Glimmers of hope for paywalls or an optical illusion?
Every 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.
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
Question, Tim. Do you anticipate mumbrella moving behind a pay wall? FWIW, the only papers I buy now are Saturday editions and the Friday AFR. Pay walls have changed my habits, I now expect to find to find the relevant article for free somewhere online. Not very noble of me, but when you look at the ‘front page’ of the mainstream local news sites, I’m not going to pay for inane listicles. The physical papers I do buy have now become an indulgent ‘event’ moment to be savoured slowly.
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Hi Me,
I wouldn’t see Mumbrella moving behind a paywall unless the market changed dramatically. We’re in the fortunate position that we happen to be in a niche where there are still advertisers who see the value of paying a premium to speak to our particular audience.
We’re also in the happy position that when we organise events and training, our audience often supports us, which gives us another good reason to be as available to them as possible.
That said, I do believe that high value information justifies a paywall model. We actually offer a product that does just that – The Source, which we launched about a year ago. That’s our subscription service to a database of Australia’s top marketing brands and marketers, along with the agencies they work with. We charge $92 a month for that, and we’re now moving close to breaking even, despite a heavy ongoing investment in researchers to constantly update the data.
Cheers,
Tim – Mumbrella
Tim, why do you regard cheaper subscriptions as of less or no value/ is the cost of the subscription at quesiotn on the number of subscripions?
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Hi Bill,
I’m talking from the economics side of the debate, so the value to the media owner not the advertiser.
At 84c a year (or even $1 a month), the potential market just isn’t big enough for the industry to survive on that basis. If it’s sampling that leads to somebody paying full price down the track, then all well and good. But if people can;t be persuaded to pay full price in sufficient numbers, then paywalls are not the answer.
Cheers,
Tim – Mumbrella
I’m also very interested to know how site like The Hoopla are doing.
The Hoopla, a terrific online news, chat and opinion site, switched to a paywall recently, with their prices a bit higher than I would have thought the market would support.
I worry their traffic has gone into freefall.
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Thanks Tim and to your team for putting your excellent Newsletter up without a pay wall, as a marketer and now working for the media in Perth I can somewhat appreciate the effort that goes behind putting out a quality read each day.
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Hi Tim,
Excellent analysis of the current newspaper paywall saga. I currently subscribe to one international newspaper via digital, the UK’s Daily Telegraph, this has cost me about A$55 for the year. It includes full website access and the mobile app. I also buy occasional individual issues of both the London Times and NYT international via kindle at about A$1.50 per issue. I also buy hard copy editions of the Australian or SMH but most of my written word Australian news sources come from the superb ABC or SBS news websites.
Personally as far as paying for good quality journalism goes I’m quite happy to do this but digitally, out of all my friends, work colleagues and acquaintances it seems I’m very much alone. I have discussed this often amongst my peers and nobody else seems interested in paying for digital news. I’m not sure paywall has that much of future for any major growth, it seems to me that there are too many other sources available. My examples of the ABC and SBS websites are also supplemented by the likes of Sky News, BBC, CNN etc. We live in a golden age of news journalism including written or spoken journalism for radio and television, there are so many options and many are not user pays….
I’ll continue to buy newspapers both the old way and digitally but I’m not sure many other s will!!
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Sensible piece Tim. But you miss a key ingredient: incumbents have to sustain the print and digital at once.
In short, you can trick up a web site fairly easily (esp if using lots of click bait). But you need relevant content, ad sales staff, marketers, printers and truckies to make a print product.
My point is that the vast dollars lost in print’s audience collapse are going to carve the guts out of newspapers – as we have seen. You can’t hope to keep the newsrooms unless the strategy is about the newsroom value. No one is pricing that into digital.
So I expect they will follow the AFR’s view of the world, which, as it said, is F*kt. (Unless you think I will pay for the ads to be delivered to my house in print)
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I’m glad you mentioned the additional advertising dollars being ploughed into News Corp’s digital subs. Not a day goes by without multiple full page ads in News Corp papers trumpeting some new offer for digital. For the last year or so there have also been constant TV ads for The Australian and rolling outdoor campaigns for the Tele. The total spend must be astronomical.
Fairfax doesn’t come close to matching it (and yet their total digital numbers are much higher than News, albeit slowing). I’ve never seen an ad for Fairfax digital subs outside a Fairfax publication, and even within their publications they don’t go too hard. I tend to agree that Fairfax could surely advertise a bit more heavily, but at the same time News Corp seems to be going way over the top. If I were a News shareholder I’d be asking why the company isn’t getting a better result with such a massive amount of marketing dollars.
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When I worked in newspapers there was a simple realisation that the old farts didnt seem to get or were willing to admit.
Money that comes in from digital is nowhere near enough to sustain a company. You’d need 10x the amount of revenue coming in from online to even hope for that to be the case. As that’s never going to happen, the current print industry is not going to be around even 5 years from now. It’s either going to be a lot smaller, or gone entirely.
And nothing of value will be lost.
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@ anonymous : you’re right, but unfortunately the publishers’ digital products rely heavily on the work done, and the content produced by the print staff ie the newsrooms which, despite big cuts, are still large and costly. How will the digital business, with its much smaller revenue streams, pay for those journalists and their work?
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“work” done? Have you seen the kind of crap the papers are putting out day after day in a neverending race to the bottom to get their mitts on the last vestiges of cash that people are willing to spend reading junk written by hacks for the entertainment of small-minded imbeciles?
“The Ferals Are Revolting” – when describing one of the most significant protests in Australian History.
“You won’t believe what some old fart’s girlfriend wore to a funeral”
time and time again, these drongos show us that they aren’t capable of being taken seriously in the 21st century, enough is enough.
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