, butthere's a certain mission behind this,” Bhattisaid. “We hope with creativity, a soundbusiness model, partnerships and idealism wehope we can solve this problem.”

GLOBALPOST.COM

Boston, United Stateswww.globalpost.com

Global news startup GlobalPost.com reporteda US$1 million revenues in 2009, and expectsto make US$3 million in 2010. The foreignreporting service employs more than 70journalists in 50 countries for about US$1,000per month. The journalists are required to fileone story minimum per week. President PhilipBalboni projects profitability in 2012.

GlobalPost launched in January 2009, by co-founders Balboni; and editor Charles Sennotthave built the company on three business

models: Advertising; a membership scheme,called Passport; and content syndication.GlobalPost investors and supporters includeLiberty Mutual Insurance Company, Bank ofAmerica, Siemens, Merrill Lynch, TuftsUniversity, Singapore Airlines, Dana FarberCancer Institute and Boston law firm ButterMcClennen & Fish. Its advertising agenciesinclude Digitas, Starcom Worldwide, HillHolliday, MEC Global, PHD and Digital Root.In an effort to reduce the cost of foreigncorrespondents, which is prohibitive for smallermedia companies, several newspaper companiesare subscribing to GlobalPost’s foreigncorrespondent services and syndications,including the Washington Post, The TribuneCompany, New York Daily News, Newark StarLedger, Pittsburgh Post-Gazette, South ChinaMorning Post, Cambodia Daily, CBS News,CBS Radio and the Australian Associated Press.At a Nieman event at Harvard University inOctober 2009, Balboni said Passport had about500 paying members and he expectedthousands in 2010. Members pay $50 to $104a year.Balboni said the site has seen nearly 3 millionvisitors since its January launch, and estimatedthat the site would have 600,000 uniques permonth by the end of this 2009, and perhapstwo to four million uniques by the end of2010. About 75 percent of the visitors comefrom the United States and Canada, while theremaining 25 percent comes from more than200 countries. The growing unique usershipwill help the site become more attractive toadvertisers and agencies.While it was a rough year, Balboni told SFNthat costs were under budget by 12 percent in2009, which offset the under-budgetperformance for advertising, due to theeconomy. That said, advertising started to pickup in the last quarter of 2009, including somenational and international brands advertisingon the site, which bodes well for 2010, he said.Balboni said that the syndication businesscame closest to achieving budget, with theaddition of 25 TV, radio and website affiliatesaround the world.“Membership is a more complicated story, butremains one that we are passionate and bullishabout for the future. We are doing some newand exciting things in 2010 in our membershipdevelopment. Stay tuned.”


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Microlocal: The New Hyperlocal

EVERYBLOCK

Chicago, United Stateswww.everyblock.com

EveryBlock founder Adrian Holovatylaunched the Web site chicagocrime.org,which included a page for each block inChicago, in 2005. The side project was createdjust for fun, but in 2006, Holovaty won aUS$1.1 million, two-year grant from theKnight Foundation's Knight News Challenge,which funds ideas that further journalism, andofficially launched EveryBlock.com in 2007.

EveryBlock organises and displays public dataand records according to location, down to thecity block.

Fast forward to 2010. The grant period hasended, and the site's code is now open source.MSNBC.com bought EveryBlock in August2009, and in January 2010, the site announcedthe release of Notify Your Neighbors, a servicethat allows people to share updates on what ishappening in their neighbourhoods and ontheir blocks via a free application for theiPhone and iPod Touch. Holovaty describedthe new feature as an “old-school discussionboard combined with sophisticated geographicfocus.”

EveryBlock has become a top examplepublishers use to describe the concept of“hyperlocal,” but for Holovaty, the term isoverused and pretty meaningless:

“As with the term 'Web 2.0,' I've given up ondefining it. Over the years, I've seen the termused to refer to Web sites that cover a metroarea by organise their content by specific townor neighbourhood, Web sites that focus on asingle city or neighbourhood intensely and

Web sites that focus on a particular part of ametro area. It appears 'hyperlocal' means'city/county-level or deeper' – but wouldn't theterm 'local' work there just as well?” he wrote.

At EveryBlock, the word 'hyperlocal' isn't usedto refer to the site. Instead, Holovaty and histeam prefer the term 'microlocal.'

“Micro implies intense focus, incredibly smallscale and rich depth – all of which describeEveryBlock's general take on things. Best ofall, people I've talked to seem to understandthe term implicitly, as isn't the case with themuch more vague 'hyperlocal.'”

As a microlocal Web site, “our goal is topublish anything and everything that's relevanta the neighbourhood level or deeper,” Holovatysaid. “One problem we try to avoid is postingtoo much coverage of things that happen to bein your neighbourhood but are of generalinterest more than they are of interest to thepeople in the neighbourhood. For example, ifyou live next to a famous jazz club attended bypeople from all over the city, you probablydon't care about what's happening there anymore than the jazz aficionado who lives 20miles away and travels into town for music.”

Over the past several years, information onlinehas become more and more available, andfrom many more sources – everyone frombloggers to government agencies. In the nearfuture, this trend will only continue. “And themore local information, the more of a need toorganise it,” he said.

For reporters, EveryBlock can be a veryhelpful tool. For publishers interested inoffering a service similar to EveryBlock ontheir site, Holovaty has one piece of advice:“Hire developers!”

The general reaction from newspapers hasbeen “intense interest. Newspaper people tendto grasp the EveryBlock idea immediately.”

Not-for-profit

As American newspapers' main revenuesources continued a precipitous decline, topleaders from news foundations convened inNew York City in April 2008 to discuss hownot-for-profits could contribute to the fundingof American journalism. Three dozen mediafoundation luminaries gathered for a day todiscuss the possibilities in a forum sponsored


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by the Annenberg School for Communicationsat the University of Southern California, andthe Joan Shorenstein Center for Press, Politicsand Public Policy at Harvard University.The questions on the table were, wouldphilanthropic foundations' donations stem theAmerican news business’ fast decline? If so,how? While participants said these foundationsare not the cure-all, a variety of ideas to helpalleviate the symptoms came forth, includingthe development of new journalism arms ofnon-governmental organisations, collaborationsbetween foundations and news organisations,university investment in news businesses andseed money for new news ventures, accordingto the “Philanthropic Foundations: GrowingFunders of the News” report produced afterthe meeting, published in July 2009.In the last half of the 20th Century,newspapers around the world experiencedunprecedented profit margins, mainly due totwo factors: • A shrinking field of competitors vying foradvertising revenue• A strong market share in the No. 1 or No. 2spot compared with other mediaHowever, the dawn of the 21st Centuryreversed those two trends, mainly with thegrowth of digital media, and the competitionthey represent for advertising revenues andconsumer usage. Prior to the middle of lastcentury, a multitude of newspapers with avariety of target audiences were published,ostensibly by publishers who had a passion forwhatever the political or religious affiliationthey espoused. The enormous profitabilityemerged as many of these newspapers closed,and fewer media companies were vying foradvertising revenues. Fast forward to 2010, and media enterprisesare quickly proliferating, and market share foradvertising spend is fragmenting. Meanwhile,advertising revenue is dropping in the face ofharsh economic conditions. In manynewspaper companies, runaway spending andunanticipated, lightning-fast market declinehave fueled a crippling debt crisis that hascaused several media companies to declarebankruptcy or make outrageously onerousbailout loan deals.The crumbling infrastructure has sent mediacompanies scrambling for answers on how topay for journalism. Among the most promising

foundation initiatives to fund journalism,according to the report, are:

• The Center for Investigative Reporting willestablish a California-based arm with US$2.4million in foundation grant money to fund astaff of 10 to produce investigative reporting.

