Why News Corp’s regional and local paywalls are holding strong

It's been seven years since News Corp owned mastheads began rolling out subscriptions. Now, local and regional titles are behind a freemium paywall. Mumbrella's Zoe Samios asks News Corp's Damian Eales why the model is working.

The arrival of a local newspaper at my doorstep always feels nostalgic. My first memories of receiving a weekly title involved cutting clippings out and pasting them into my primary school workbook in an attempt to show my teachers what was going on in my community.

But there was one consistent thing about the papers, no matter where I lived in Sydney: they were free.

News Corp’s Eales argues the paywalled formula which has worked internationally can work in a ‘hyper-local’ way

News Corp has long been an advocate for online subscription and reader revenue models. It kicked off with The Australian’s paywall in 2011, before expanding to the Herald Sun in 2012 and the company’s metro titles in 2013. But in the last year it has been rolling out paywalls across its regional titles too.

That brings News Corp’s total subscriber base to more than 400,000 digitally. News Corp isn’t the only publisher to venture into this space, nor the only publisher which has successfully done so.

But the roll-out of regional paywalls means the publisher is encouraging people to pay for a service that it never has before. Why? News Corp’s chief operating officer, Damian Eales, argues if the paywalled formula works internationally, it should also work in a “hyper-local” way.

“The Australian was the first publication in this country to go behind a paywall for instance, and the likes of the Wall Street Journal and the New York Times are examples of global subscription success stories. The thinking was you need a huge national or international customer base to get the numbers to drive a subscription business,” Eales says.

“We are finding that people are increasingly willing to pay for a subscription that includes exclusive content about their local council, their local business community, local development applications, local personalities and much more.

Eales says the shift to subscriptions is of benefit to advertisers too

“The learning for us is that the more scarce the content, the more valuable it is.”

Eales says Australians want to celebrate the suburb they live in and people within their community.

“Local content is unique because you can’t get it from anywhere else – no-one else is dedicating resources to reporting on local crime, council, transport or lifestyle at a grassroots level in the way local titles do,” he says.

“They want to know and understand the key issues that affect their lives – development applications, council decisions, road closures, and community festivals – and this information is not available through any other trusted source.”

And according to Eales, the response to this shift has been “outstanding”, with consumer revenue continuing to increase year on year. But he wouldn’t comment on whether it made the NewsLocal and regional titles more appealing for potential buyers, which are currently looking into the titles. He also couldn’t comment on whether these freemium models would continue to exist, should the titles be sold.

But despite this, Eales believes paywall models will encourage the survival of these titles.

“There are a number of factors which are leading me to believe this,” he says.

“First, we are witnessing an increased propensity to pay for scarce quality local content. Second, the proliferation of fake news has led to a flight to quality news brands and a broad distrust of news and advertising in social and search media. Third, we are seeing an acceptance by the market of a subscription economy, led by the likes of Netflix.”

And, he argues, there is also benefits for advertisers: “Dwell-time in an article written by a journalist, commissioned by a trusted news brand, is increasingly being valued more than flick-time on an untrusted platform. It will come at higher yield, but it will deliver an engaged, trusting audience.”

Naturally, there are challenges with the implementation of models such as these. Months ago, Media Watch host Paul Barry spoke about local communities creating secret Facebook pages where they could share paywalled content from rival publisher Fairfax Media’s Wagga Daily Advertiser.

Eales assures that while there are other challenges will the roll-out of paywalled products, this is “not really” an issue.

“If we choose to lock the content, that Facebook article will hit our paywall,” he explains.

“If we choose to give it away for free, we are happy for it to get shared across a broad audience on the basis that it will drive a relationship down the road with our brand directly.”

On the topic of challenges, Eales turns his attention to the learning process, preferring to look at each challenge that has presented itself as part of an “iterative” process.

“We are constantly trying to optimise our paywall, our content mix, our customer journey, and our relationship with the platforms such as Google and Facebook,” he says.

“As an example, we have moved from a free model, to a metered model, to a hybrid (free +premium) model. We think we’ve landed on the right model now where we give away for free sufficient content to encourage readers to visit our sites or our apps, but we lock that premium content which is most valued and most likely to drive subscription and retention.

But Eales also argues his background in marketing – namely as group general manager of financial services and marketing at David Jones and GM of strategic marketing at Westpac, helps to build out a paywalled offering.

“It’s essential. I mean it’s obvious but marketing is so much more than running advertising campaigns. Marketing is the end-to-end process of generating revenue and that means not just defining a value proposition, but engineering it; that means not just defining a customer experience, but engineering it,” he says.

“As we move more and more to a subscription economy, expect more and more marketers to be proficient in this space.”

The Australian’s Nicholas Gray will be a keynote speaker at Mumbrella’s Publish conference in September.Earlybird tickets are on sale now.


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