A New Business Model Emerges To Support Print and Promote Digital

Philip Stone January 6, 2011 Follow on Twitter

New business models are emerging that turn newspaper companies into what they need to become -- news media companies -- with the bottom line that print becomes just one of several content platforms, with pricing to support all platforms while enabling print to maintain its niche.

Or put another way, talking about newspapers no longer implies paper – paper is just one of many options available for the reader to receive the information. Paper, tablets, online, mobile and whatever else comes along will all get their information from the one newsroom and there will be adaptations and applications for each platform, but at the end of the day the newspaper’s priceless brand remains intact – it’s just a matter of how the reader chooses to access the information.

So the announcement by the Dallas Morning News this week about making people pay for its high value local content, and making all its content available to diverse audiences with various pricing plans deserves  close scrutiny. The philosophy is certainly right; will the public bite?

A.H. Belo was among the pioneers in deciding not so very long ago that the 80-20 revenue split between advertiser and subscriber was no longer sustainable in today’s newspaper world and it has been in the forefront of increasing its print newsstand and subscription prices with the goal that eventually there will be around a 50-50 split between advertising and reader contributions. By and large its readership seems to have bought into paying more.

Today a seven-day-a-week print subscription to The Morning News costs $7.99 which on a monthly basis comes to $34.62, and you get the eEdition (digital replica) thrown in, too. What’s that, you don’t want the eEdition then you can knock a whole $0.01 cent off the weekly cost! Ah, but you would rather not have print at all but just have the eEdition -- that’s going to cost $12.95 a month. But, of course, you can go to dallasnews.com and get just about all the news and information the newspaper has and not pay a penny.

So, the next step is to digitally monetize all of that investment going into producing all of that great local news that no one else can come close to. Come mid-February the newspaper is implementing a “Subscriber Content” pay wall on the  web site – you want to see all that proprietary news and information developed by the newspaper’s news, sports and other journalists and you don’t have a print subscription then you’re going to have to pay for that information. Those who don’t pay will still see those local headlines, blogs, classified ads and non-proprietary information such as AP stories, but the meat and potatoes the newspaper produces itself  that previously it had given away online now will have a charge.

And here is where the pricing gets interesting. Print subscribers will have full access to all digital and mobile platforms – whatever the newspaper publishes on whatever platforms – for $33.95 a month – basically the current print subscription rate. But if you don’t want print, but you want the eEdition, the web site Subscriber Content, plus iPad and iPhone apps then that all will cost $16.95 a month – half of the price of print and digital combined. So, for those who say paper is passé they can save half of the print subscription cost and just subscribe to digital services – the important word there is “subscribe”.  But for those who figure the print newspaper is worth $17 a month can have the best of all worlds – news and information available on the platform of choice – paper and digital.

What is important here is the transformation from all news available for free on the web to having to pay for the stuff you really want plus having the product available on various digital platforms. Local content is expensive to produce; it needs to be paid for no matter what the platform. The newspaper says it is working on Android and Blackberry apps.

It’s a ploy that ftm has been recommending for several years now – the stuff you produce yourself you charge for because of its exclusivity and its cost; the stuff you can read anywhere such are wire service copy remains at no charge. And make everything available, at an all-in cost, on as many platforms as possible.

“We are confident that we are opening a new avenue for growth by providing unique, relevant local content on the platforms readers want, and creating highly targeted opportunities for advertisers to reach consumers,” said John McKeon, the newspaper’s president and general manger.

What doesn’t get talked about in all this is how the editorial costs are spread. If indeed it is one newsroom and many different applications then cost centers need to be readjusted so it is not just print that gets lumbered with all the editorial costs. Sure, print continues to pay for the newsprint and ink, and the delivery trucks and all of that but when it comes to editorial then internally digital should not  get a free ride – it must pay its own editorial way according to set formulas, say a percentage of income received.

It’s always interesting how newspaper companies in their quarterly reports split up income between their paper and digital platforms, but they don’t show any sharing of the common costs between the various platforms. Doing that should help the print platform’s bottom line, and in the eyes of the accountants ensure survival, although for the company as a whole the overall bottom line is the overall bottom line. People will, however, be judging each platform’s bottom line, so there needs to be a sharing there of the real costs for the true picture.

The Morning News has a neat name for its marketing of the new scheme – The Next Generation. It sums it up real well and it’s where all newspapers should strive to be.

See also in ftm Knowledge

Media Business Models Emerging

After a rough transition media business models are emerging. Challenges remain. There are Web models, mobile models, free models, pay models and a few newer models. It makes for exciting times. This ftm Knowledge file examines emerging business models and the speed-of-light changes. 123 pages PDF (May 2010)

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