• The Kaiser Family Foundation of Californiarecently launched its Kaiser Health Serviceproject, aimed at filling a growing void ofnational health coverage.

• Voice of San Diego, has established scienceand environmental reporting positions, partlythrough foundation grants.

• The Knight Foundation has given $24million in grants to fund dozens of local newsWeb sites

• The Huffington Post Investigative Fundreceived $1.75 million in grant money tolaunch its investigative reporting unit.

• The international Human Rights Watch,which produces reports about human rightsviolations in 80 countries, has been given agrant to translate long, dry content into snappytext and video journalism.

• Participants discussed how multi-billionendowments would go a long way to fundjournalism in segments, for example, a $2billion endowment might yield a $100 millionper year budget, the amount reportedly neededto run American TV programme NewsHour.The Associated Press’ Tom Curley reckons thatit would take the annual yield from a $6 billionendowment to run AP’s core operations.

CROWD-FUNDING: SPOT.US

San Francisco, United Stateswww.spot.us

Crowd-funding journalism initiative Spot.Us isproducing journalism funded by donationsfrom the public. In 2008, the San Francisco-based site won the John S. and James L.Knight Foundation's Knight News Challenge,which gave Spot.Us founder David Cohn aUS$340,000 two-year grant.

Using small amounts of money from a largenumber of people, which has become knownas crowd-funding, has been aimed atencouraging journalism done for a communityto be funded by that community. Rather thanusing a traditional revenue model, likesubscriptions or advertising to support


64

journalism, crowd-funding is seen as relyingmore on individual readers, who also submittips and story ideas that they would like toread about. All stories are written by registeredfreelance journalists.

However, if a proposal does not receiveenough funding, it does not become a story,which critics say does a disservice toimportant journalism that may coverunpopular or uncomfortable subject matter.Proponents say it's more democratic, and thestories that are created will be well-receivedby readers.

The Creative Commons system allows Spot.Uscontent to be freely used by newsorganisations, as long as they attribute thework to its original author.

“When I talk with people in traditional newsorganisations, they like the idea,” Cohn toldthe Pacific Area Newspaper Publishers'Association. He said that thanks to theCreative Commons system, which allows usersto release content from certain aspects ofcopyright while maintaining others through arange of licenses, Spot.Us “can be a little bit ofan Associated Press in a sense.”

In November 2009, the first Spot.Us story tobe featured in The New York Times waspublished. More than 100 donors contributed$10,000 to fund the report, in which reporterLindsay Hoshaw covered a story aboutpollution in the Pacific Ocean. Hoshaw wasable to spend a month aboard the boat featuredin the article, the Alguita, and did research onher story about the Great Pacific GarbagePatch, a gyre of waste floating in the centralNorth Pacific Ocean roughly twice the size ofTexas, and the effect the toxins are having onmarine life. Below the article, a note states:

“Travel expenses were paid in part by readersof Spot.Us, a nonprofit Web project thatsupports freelance journalists.”In order to raise money for a story, a pitch forthe story is posted on the Spot.Us Web site,and members of the public can then donate tothat story. Publishers can also donate, and ifthey pay 50 percent of the amount needed,they gain first-publishing rights; if they pay forall of it, they get exclusive rights to the story,according to PANPA.

CROSS-MEDIA ADVERTISING ANDGAMBLING REVENUES

• Cross-media advertising represents apowerful new revenue stream. Mega-mediahouse IMPRESA in Portugal, with a combinedportfolio of TV, radio, newspapers, magazines,mobile and Web operations, developed aclever and profitable answer to theplummeting real estate market, amid theeconomic crisis. They created a multimediacampaign with TV, Web and newspaperadvertising to give away an apartment. Theresults: €320,000 profit from paid-for callsand texts in the contest. The campaign was sosuccessful, they will repeat again in bothLisbon and the Algarve, Portugal’s holidaydestination.

• The Metro in London, the most circulatedfree newspaper in the world, has had successwith online gaming, having earned more than£600,000 with four gambling games in 2009:Arcade, Casino, Poker and Bingo. Metropartners with “white label” European gamingcompany St. Minver, www.stminverltd.com,and payments from consumer go directly tocredit and debit cards. Other St. Minver clientsinclude Yahoo! UK and Ireland, and the DailyMail in London.

POYNTER INSTITUTE AND SCOTT TRUST:A HISTORY OF FINANCING JOURNALISM

Another model explored was the not-for-profitfoundation running the for-profit newspapercompany. Such are the models for both the St.Petersburg Times in Florida, United States,owned by the Poynter Institute training centreand think tank for journalism. A similar modelhas long been executed at the UnitedKingdom’s Guardian and Observernewspapers, owned by the Scott Trust.

In both cases, profits from the newspapers areused by the not-for-profits to fund


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philanthropic endeavours, such as training andunderwriting of new journalism initiatives.The for-profit media company continues topay taxes on its revenues, but the not-for-profitfoundation or trust acts as a shelter and allowsthe media company to be independent.

The Poynter Institute was created to keep theSt. Petersburg Times financially independent,locally owned newspaper. While the PoynterInstitute has owned the Times since 1977, itsleadership is still open to developing newmodels to fit in with the needs of the era.

“Here’s a hypothetical,” said Paul Tash,editor, chairman and CEO of the St.Petersburg Times, at the Harvard meeting.“What if we gave to Poynter some part of ourWeb operation, and made that as an R&Dproject. A journalistic lab. Even gave somesupport to it from the St. Petersburg Times.Then Poynter might attract somephilanthropic support for it. That, perhaps,could be a model.”

The Scott Trust in the United Kingdom isanother example of a not-for-profit institutionfunding a for-profit newspaper. The SFNTeam interviewed Larry Elliott, trustee of theScott Trust, about how the Guardian andObserver are financed by the trust.

Most newspapers in the United Kingdom areowned by a proprietor and traded on the stockexchange. The Scott Trust owns the GuardianMedia Group, with a variety of multiple mediain its portfolio, including the Guardian, theObserver, digital arm Guardian Unlimited,Auto Trader and a variety of local newspapersand radio stations. While the trust owns GMG,it does not micromanage or interfere in thebusiness operations, Elliott said.

“The Guardian was owned by the Scottfamily for a long time. In 1936, Scott’s sondied and the brother became the sole ownerand was faced with high taxes. He couldn’thave survived, so he put all his shares into atrust so it was guaranteed it couldn’t be takenover,” Elliott said.

“All of the proceeds (from the business units)make sure the Guardian survives inperpetuity,” he said. “The papers don’t haveto make a profit, but the group as a wholemakes enough so that there is a stream ofrevenue, enough to uphold its publishing inthe liberal tradition.”

According to Scott Trust documents, the corepurpose of the Scott Trust is to secure thefinancial and editorial independence of theGuardian in perpetuity: as a quality nationalnewspaper without party affiliation;remaining faithful to its liberal.”

And the purpose of the GMG “is to providethe revenue to make that happen,” he said,explaining that the Guardian is “effectivelysubsidised, so the Trust essentially milks therest of the group.”

However, there is a limit as to how muchprofit can be made and how much theGuardian can be subsidised, because of thelosses from the recession. It is not a blankcheck, but it is protected from the ferociouspressures, Elliot said.

