Glimmers of hope for paywalls or an optical illusion?

tim burrowes landscapeEvery newspaper and magazine in the country records a drop in print sales today. But are there a couple of tiny green shoots in digital – or is it just a trick of the light, asks Mumbrella’s Tim Burrowes

You know those astronomers who patiently watch the same distant star for months on end because every few months the brightness fluctuates fractionally, letting them extrapolate the existence of an orbiting planet?

When the quarterly audited paywall numbers come in, I think I know how those scientists feel.

The figures mean almost nothing, but if you squint really hard, you can just about make something out.

Today is one such day, with the print and digital sales numbers for the first quarter of this calendar year published.

The print side can be dismissed fairly quickly: Things are still bad in print. Today we hit the milestone that every audited print number is down. Every newspaper and every magazine, without exception.

Four national newspapers. Ten weekday metropolitan titles. Ten metro Saturday titles. Ten metro Sunday titles. Forty regional dailies. Four country press titles. Ten weekly magazines. And one fortnightly mag. All down.

From Zoo Weekly’s loss of 36 per cent of its sales in the space of a year, to The Tully Times’ loss of 45 more copies per week, the direction was the same.

The move from broadsheet to compact did nothing to slow the double digit slide for The Age and The Sydney Morning Herald. The Weekend AFR fared even worse.

I wonder now if print success is simply that of avoiding a double digit fall. If so, News Corp could just about claim it. The Australian’s weekday edition only dropped 6.7%. The Courier-Mail in Brisbane was down only 5.6%. The Daily Telegraph in Sydney was down 9.5%. Also in that club, Seven West Media’s The West Australian – down 9.1%, and the weekday AFR, down 6.4%.

But now, of course, most are looking to paywalls – in theory, the last best hope of the print industry.

Three months ago, what faint signals there were made me pessimistic. What growth there was appeared to be stalling – certainly quarter-on-quarter. (Usually, I prefer year-on-year numbers as they smooth out seasonal changes, but in the case of the new paywalls, that’s not particularly meaningful.)

This quarter, there are a couple of results from News Corp titles (or rather, the few that actually audit their numbers) that could be interpreted as green shoots.

But before I get to that, let me set out the inadequacies of the audited data.

As I wrote last time, the biggest problem is that the definition of a paying digital subscriber is feeble. While it could be somebody paying the full $24 a month, it’s more likely to be somebody on a 28-day $1 trial. Or even, in Fairfax’s case, a school reader worth just 84 cents a year.

But even with that caveat, clearly it’s better for the newspaper industry for numbers to be going up. Even if these are sampling readers at this stage, they could become properly paying customers later.

Let’s start with The Australian, which (other than the AFR) was first to jump to a paywall.

A quarter ago it looked like The Australian’s digital growth was stalling. For four successive quarters its digital-only sales and its bundled print-plus-digital sales had seen growth shrink each time.

This time, The Oz turned that around – putting another 4,000 or so digital subscribers, and slightly more if you include those taking a digital and print bundle.

More than 8 per cent growth is a respectable enough number, albeit off a low base.

It may also suggest that the move away from the metered model paywall to a locked premium content model is working slightly better for The Australian.

However, it would also be interesting to know how many of the people on the digital-plus-print edition bundle are genuinely in it for the digital part.

The Australian M-F digital sales (including print and digital bundles)

  • December 2012 – 39,539
  • March 2013 – 45,869 (+16%)
  • June 2013 – 51,213 (+5.3%)
  • September 2013 – 55,991 (+4.8%)
  • December 2013 – 57,282 (+2.3%)
  • March 2014 – 62,106 (+8.4%)

I raise that because it’s currently slightly cheaper to subscribe to The Australian in print six days a week, with digital access on top, than it is to just get the print edition six days a week.

australian digital subs

With those price points, a print diehard would still be smarter getting the digital bundle even if they never log-in.

In fairness though, The Australian’s digital-only subs also went up. (I told you it was hard to make out what the wobbling of the distant planet means.)

The Australian digital-only sales

  • December 2012 – 35,987
  • March 2013 – 42,719 (+18.7%)
  • June 2013 – 47,784 (+11.9%)
  • September 2013 – 52,181 (+9.2%)
  • December 2013 – 53,019 (+1.6%)
  • March 2014 – 57,555 (+8.6%)

But the even more intriguing numbers come from News Corp’s only daily metro to share its digital numbers – Melbourne’s Herald Sun. After actually going backwards in digital only sales a quarter ago, there’s been a sudden jump of 20%.

Herald Sun digital and digital-plus-print sales:

  • March 2013 – 26,436 (First publication of data)
  • June 2013 – 33,714 (+27.5%; after paywall launch)
  • September 2013 – 37,564 (+11.4%)
  • December 2013 – 39,380 (+4.8%)
  • March 2014 – 47,815 (+19.9%)

And the Herald Sun’s digital-only sales:

  • March 2013 – 24,318
  • June 2013 – 30,624 (+25.9%)
  • September 2013 – 33,203 (+8.4%)
  • December 2013 – 33,106 (-0.3)
  • March 2014 – 40,362 (+21.9%)

So while this is good news, it’s hard to know whether it’s a meaningful victory.

