As newspapers’ print revenue and readership continue to drop, the future of the industry depends on finding a way to collect money from people who read the news for free online.
And so the Star Tribune last week launched a new, paid subscription system for its digital content on phones, laptops and iPads. Modeled after the New York Times’ digital paywall, the Strib’s new service allows people to read up to 20 articles a month for free. After that, they will be “invited to subscribe” at rates that generally amount to a buck or two a week.
Subscribers to the Sunday print edition get an even lower rate, and if you take the printed paper more than one day a week, digital access is free. It’s a pretty good deal, if you ask me.
And it’s a necessary move by the Star Tribune and its publisher, Michael Klingensmith — who was just named “Publisher of the Year” by Editor & Publisher magazine. The so-called “paywall” has been a subject of intense debate in the news business for nearly a decade now, and I’m not going to rehash all the arguments here. Once the Times put up a paywall, it was inevitable that others would follow.
The question now is whether digital money can offset print revenue declines that continue to run in the high single digits year over year at most publicly traded newspaper companies. The privately owned Strib doesn’t report its revenue, but according to reporting by my MinnPost colleague David Brauer, the hometown paper is doing better than the industry overall.
Digital subscriptions are not a surefire game-changer for the legacy print business. For the past couple of years, newspaper and magazine executives have touted the iPad as a potential savior. It’s smaller than a laptop but bigger than a phone — a perfect size for delivering news content.
But a study of tablet use released last month by the Pew Research Center cautioned that the revenue potential for news on the tablet may be limited. Only 14 percent of current tablet users are paying for a news app, the study found. And of those who read their news on a tablet for free, only 20 percent would be willing to pay even as little as $5 a month for news.
Rupert Murdoch’s “The Daily,” an iPad newspaper that launched in February, has attracted only 80,000 subscribers at 99 cents a week. That’s one-sixth the number Murdoch said would be needed to break even. If Murdoch — arguably the world’s most powerful media tycoon — can’t get a tablet newspaper off the ground, who can?
Two quarters into the launch of its paywall, the New York Times posted a profit in the third quarter and reported a total of 324,000 digital subscribers. But some analysts were too quick to credit the Times’ paywall. The paper’s profit was due more to severe cost-cutting than to strong business performance. The growth of digital revenue weakened in the third quarter, and print advertising at the Times was down 10 percent.
Tablets and paywalls are the best options available to the newspaper business right now, and the Star Tribune is wise to promote them. The Strib is among the early adopters at this stage, and it’s a smart place for the paper to be.
But it’s by no means certain that tablets and paywalls will ensure the organization’s future. That will ultimately depend on whether news consumers continue to find value in the Star Tribune’s content — and whether marketers believe the Star Tribune provides a good platform for communicating with those consumers.