“I think the model is primarily advantageous,because we are a relatively small company,compared to News Corp.,” he said. “It’sobviously very tough time for newspapers,with structural and cyclical pressures, but itdoesn’t mean that we are not obliged to makea profit for shareholders. We don’t have tomake an instant profit; our structure enablesus to chart our course for the next 10 years.”

Tash remarked that Poynter Institute’sstructure is hard to duplicate, because itrequires the publisher owner to give up thereins of the institution to a not-for-profitorganisation. Several media companies haveinquired with Tash about how to duplicatePoynter’s success, but ultimately get hung upon ceding control of their company.

The Poynter Institute, while slightly differentin structure than the Scott Trust, is similar inapproach and mindset. “This is a tough timein the economy and in Florida,” Tash said.“We will get through it, and will thrive, onereason we are able to navigate this difficultstretch is the structure we have – principles,independent and private. We are built forrough weather.”


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VOLUME 8 REPORT N° 4 WINNING MOBILE STRATEGIES

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4. New Business Models for News Project

VOLUME 8 REPORT N° 4 WINNING MOBILE STRATEGIES

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The City University of New York GraduateSchool of Journalism Center for JournalisticInnovation, through major foundation support,has developed new models for the newsbusiness, substantiated by data projections. Theproject is led by Jeff Jarvis, associate professorat the school and director of the interactiveprogramme. The project was funded by theKnight and McCormick Foundations. TheAspen Institute and MacArthur Foundationfunded conferences associated with the project.

The project is predicated on the assumptionthat there is a market demand for qualityjournalism and watch-dogging thegovernment, and that the market will find away to meet that demand.

“The question so many are asking is how. Wewill attempt to answer that by projecting thefuture of news in a metropolitan area,concentrating on four perspectives —hyperlocal, the new news organisation,publicly supported journalism, and theframework to support this new news economyas a whole,” according to Jarvis’ overviewstatement about the project.

Jarvis gave the SFN project permission toreprint the key messages of the project results,as encouraged by the project’s funders. Moredetailed projections, presentations, videos,budgets, calculations and revenue ideas can befound on the project’s Web site,newsinnovation.com.

The Initiative’s Assumptions

The project’s model market is a hypothetical top25 metro area in the United States, where thesole daily newspaper has ceased publication.

“In short: We are asking what will fill the void.We posit that no single company or productwill do that. Instead, an ecosystem made up ofmany players operating under many modelsand motives will emerge. In all cases, we areagnostic as to who owns and operates theseentities: legacy or new companies, large orsmall.”

The project examines the following viablerevenue models:

• The optimal hyperlocal (town orneighborhood) blog or site. The analysis

details how to maximise revenue on hyperlocalsites, whether they are run by sole proprietors,larger startups, or established mediacompanies. The analysis includes helping sitesprovide the best and most valuable service tolocal advertisers; establishing local networksof fellow hyperlocal sites to increase sales andrevenue opportunities; larger metro-widenetworks and exploring other revenueopportunities, such as paid models andcommerce. We will look at what these sitesneed to succeed, such as networks, promotionby aggregators and technology.

• The new news organisation. Even after amarket loses its daily paper, there is still anopportunity for a new news organisation to bereconstituted around key journalistic rolesserving the metro area, according to the project.The analysis includes the projected scale ofsuch an enterprise: its audience and revenueyielding its resources and functions, includingreporting, aggregation/curation, the organisationof the broader community and its news efforts.Other questions examined are how manyemployees can a profitable, journalism-centredbusiness support, and the employees’ roles.


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Revenue and Hyperlocal Blog Framework

Source: City University of New York, New Business Models for News, 2009 © WAN-IFRA 2010

Overall Metrowide market Total # of adults 18+ (metrowide) % of these who are online usersTotal of adults 18+/Online (metrowide)SubmarketsCoverage area - Large blog (Population = 60k) % of total living in large population (population = 60k) Total # of people living in large submarkets # of areas with population = 60k/total areaCoverage area - Medium blog (population = 35k) % of total living in large population (population = 35k) Total # of people living in large submarkets # of areas with population = 35k/total areaCoverage area - Large blog (population = 20k) % of total living in large population (population = 20k) Total # of people living in large submarkets # of areas with population = 20k/total areaUnique visitors & page viewsLarge hyperlocal blog % of these who are large blog users Begining UV Ending UV Page views/user/Mo.Total monthly PVs - Large hyperlocal blog (all blogs)Total monthly PVs/Large blogMedium hyperlocal blog % of these who are large blog users Begining UV Ending UV Page views/user/Mo.Total monthly PVs - Medium hyperlocal blog (all blogs)Total monthly PVs/Medium blogSmall hyperlocal blog % of these who are large blog users Begining UV Ending UV Page views/user/Mo.Total monthly PVs - Small hyperlocal blog (all blogs)Total monthly PVs/Small blog

Year 1

5,000,00080%

4,000000

54%2,700,000

45

36%1,800,000

52

10%500,000

33

35%–

945,00012

11,340,000252,000

35%–

630,00012

7,560,000145,385

35%–

175,00012

2,100,00063,636

Year 2

5,000,00080%

4,000000

54%2,700,000

45

36%1,800,000

52

10%500,000

33

49%–

1,323,00012

15,875,000317,520

49%–

882,00012

10,584,000235,200

49%–

245,00012

2,940,00089,091

Year 3

5,000,00080%

4,000000

54%2,700,000

45

36%1,800,000

52

10%500,000

33

50%–

1,620,00012

19,440,000388,800

50%–

1,080,00012

12,960,000288,000

60%–

300,00012

3,600,000109,091


69

• Publicly supported journalism. While theanalysis is predicated on the opinion that anyone foundation, government or publiccontribution will not rescue an existing newsoperation, publicly supported journalism fromindividuals, foundations and companies canplay a role in a new news ecosystem. “Thiscould take the form of a local ProPublica or ofcrowdsourced funding through a platform suchas Spot.US or of an expansion of publicbroadcasting’s role. The key question we willanswer is what level of support will likely beavailable — projecting from current effortslocally — and what those resources couldprovide,” according to the project’s overview.

New Business Models

The CUNY team has created original businessmodels for a Hyperlocal Website, a New Newsorganisation and the Ecosystem Framework. Inaddition, they have developed a model for a

Not-for-Profit news organisation that is basedon an assumed level of community andfoundation support in a Top-25 metro area.

To view and analyze all the models, go tonewsinnovation.com/models. The models havebeen openly published and are freely availablefor use by anyone. The spreadsheets can becopied and customized by inserting differentvalues and assumptions.

The following models reflect a convergence oftwo key interrelated parts of the new newsecosystem: the Hyperlocal Blog and theFramework, or sales and support structure thatserves the cumulative, underlying network oflocal sites.

The Hyperlocal Blog by its definition servessmall markets, not the five million populationcity used in the project. The sample metromarket was divided into many smaller marketsof 20,000, 35,000 and 60,000 in order toformulate smaller targeted blog audiences.