This is where the seasonal variations can trip us up on quarter-by-quarter results. The Herald Sun is the paper for the AFL fan, so the start of the season will have helped.

So too will the paper’s SuperCoach footytips contest. Access to the SuperCoach Gold offering comes as part of subscription to the paper’s paywall.

Not that this is something to criticise. If The Herald Sun is beginning to find a bundling formula that works, then this becomes a signal that everybody can learn from.

Up to now there have been two main possibilities facing the newspaper industry as it tries to puzzle out the slow take-up: Either the public simply don’t want the products; or the marketers have been failing to sell it well enough.

The best possible outcome for newspapers would be if in fact there is a public demand once the bundle is marketed properly, even if it means offering a product that is more than just the journalism. News has been experimenting with offers including subscriptions to NewsLifeMedia magazine titles and music streaming, which all makes sense.

And if the Herald Sun is beginning to learn how to market bundles, then this is a green shoot the industry can focus on.

Based on a single quarter of movement upwards, it’s too early to say though. Once we go two or three quarters delivering that sort of growth, then it becomes less crazy to anticipate that digital subscriptions have a shot at being a mass product.

But remember just how murky the whole industry has chosen to make the picture.

First a deadline was set for all audited publishers to share their paywall data, then this was quietly dropped, leading to the odd situation where those who started to share are obliged to go on doing so, while those who moved more slowly can keep quiet.

In particular, until (or, rather, if) News Corp’s The Daily Telegraph starts sharing numbers, it’s hard to get anything approaching a full picture.

Where there must be most concern though is at Fairfax, where The Age’s digital growth is stalling, and the SMH isn’t doing much better on the growth curve.

In total, the number of people paying for digital-print bundles from The Age grew by just 139. For The SMH it was a bit better, but still only about 6,000. And given the Fairfax habit of offering those super cheap educational subs, it’s not likely those translate to significant revenues.

The Age M-F digital-only and digital-plus-print sales

  • Dec 2012 – 37,162
  • March 2013 – 41,381 (+11.4%)
  • June 2013 – 47,951 (+13.7%)
  • September 2013 – 97,788 (+51%; after paywall launch)
  • December 2013 – 117,892 (+20.6%)
  • March 2014 – 118,031 (+0.1%)

The Age digital-only sales

  • December 2012 – 16,599
  • March 2013 – 19,989 (+20.4%)
  • June 2013 – 26,359 (+31.9%)
  • September 2013 – 60,546 (129.7%; following paywall launch)
  • December 2013 – 77,220 (27.5%)
  • March 2014 – 78,601 (+1.8%)

Sydney Morning Herald M-F digital-only and digital-plus print sales

  • December 2012 – 37,162
  • March 2013 – 44,697 (+20.3%)
  • June 2013 – 43,191 (-3.5%)
  • September 2013 – 98,177 (+127.3%; after paywall launch)
  • December 2013 – 120,043 (+22.3%)
  • March 2014 – 126,500 (+5.4%)

SMH digital-only sales

  • December 2012 – 28,069
  • March 2013 – 24,020 (-14.4%)
  • June 2013 – 22,589 (-6%)
  • September 2013 – 63,989 (+183.3%; following paywall launch)
  • December 2013 – 83,558 (+30.6%)
  • March 2014 – 90,549 (+8.4%)

So what’s going on? Either the loyalists converted quickly to The Age and SMH paywalls, and that’s most of what Fairfax will get. Or the marketing isn’t good enough yet, but there are potential customers who could be converted if it was.

That makes sense; when it comes to consumer marketing, News Corp has run rings around Fairfax in terms both of strategy and spend, which might explain why less progress is being shown.

There is another question to all this: Just what is the point of issuing the audited digital numbers anyway? They’re too vague to give the market a true picture, but I figure the whole truth would be too depressing for the market. Or as News Corp puts it, why share other numbers if they lose a competitive advantage?

Fairfax takes a similar stance, ludicrously refusing to discuss quarter-on-quarter results, arguing that only year-on-year comparisons are meaningful, despite the fact that it switched to the paywalls for its metro titles less than a year ago.

And the main reason audited print numbers are important to advertisers isn’t there with digital. In print you buy the total circulation size, so it’s important to be confident that this has been verified. In digital you generally pay by the number of times your ad is served, not the number of people who visit the site. The advertiser will know that number for themselves anyway.

What’s now incontrovertible is that paying digital readers are much harder to come by than they were in print.

Whether newspaper or magazine mastheads, you not only need to deliver a good product, but you need to market it well too. You don’t need a telescope to know that.

  • Tim Burrowes is content director of Mumbrella

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