Making sense of paywall figures
Fairfax’s AGM statement this week and today’s quarterly release of newspaper criculation numbers include digital data – but without enough detail to give a true picture, argues Merja Myllylahti, in a crossposting from The Conversation
Media companies are failing to deliver transparency about their digital subscriptions, as my recent study about paywalls found.
The research of paywalls in eight countries found paid online content presents roughly 10% of news companies’ total publishing or circulation revenue. This is not enough to make paywalls a viable business model in the short term.
In fact, trying to make sense of how many people are paying for access to online news content is much harder than you might think. Newspaper companies are disclosing very ambiguous figures about their online subscriptions, and are reluctant to reveal how much paywalls ultimately contribute to their bottom line.
The same can be said of Fairfax, which this week released new figures concerning its digital subscriptions. Chief executive officer Greg Hywood told investors that the company’s paywall “success has exceeded expectations”.
Fairfax launched paywalls for its mastheads The Age and The Sydney Morning Herald in July 2013. The readers of the papers can access 30 articles per month for free before the paywall kicks in.
According to Hywood, The Age and The Sydney Morning Herald now have 86,000+ paid digital subscribers, and 102,000+ existing print subscribers who have signed up for digital access, or bundled subscriptions.
Fairfax doesn’t disclose how its print subscribers pay on top of their print newspaper, or if they pay anything at all. The idea of bundling is that if you offer a digital subscription relatively cheaply on top of the print subscription, people are more likely to take both.
For example in Finland, the leading national newspaper Helsingin Sanomat, charges its print customers only US$48 for the digital access on top of their print subscription. The Finnish paper claims around 42% of its readers pay for the digital content.
The parent company of the paper, Sanoma, doesn’t disclose any revenue figures for its paywall, but it seems that its bundling model is working reasonably well.
A quick calculation of Fairfax’s paywall revenue reveals that if the readers of its two mastheads paid for the cheapest digital-only package, A$180 dollars per year, Fairfax would make around A$16 million annually. Assuming an extra 102,000 readers would pay for a bundled package with the price tag of A$528 per year, Fairfax would earn A$54 million from these bundled subscriptions.
Based on these figures and rough calculations The Age and The Sydney Morning Herald would earn A$70 million from their bundled and digital-only subscriptions per year. This presents approximately 3.3% of the media corporation’s annual revenue.
I guess it is fair to say that these two mastheads would not save Fairfax from sinking, but extra revenue is welcome for any news publishing company nowadays.
New king of content bundling
In the US, some of the leading media corporations have sold off their newspapers, and a new block of media moguls has emerged. But the same challenge remains there – how to sell digital subscriptions to a public generally uninterested in paying for news.
Earlier this year Amazon’s founder Jeff Bezos bought The Washington Post. Bezos has been hailed in media as a content “bundling king”.
He believes that people don’t buy individual stories, they buy packaged or bundled content. “People will buy a package. They will not pay for a story,” he told staff at the WaPo.
The Washington Post had put up a paywall a few months earlier, in June. It gives its readers 20 free articles per month before they are asked to pay. But Bezos intends to bundle content of his newly acquired newspaper into packages, lucrative to different groups and a different kind of buyer.
Amazon is already experimenting with different packages for its users. They are starting to offer combined print and digital subscriptions for magazines like Vogue, Wired and Vanity Fair.
And Amazon has a major strength compared to traditional news outlets. Its platform has a wide reach and a prominence, which the magazine’s own distribution channels don’t.
Circulation stabilises, print readership high
The latest reports from PEW and PricewaterouseCoopers suggest the decline in newspaper circulation and revenues has stabilised, although globally news publishing revenues from sales and advertising fell in 2012 to US$164 billion from US$187 billion in 2008.
PwC forecasts flat revenue growth for the newspapers in 2013-2017, and notes that “a long-term decline in newspaper advertising revenues means that circulation will represent an increasingly significant proportion of overall revenues”.
A recent study published by Dr Neil Thurman provides surprising findings. He observes that in the UK, an average of 96% of the time spent with newspapers was in print, not online. This suggests print newspapers are far from the death’s door, since the readers spent more minutes reading the print version of a newspaper than the online one.
Another study also suggests that print newspapers are surprisingly resilient and have loyal readership, at least in certain countries. The Reuters Institute Digital Report 2013 reveals that newspaper purchases are especially high in Japan, Italy and Germany.
The report also found the number of people paying for online news content has increased, although the numbers are still relatively low.
Merja Myllylahti is a lecturer at Auckland University of Technology..
This article was originally published at The Conversation.
Read the original article.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Thank goodness! if you can believe this article, the media now along with every other business has to justify it’s rate/price increases by market value and content sold,. If you need it , you will buy it . Media has the benefits readership/ listener ,viewer, audiences. to market , which if the proprietors have their eye on the ball , rather than diversification and expansion. This has to be a good thing!
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Not sure this piece helps a lot. Newspaper companies have adopted “paywalls” in about 650 instances, but few are actually making content the actual business the way the WSJ, FT and perhaps NYT have. The big problem is that advertising is getting worse and publishers are still talking about a “recovery” at some point!
Fairfax and News are in denial about the issue. Neither will charge much for the core content value and neither is seeing anything other than further degradation of advertising. In short, they have no plan.
If News and Fairfax had a plan they would be making seriously good multimedia news products that people value. They would also have re-shaped their print products to highlight their strengths.
Both have shipped out most of their better talent and are barely hanging on to what remains.
Amazingly, the managers are still pocketing the salaries that applied in the old days, when money flowed in via the storm drains.
Something has to give here, but sadly it won’t be the people in the comfortable arm chairs.
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