Medium Hyperlocal Blog: Expense Assumptions

Local banner ads rev share Framework rev share Total rev share local banner adsAd network rev share & commissionLocal ad network rev share & commission Commission – Bloggers % sold by large & medium bloggers Framework rev share Total rev share + commissionsMetro ad network rev share & commission Commission – New news organisation % sold by new news organisation Framework rev share Total rev share + commissionsNational ad network rev share & commission Commission – Framework % sold by framework Framework rev share Total rev share + commissionsAnnual growth rates Product development costsTravel/MiscellanousMarketind and promotionTechnology costsRent & utilitiesCapex per EmployeeRent Square footage/person Cost/square footage

Year 1

15%15%

20%100%20%40%

20%100%15%35%

20%100%20%40%

10%50%35%

n/a10%$500

100$–

Year 2

15%15%

20%100%20%40%

20%100%15%35%

20%100%20%40%

10%50%35%25%10%$500

100$8

Year 3

15%15%

20%100%20%40%

20%100%15%35%

20%100%20%40%

10%50%35%25%10%$500

100$8


HYPERLOCAL REVENUE POTENTIAL

Project leaders at CUNY used this logic todevelop their theory that hyperlocal blogscould be moneymakers for journalismorganisations. Accompanying this theory aretwo charts outlining the revenue and userframework for the revenue model, in additionto a breakout of the expense assumptions for amedium-sized hyperlocal blog.

“Today, there are hyperlocal blogs operating intowns and neighborhoods across America.Many are run by former professionaljournalists or new entrepreneurs with nobusiness - and certainly no sales - experience.They aim to cover their neighborhoods andmany are doing good work, serving and

attracting substantial audiences. If it can beshown that such businesses will supportjournalism and journalists, will more join theirranks to serve more towns? If we demonstratethat a hyperlocal blog in a town could generate$100,000 to $300,000 or more a year inrevenue, would this motivate laid-off reportersand journalism students to start them and servemore towns and topics?How could their businesses be optimized?What if they could sell advertising that serveslocal merchants better - including helpingthese businesses with their presence on theweb and on Google and Yelp? What if theycould sell advertising serving local merchantsin neighboring towns and sites? What if theywere able to get a piece of the regional


70

New News Organisation: Expense and IncomeExpensesMain Web siteB to C services SMS alerts Special/Themed issues Events Local coupon service Donation system for watchdog journalism Twitter coupons Listing sales of local businesses Tickets for local events/Entertainment Local Web sites for targeted markets/Communities Series of iPhone apps Local shopping comparison appSubtotalB to B services Listing sales from local businesses Events Marketplace Site builder Training in sales & marketing for local businesses Online subscription to weekly e-newsletters Businesses for sale and funding E-mail campaign serviceSubtotalTotalExpense/revenue margin

Operating income (EBDITA)Operating income marginCumulative EBDITAInvesting incomeCapital expenseEarnings before taxesIncome taxes @40%Earnings Net margin

Year 1$4,587,500

$5,000$258,800$130,000

$8,000$2,000

$0$0$0$0$0$0

$403,800

$103,495$223,000$215,000

$0$0$0$0$0

$541,495$5,532,795

112%

$(581,269)-12%

$–$60,000

$(581,269)$(232,508)$(348,761)

-7%

Year 2$5,380,900

$0$254,300$186,000

$3,000$0$0

$69,388$5,000

$1,135,541$35,000

$0$1,688,229

$169,145$284,000$168,100

$0$196,450$41,000

$0$0

$858,695$7,927,824

70%

$3,424,19230%

$2,842,923$–

$70,500$3,424,192$1,369,677$2,054,515

18%

Year 3$6,203,706

$0$254,810$219,320

$3,000$0$0

$66,675$0

$2,743,617$10,000

$0$3,297,422

$241,948$347,270$171,262

$0$174,850$54,000

$0$0

$989,330$10,490,458

52%

$9,811,40448%

$12,654,327$–

$81,000$9,811,404$3,924,562$5,886,842

29%


advertising pie that will be redivided when thepaper leaves? What if they could get a share ofother revenue streams, such as ecommerce?

Finally, what if these hyperlocal journalistsdidn't have to sell? What if the ecosystemsupported independent business people - callthem citizen sales forces – able to serve a newpopulation of local merchants and bring valueto these hyperlocal bloggers, enabling them toconcentrate on serving their communities?These are the questions we are asking.”

NEW NEWS ORGANISATION

Another facet to the New Revenues for Newsproject was to reimagine the news organisationas it has stood for decades. Here are theparameters CUNY researchers developed forthe new news organisation. Accompanying thisrevenue model is a three-year incomeprojection statement for the new newsorganisation, including the variety of revenuestreams that could be part of the new newsorganisation.

“When we at CUNY held a conference in newbusiness models for news in October 2009,members of the group charged withreimagining the newsroom started theirdiscussion not with the size of the currentnewsroom, imagining how to save its existingstructure. Instead, they forecast plausiblerevenue for a metro-wide news service andthen estimated how much staff it couldsupport:about 30 people. Recently, we spoke with theeditor of a metro paper who said that of the300 people in his newsroom, about 50produced original journalism (versus printproduction and commodity content).

We are not suggesting that 30 people can dothe work of 300 - even with efficienciesbrought by the internet - and we emphasizethat these 30 must work with networks ofhundreds, possibly thousands more in thecommunity. In effect, these 30 professionaljournalists would organize and train networksof independent journalists and citizens to coverkey aspects of community life, from education,


71

New News Organisation: Income StatementRevenuesAdvertising Online ad revenues Sales commissions on metrowide ad network salesSubtotalB to C services SMS alerts Special/Themed issues Events Local coupon service Donation system for watchdog journalism Twitter coupons Listing sales of local businesses Tickets for local events/Entertainment Local Web sites for targeted markets/Communities Series of iPhone apps Local shopping comparison appSubtotalB to B services Listing sales from local businesses Events Marketplace Site builder Training in sales & marketing for local businesses Online subscription to weekly e-newsletters Businesses for sale and funding E-mail campaign serviceSubtotalTotal

Year 1

$1,988,495$260,718

$2,249,213

$17,753$416,000$165,000$75,000$25,200$7,316

$0$0$0$0$0

$706,269

$928,400$742,500$325,145

$0$0$0$0$0

$1,996,045$4,951,526

Year 2

$5,787,423$744,867

$6,532,290

$49,708$416,000$275,000

$75,000$29,400$29,263

$177,530$33,833

$843,531$49,750

$0$1,979016

$1,108,400$990,000$358,309

$0$264,000$120,000

$0$0

$2,840,709$11,352,016

Year 3

$9,972,956$1,691,192

$11,664,148

$195,866$416,000$330,000$75,000$36,400

$109,737$397,979$35,525

$3,560,479$74,625

$0$5,131,611

$1,198,400$1,237,500

$410,203$0

$480,000$180,000

$0$0

$3,506,103$20,301,862

Notes

(1)(1)(1)(1)(1)(1)(2)(2)(2)(2)(3)

(1)(1)(1)(4)(2)(2)(5)(5)

Notes: (1) Year 1 launch, (2) Year 2 launch, (3) High cost of data collection, (4) Don’t do due to strong competition, (5) Not included in this model.Source: City University of New York, New Business Models for News, 2009 © WAN-IFRA 2010

housing, and sports to government, business,and crime. They would also aggregate andcurate coverage of the community from othersources and possibly link to state, national, andinternational coverage of news relevant to themetro area. In any case, we envision a new,metro-wide news organisation that operates ata smaller scale and wethen ask how large itsaudience and revenue could be.

NOT-FOR-PROFIT NEWS ORGANISATION

The CUNY project also developed a scenariofor a Not-for-Profit news organisation that isbased on an assumed level of community andfoundation support in a Top-25 metro area inthe United States with five million inhabitants.The main sources of income would beprimarily advertising, supplemented by agrowing percentage of revenue coming frommembership fees and foundation support.

The accompanying charts show revenue andexpense projections for such a not-for-profit

organisation, plus detailed revenueassumptions for the first three years of theorganisation's existence. While the charts onlyshow projections for advertising, membershipand foundation revenue, the report also offersa variety of ideas for revenue making for anynews organisation atnewsinnovation.com/models, including:

• Coupons• Sponsor posts• Video advertising• Ad networks• E-commerce• Paid content• Lists and databases• Mobile• Niche websites• Donations• Special reports• Events and conferencing• Syndication• News cafes


72

Not-for-Profit Organisation: Membership Projections


RevenuesGross revenuesFoundation supportMembership supportAdvertising & corporate sponsorshipFundraising eventsE-CommerceRevenue before operating expensesExpensesSG & A Salaries Membership expense Insurance Rent legal & accounting fees Fundraising Events Web site development Travel Miscellaneous expensesTotal expensesOperating incomeExpense/Revenue marginOperating income marginInvesting incomeCapital expensesEarnings before income and taxesIncome tax expense (@40%)EarningsNet margin

Year 1

$1,369,010$750,000$278,178$248,832

$50,000$42,000

$1,369,010

$1,025,400$27,818$2,100

$48,000$10,000$12,500$25,000

$150,000$2,800$3,660

$1,307,278$61,733

95%4.51%

$–$105,000

$61,733$24,693$37,040

2.71%

Year 2

$2,139,338$1,000,000

$389,450$641,088

$50,000$58,800

$2,139,338

$1,543,784$38,945$2,415

$52,800$11,000$12,500$25,000

$150,000$2,940$3,843

$1,843,227$296,111

86%13.84%

$–$–

$296,111$118,444$177,666

8.30%

Year 3

$2,843,493$750,000$556,357

$1,403,136$50,000$84,000

$2,843,493

$2,111,371$55,636$2,777

$58,080$12,100$12,500$25,000

$150,000$3,087$4,035

$2,434,586$408,907

86%14.38%

$–$–

$408,907$163,563$245,344

8.63%


73

Not-for-Profit Organisation: Assumptions


Market assumptionOverall metrowide market Total # of adults 18+ (metrowide) % of these who are online usersTotal # of adults 18+/Online (metrowide)Revenue assumptionsUnique visitor & page view % of these who are non-profit news users Begining UV Ending UV Page views/user/Mo.Total monthly PVsAdvertising and corporate sponsorshipTotal # of ads units per pageTotal impression (all ad types)Sell through rate (overall)Average CPM Banner ads and sponsorships (effective CPM)Contextual ads (Google, e.g.) # of ads per page CPC CTRAverage monthly ad revenue (banner ads & sponsorships)Average monthly ad revenue (contextual)Total monthly ad revenue (banner + contextual)Total annual ad revenueFoundation supportTotal # of foundations providing supportAverage grant sizeTotal foundation supportMembership support% of unique visitors who become membersTotal # of donors% of members donating at individual levels $35 $50 $175 $375 $750 $1,500 $2,500 $5,000 $10,000 $25,000Total annual membership revenues/levelTotal # of members at individual levels $35 $50 $175 $375 $750 $1,500 $2,500 $5,000 $10,000 $25,000Total annual membership revenues $35 $50 $175 $375 $750 $1,500 $2,500 $5,000 $10,000 $25,000Total annual membership revenues

Year 1

5,000,00080%

4,000,000

5%–

200,0003

600,000

63,600,000

45%

$12.00

3$0.20

0.36%$19,440.00

$1,296.00$20,736.00

$248,832

1$750,000$750,000

0.35%700

8%43%35%7%3%2%0%1%0%1%

563042434621143624

$1,973$15,223$42,503$17,240$15,613$20,818$8,674

$30,359$17,348

$108,426$278,178

Year 2

5,000,00080%

4,000,000

7%–

280,0005

1,400,000

68,400,000

50%

$12.00

3$0.20

0.36%$50,400.00

$3,024.00$53,424.00

$641,088

2$500,000

$1,000,000

0.35%980

8%43%35%7%3%2%0%1%0%1%

494263406429195926

$2,763$21,312$59,504$24,136$21,859$29,145$12,144$42,503$24,287

$151,797$389,450

Year 3

5,000,00080%

4,000,000

10%–

400,0007

2,800,000

616,800,000

55%

$12.00

3$0.20

0.36%$110,880.00

$6,048.00$116,928.00$1,403,136

3$250,000$750,000

0.35%1,400

8%43%35%7%3%2%0%1%0%1%

1136094869242287

1239

$3,947$30,446$85,006$34,480$31,227$41,636$17,348$60,719$34,696

$216,853$556,357

“What could this new news organisation’sproduct and service be and how could itrelateto the ecosystem? It must provideoriginal and unique reporting. It also needs toworkcollaboratively with the community – theecosystem – and so it may organizethosepeople and even train them. It will curatethe best of the ecosystem and the world to addvalue. It likely will not only produce articlesbut will reveal its process in blogs,aggregators, wikis, Twitter and RSS feeds,email, podcasts, and new tools yet to beinvented – so working in this organisation willrequire new media skills.

What will it take to support such a staff - howmuch audience, market penetration, traffic,advertising, and other revenue? (We assumethis new news organisation will be a for-profitenterprise; it need not be, but we believe this isthe higher bar to pass to demonstrate thesustainability of such journalism.) What roleswould the journalists in this new newsroomperform: reporting, community-organizing,curating, vetting, training? To be efficient, thestaff must reduce production tasks –technology will help them and they shouldspecialize and not replicate commodity contentavailable a link away.

“It is our hope that this news organisation –and the hyperlocal sites working with it – willbe motivated and supported to provide thebeat, watchdog, and investigative journalismtheir community needs, not only because it'snecessary but also because such work bringsthem value: attention, distribution via theconversation, branding, Googlejuice, audience,and ultimately profit. Note well that this workcan come not only from each organisationindividually but from networks oforganisations working together, collaboratingand crowdsourcing journalistic effort.”


74


75

5. Government Funding and Subsidies

Government funding and subsidies are thenorm for some countries, an experiment inother places, and almost flat-out rejected byothers. Culture plays a significant role in howpeople view government help – to some, a taxbreak is going too far, while to others,subsidies are expected.

James Moroney, publisher and CEO of theDallas Morning News, speaking on behalf ofnewspaper publishers, asked a SenateCommerce subcommittee in May 2009 togive newspapers a limited antitrust exemptionso they could “jointly experiment withinnovative content distribution and cost-saving arrangements.” Moroney argued thatnewspapers must act as a group to imposenew payments for online content if theirefforts are to be successful. Without jointaction, readers will simply turn to otheronline information.

Rupert Murdoch, on the other hand, inDecember 2009 wrote in a Wall Street Journaleditorial that government assistance tonewspapers would be an even bigger threat tosurvival than new technology.

“The prospect of the U.S. governmentbecoming directly involved in commercialjournalism ought to be chilling for anyone whocares about freedom of speech,” Murdochwrote. “It is precisely because newspapersmake profits and do not depend on thegovernment for their livelihood that they havethe resources and wherewithal to hold thegovernment accountable.”

United States

The global newspaper industry is suffering froma decline, and the U.S. market is one of themost seriously hit, as ad revenues haveexperienced a great recession, print readershiphas dropped as consumers switch to the Web forfree information and debt loads have hurt manycompanies so badly that one after another hasfiled for bankruptcy over the past couple ofyears, according to the Congressional ResearchService report “The U.S. Newspaper Industry inTransition,” written by Suzanne M. Kirchhoff.

Since 2007, eight major U.S. newspaperchains have filed for bankruptcy protection,including Tribune Co., Philadelphia

Newspapers LLC, Sun-Times Media Group,Star Tribune Holdings Co., MediaNews Groupand Journal-Register Co. Several large metrodailies have also closed down, and many havelaid off staff, reduced salaries, shrunk the sizeof the printed paper or even shut down printoperations and began publishing online only.

READERSHIP AND CIRCULATION

The overall daily print newspaper readership inthe United States is declining, according to theScarborough Research Top 50 Market Report

1998-2007. In 1998, 58.6 percent of total adultsread a print newspaper on a weekday. By 2007,that percentage had dropped to 48.4 percent.

In 1998, 62.2 percent of men and 55.2 percentof women in the United States read a weekdaypaper. The figures were both down to 51percent, and 45.9 percent in 2007, respectively.

During the six months ending in March 2009,most of the top 20 U.S newspapersexperienced a year-over-year print circulationdrop. Seven of them even marked a double-


76

Weekday Print Newspaper Readership, U.S.

Source: Scarborough Research Top 50 Market Report 1998-2007, prepared by Newspaper Association of America © WAN-IFRA 2009

0

10

20

30

40

50

60

70

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Percentage of total adults Percentage of men Percentage of women

%

56.955.1 54.3 55.4 54.1 52.8 51.6 49.9 48.4

62.2 60.6 58.8 57.5 58.2 56.8 55.5 54.152.3 51.0

55.253.4 51.7 51.3 52.8 51.5 50.2 49.2 47.6 45.9

58.6

Top 20 U.S. Newspapers: Print Circulation

Source: Nielsen Online and Editor & Publisher © WAN-IFRA 2009

Circulation %

-7.46

0.61

-3.55

-6.55

-1.16

-14.26

-20.55

-7.47

-13.96

-5.72

-3.01

-9.88

-0.71 -0.04

-15.72

-13.68

-11.7

-5.9

-13.72

-25

-20

-15

-10

-5

0

5

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

U SA T oday

T he W

all S

treet

J our

nal

T he N

ew Y o

rk T

imes

L os A

ngele

s Tim

es

T he W

ashin

gton

Pos

t

New Y o

rk D

aily N

ews

New Y o

rk P

ost

Chicag

o T ri

bune

T he H

ousto

n Chr

onicl

e

T he A

rizon

a Rep

ublic

T he D

env e

r Pos

t

Newsd

ay

T he D

allas

Mor

ning

News

Minn

eapoli

s Sta

r-Trib

une

Chicag

o Sun

-Tim

es

San F

ranc

isco

Chron

icle

T he B

osto

n G lob

e

Clevela

nd P

lain

Dealer

Detro

it Fre

e Pre

ss

T he P

hilad

elphia

Inq uir

er

Daily print circulation Six month ending March 2009 (%)

digit decline, according to Nielsen Online andEditor & Publisher.

The Wall Street Journal is the only onereporting a gain in print circulation, eventhough it’s just a slight 0.61 percent.

Meanwhile, most of the top U.S. newspaperssaw their online readership numbers jump inApril 2009, compared to the same period oneyear before. The Wall Street Journal Online,NJ.com, and MiamiHerald.com were thebiggest gainers, with more than 100 percentyear-over-year growth. Twelve othernewspaper Web sites also marked a double-digit growth, according to Nielsen Online.

ADVERTISING

In terms of adverting revenues, Internet adsstarted to take off in the United States in 2003,while print ads began to recess. According tothe Newspaper Association of America, totalnewspaper advertising revenues, includingprint and online, reached US$37.8 billion in2008, down from $49.4 billion in 2003.

In 2008, $34.7 billion of the revenues camefrom print, while $3 billion came from theWeb, which had increased from just $1.2billion back in 2004.

The Internet is no doubt the area with the mostgrowth, seeing increases in both readershipand advertising. Unfortunately, publishers stillcannot find a widely agreed-upon newbusiness model – if there is one – as printreadership declines further hurt subscriptionand advertising revenues, all while growthonline cannot yet compensate for print losses.Newspapers rely on advertising for about 80percent of revenues, but only less than 10percent of newspaper company ad revenues inthe United States are contributed by the Web,according to the congressional report.


77

U.S. Newspaper Web Site Readership

Source: Nielsen Online and Editor & Publisher © WAN-IFRA 2009

Unique View %

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

T he N

ew Y o

rk T

imes

Wall

Stre

et J o

urna

l Onli

ne

USA T oday

. com

Was

hingt

onpos

t. com

L A T

imes

B osto

n.co

m

D aily N

ews O

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Editio

n

New Y o

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Chicag

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SFGat

e. com

- San

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ncisc

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Newsd

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Politic

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T he W

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Tim

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Atlant

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Consti

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T he H

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e

NJ . com

Chicag

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-Tim

es

T he S

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Miam

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D allas

news. c

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D allas

Mor

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News

B altim

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un

Star T

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Az cen

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om-40

-20

0

20

40

60

80

100

120

140

160

180Unique views in April 2009 Change from April 2008 (%)

-8

160

12 818

33

73

27 30

-9

32

8370

-39

106

-7

39

104

-12

23

40

9

U.S. Newspaper AdvertisingRevenues, 2003-2008

Source: Newspaper Association of America © WAN-IFRA 2010

05

1015202530

4035

4550

US$ billion

2003 2004 2005 2006 2007 2008

Print ads Internet ads

NEWSPAPER BAILOUT?

As financial problems intensify, there is agrowing concern that the newspaper industry'sdownturn will impact civic and social life.

The number of newspaper reporters coveringstate capitols and city halls is going down,while the number of states with paperscovering Congress fulltime has also declined,from a recent peak of 35 in 1985 to 23 in 2009.

The debate over “whether the problems thenewspaper industry faces pose a public policyissue that is worth federal action have begun inthe Congress. Ms. Kirchhoff pointed out thatthe congressional response may depend on thecauses of the crisis: 'If the causes are related tosignificant technological shifts (the Internet,smart phones and electronic readers) orsocietal changes that are disruptive toestablished business models and means ofnews dissemination, the policy options may bequite limited, especially if new models ofreporting (and, equally important, advertising)are beginning to emerge. If, on the other hand,the current crisis is related to the struggle ofsome major newspapers to survive the currentrecession, possible policy options to ensure thecontinuing availability of in-depth local andnational news coverage by newspapers mightinclude providing tax breaks, relaxing antitrustpolicy, tightening copyright law, providinggeneral support for the practice of journalismby increasing funding for the Corporation forPublic Broadcasting (CPB) or similar publicprograms, or helping newspapers reorganize asnon-profit organisations.'”

On the other hand, others see the industrydecline as a natural and necessary transition fornew models. According to the survey “Stop thePresses? Many Americans Wouldn’t Care a Lotif Local Papers Folded,” conducted by The PewResearch Center for the People & the Press,only 43 percent of those surveyed said losingtheir local newspaper would hurt civic life intheir community “a lot.” Another poll by SacredHeart University also showed that as few as 20percent of Americans would not oppose a tax-funded bailout of U.S. newspapers.

ACTIONS TAKEN

Congress has begun discussion on this topic,but the debate has not gone beyond the hearingstage yet.

In April 2009, the House Judiciary Subcommittee

on Courts and Competition Policy held a hearing,seeking the possibility of changing antitrustlaw in order to allow for more collaborationand mergers in the newspaper industry.

Expressing concern over the quality andcredibility of unpaid information, U.S.President Barack Obama showed modestsupport for a bailout in an interview in the fallof 2009.

Meanwhile, according to The Hill's BlogBriefing Room, Sen. Ben Cardin, a Democratfrom Maryland, has introduced S. 673, the so-called “Newspaper Revitalization Act,” a billthat would give news organisations tax deals ifrestructured as 501(c)(3) corporations. The billhas attracted one cosponsor, another MarylandSenator, Barbara Mikulski, also a Democrat.

In May 2009, some newspaper publishersasked the Senate to temporarily relax antitrustlaws so publishers could together set a newonline pricing policy and change tax laws toallow media companies to write off pastlosses, according to the Congressional report.

However, there is still no consensus. TheNewspaper Guild, one of the main unions in theindustry, argues that newspaper chains haveused mergers to undermine existing contracts.

Some newspaper publishers have also showntheir opposing stance. They think it would barnewspapers from endorsing candidates orexpressing certain partisan political opinionsin order to keep the non-profit status.

Newspaper Association of America PresidentJohn Sturm also told a committee hearing ofthe U.S. House of Representatives on “TheFuture of Newspapers” that “The newspaperindustry is not seeking a financial 'bailout' orany other kind of special subsidy. We don'tbelieve direct government financial assistanceis appropriate for an industry whose coremission is news gathering, analysis anddissemination.”

Government Subsidies to U.S.Newspapers Declining

In the United States, government assistancethrough subsidies and tax breaks have been inplace since 1792. But the long-running threadof government assistance has begun tounravel, and newspapers have been losing thatsupport over the past 40 years, according to astudy by the University of Southern California.


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The debate throughout U.S. media overwhether government subsidies are essential tonewspapers' survival, as well as how muchassistance they can accept – if any – and stillbe independent, is ongoing. However, thestudy, conducted by Geoffrey Cowan, deanemeritus of the USC Annenberg School, andDavid Westphal, USC Annenberg Schoolexecutive in residence and former Washingtoneditor for McClatchy Newspapers, points outwhat many may not know: in today's dollars,government support for newspapers andmagazines has fallen drastically.SUBSIDIES

The largest government reductions have comefrom the decreased level of postal subsidies fornews, which have been cut by more than 80percent in the past 40 years, Cowan wrote inthe study's introduction.“Thanks to the visionary leadership of GeorgeWashington and James Madison, mailing costswere heavily subsidised by the government for thefirst 180 years of our nation’s history – from thePostal Act of 1792 to the Postal ReorganisationAct of 1970. In 1970, the Postal Servicesubsidised 75 percent of the cost of periodicalmailings. Today, the subsidy has fallen to just 11percent. In today’s dollars, that’s a declinefrom nearly $2 billion in 1970 to $288 milliontoday. Magazines that would still be profitableunder the arrangement established by our foundersare now closing at a precipitous rate,” he stated.Slated for cuts are public and legal notices,which government agencies are looking tosave on costs by running notices online, ratherthan in print. These are two areas that havebeen an important revenue source for U.S.papers throughout the country's history,providing hundreds of millions of dollars toweeklies, dailies and national newspapers.“While lobbyists and lawyers for some mediacompanies are trying to block these changes, aday of reckoning is clearly on the horizon. Theloss in revenue will be substantial,” accordingto Cowan.TAX BREAKS

Tax breaks created to help news outlets are partof the federal tax code in most states, whichtogether add up to hundreds of millions ofdollars in lost tax revenues for the government.“For example, the federal tax code hasprovisions for the special treatment of

publishers’ circulation expenditures as well asspecial rules for magazine returns. Those twosections of the code account for a loss of $150million in taxes – or a subsidy of $150 millionfor the industry. Tax breaks at the state level,including favorable treatment of newsprint andink, amount to at least $750 million. The actualamount is probably much higher because manystates don’t report separate data for publishers.How long those preferences will persist isanyone’s guess,” Cowan wrote.

Denmark

In the past 10 years, total revenue has onlyexceeded the value of distribution subsidiesonce, in 2005, said Ebbe Dal, managingdirector of the Danish Newspaper Publishers'Association.

“There are profitable newspaper houses inDenmark, but seldom at a level that would beaccepted in a conventional limited industrialcompany,” he said.

However, with the exception of MecomGroup-owned Berlingske Newspapers andBonnier-owned Børsen, “the majority ofnewspapers being owned by foundations orhundreds of small more or less idealisticshareholders try to make money to be able toproduce newspapers and not the opposite.”

Being not-for-profit has its risks, namely beingvulnerable in bad times, and “maybe a less


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1. The government should find ways to make sure that reporters, news organisations and other content creators are paid for work that might otherwise be used without permission or compensation (which is one reason why the founders provided for copyright laws in the Constitution).

2. Most government funding should be indirect, rather than direct (as it is through the Corporation for Public Broadcasting and through participating public radio and television stations).

3. Where possible government funding should be distributed according to a formula rather than as a direct subsidy for particular news outlets (as is the case with tax breaks and postal subsidies).

4. The government can play an important role by investing in technology and other innovations, as it did when it supported research on transistors, on satellite technology and on the Internet.

Westphal and Cowen'ssuggestions

for creating a fair system in whichgovernment can better support

the production of news and information

vigorous concentration of running lean,” Dalexplained.

In a poor economic climate, like the one theworld has been experiencing over the pastyear, Danish newspapers are well-funded, ifnot profitable.“It is a very important advantage for liquiditythat 90 percent of the Danish circulation is pre-paid three, six or even 12 months in advance,”Dal said.Newspapers in Denmark do not pay value-added taxes, and receive distribution subsidiestotalling €50 million per year, as well as €2million to support newspapers in crisis, he said.Lisbeth Knudsen, chief editor of BerlingskeTidende, said distribution subsidies are thelargest direct newspaper subsidy, and are paidto most daily and paid-for weekly newspapers.“The distributions subsidy is divided into two,a daily and a weekly scheme, but the rules areessentially the same. The level of subsidy, paidto the newspaper, is determined by the numberof subscribers. The maximum number ofsubscribers that a newspaper gets subsidies foris 7.2 million annually,” she said.Knudsen said subsidies in no way makenewspapers in Denmark less competitive.Most newspapers have been run by publishersand financed with trust money, with theexception of Berlingske Media and Bonnier.“We have over 30 newspapers for a populationof 5.4 [million], all in all. Therefore you needto be very competitive and drive high qualitynewspapers at the same time.”Being exempt from Denmark's VAT, an indirectsubsidy, is a significant value for Danishnewspapers, according to some analyses, shesaid. The Danish VAT is 25 percent, which hasa value of more than DKK 1 billion (€134.3million) – that's 2.5 times the value of thedirect subsidies, Knudsen pointed out.Transformation subsidies, which supportnewspapers in crisis, are relatively small,compared to distribution subsidies. The fundwas established when the country's subsidiessystem was changed, she said. In the past,Danish newspapers were not subsidiseddirectly, as subsidies were paid to distributioncompanies, which in turn charged newspapersbelow-cost distribution services.Camilla Struckmann, of JP/Politikens Hus,agreed that distribution subsidies have not

weakened competition among newspapers. In2008, JP/ Politikens Hus received DKK 45million (€6.04 million) in distributionsubsidies, which amounted to 3 percent of thegroup's total production and distribution costs.

Lars Munch, CEO of Jyllands Posten/Politikensaid the newspaper industry in Denmark couldnot be classified as not-for-profit; however,newspapers do receive two types of subsidies.

“We certainly do not have a not-for-profitatmosphere, but tough competition has put theprofit under pressure. As a matter of fact, Ibelieve you would find it hard to find othercountries with lower advertising rates or withmore titles per capita. Competition is driven bysurvival!” he said.

Newspapers also receive lower rates fortelephone and postal charges, as well asgovernment payments for agencyadvertisements and printing the results of thenational lottery, according to Press Reference.The government also makes yearlycontributions to the Financial Institution of theDaily Press, which makes low-interest loansavailable.

In Nordic countries, Sweden and Norway“have tended to take a stronger welfareorientation, employing direct subsidies inaddition to a range of fiscal advantages.Denmark, Iceland and Finland have useddirect subsidies to a lesser degree in theirefforts to half newspaper mortality,” accordingto Robert Picard's 2007 report “Subsidies forNewspapers: Can the Nordic Model RemainViable?”

Danish newspapers and government arediscussing the possibility of changing thedistribution subsidy system once the globalfinancial crisis is over, Knudsen said.

“The president subsidy system functions wellin Denmark, but has a long tradition andbackground and we have learned to live withits downfalls,” Struckmann said. “The presentsubsidy system contributes to consolidate andcement the existing media structure. This ispositive because it maintains diversity incontent and media accessibility, but also has anumber of negative consequences, since theincitement to innovate is reduced and becausethe access to established new companies in themarket without an historic anchor to one of theexisting suppliers is hampered.”


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Newspapers are no longer just printed papers –they are multimedia, growth businesses. Andas such, revenue possibilities are catching upwith the many ways to distribute content.Newspapers are choosing and implementingnew, multiple revenue streams to support theirmultimedia businesses, monetizing content onmultiple platforms while continuing toinnovate and build on revenue streams alreadyin place.

The worst of the global economic downturnand advertising recession is believed to beover, and newspapers are dusting themselvesoff, changing cost structures to fit current andfuture needs and working even harder to growcontent and revenues.

In mid-2009, a Moody's senior analyst in NewYork noted the U.S. newspaper industry's coststructures were “distorted,” a description thatcan be applied to newspapers' situations inmany other countries. Just 14 cents on thedollar were spent on editorial content, while 16cents were spent on advertising and marketing.The most money, 70 cents on the dollar onaverage, was spent on paper, printing,

distribution and corporate functions. Basically,too much is spent on printing and distribution,and not enough is spent on what readers areactually looking for – the content, StephenQuinn wrote in Chapter 1. Newspapers need tolook at all platforms, instead of focusing juston print.

“Journalism will thrive when media companiesfree themselves of the shackles and mindset ofprint, and focus on online, wireless,interactivity and whatever new platformsemerge for digital delivery. Tomorrow’sjournalism will appear on a variety ofplatforms designed to reach as many people aspossible at all times of the day,” he stated.

Digital Revenue Streams

In the last months of 2009 and first months of2010, newspapers all over the world beganlaunching their mobile strategies – the nextstep into the next digital frontier.

Some newspapers, like The Guardian, havelaunched a paid mobile application. TheGuardian's app costs £2.39, and within the first

Conclusion

couple of weeks after its launch, it hadreceived almost 69,000 downloads.

Other newspapers companies, like Daily Mail& General Trust, are launching free apps thatare supported by ads, aiming for wider long-term downloads.

Newspapers that look at what their users wantand find a way to offer it to them are alsoplanting the seeds for long-term revenuegrowth.

Singapore Press Holdings came up with anidea for the Singapore market that would onlywork there, and only for SPH. In 2008, SPHlaunched Rednano.sg, a local search anddirectory offering that rivals Google, and givesusers searching for anything related toSingapore local context, which meansincreased relevance. Not only does search giveSPH traffic to monetize, it also gives thecompany a deeper understanding of users, saidPaul Jansen, CEO of SPH search.

New Content Models

Newspapers have cut costs for the past severalyears, and because of this, have had to comeup with more efficient ways to cover the news.Most newspapers are focusing on what is mostimportant to them, and makes them mostunique, and have looked outside their officewalls for help on what they can't afford tocover themselves anymore.

Outside help is coming in the form of start-upslike Associated Reporters Abroad, based inBerlin, which aims to bring the newsroommodel to foreign correspondents andfreelancers, lending stability and credibility tothe exchange between news outlets andfreelancers. Newspapers can be assured thatthe story they want is being covered and doneright, and journalists are given the addedinsurance of having a story edited beforesending it to a newspaper, as well as havingsomeone help them shop their story ideasaround to different news outlets.

GlobalPost, a news startup that is looking toreduce the cost of foreign correspondents, ishelping smaller media companies gain thecoverage they want and can afford. This isbeing done using three business models:advertising, a membership scheme calledpassport and content syndication. Thecompany also has investors and supporters

which include Liberty Mutual Insurancecompany, Siemens and Bank of America. ByOctober 2009, Passport had about 500 payingmembers, and the firm reported US$1 millionin revenues for 2009.

Another content model many newspapers areinvesting in that of hyperlocal. Newspapershave been a step ahead in the hyperlocal gamefor hundreds of years – they know their areasbest, and the kind of content they can providecannot be offered by any wire service orsearch engine.

EveryBlock.com, which organises anddisplays public data and records according tolocation, down to the city block, is an exampleof what newspapers are looking to do, andunique content they can offer readers. And forreporters, EveryBlock can be a very usefultool.

When talking to newspapers aboutEveryBlock, Adrian Holovaty, the site'sfounder, said he always gets “intense interest.Newspaper people tend to grasp theEveryBlock idea immediately.”

And More

The global economic crisis pushed newspapersto try things they normally never would have,which has set the stage for current survival andfuture growth. Some newspapers are tryingnon-profit models, others are testingfoundation initiatives, government aid,publicly supported models and more.

Every newspaper is different, and each isfinding the best set of revenue streams andcontent models for its location and readers.Finding a way to give the audience what itwants, and monetize those offerings is acompletely different picture for everyone, andthe newspapers that are successful now and inthe future will choose their businesses wisely,and work hard to implement them quickly andcorrectly.


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THE PUBLISHER

World Association of Newspapers and News Publishers7 rue Geoffroy St-Hilaire75005 Paris, FranceTel.: +33 1 47 42 85 00Fax: +33 1 47 42 49 48E-mail: [email protected]

WAN CEOTimothy Balding

SFN DIRECTOR

Martha L [email protected]+ 1 847 778 9806

SFN BUSINESS ANALYST

Erina Lin

SFN EDITORIAL MANAGER

Leah McBride Mensching

PAGE AND GRAPHICS DESIGNER

Marianne Audouard

GUEST CONTRIBUTOR

Stephen QuinnAssociate Professor of Journalism,Deakin University, Australia

World Association of Newspapers and News Publishers

© WAN-IFRA February 2010

The contents of this report may be used in whole or part by publishersin the execution of their business. Use of any part of the content or intellectual property herein for the purpose of representation or consulting requires prior written consent of the author. Any reproduction requires prior consent of WAN-IFRA.

Shaping the Future of the NewspaperANALYSING STRATEGIC DEVELOPMENTS AND OPPORTUNITIES IN THE PRESS INDUSTRY

STRATEGY REPORTVolume 9 N°2 FEBRUARY 2010 © WAN-IFRA

A World Associationof Newspapers and News Publishersproject supportedby four strategicbusiness partners

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