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Special Presentation for Press Forward ConferenceMarch 1, 2013
WILL PAYWALLS KILLNEWSPAPER WEB ADVERTISING?
About this presentation
The following presentation was made by Gordon Borrell during Press Forward, the Wisconsin Newspaper Association/Associated Press Convention & Trade Show, at the Madison Marriott West in Middletown on March 1, 2013.
© 2012 Borrell Associates Inc.
The Paywall Phenomenon
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It’s Definitely a Trend
Sources: Borrell Associates Inc.; Pew Research
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A Few Facts to Consider
Visitors, visits/visitor & reach stagnant for newspapers
… But not for TV & hyperlocal ‘pureplay’ sites
95% of local news websites don’t have paywalls
These companies don’t:
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A Few Facts to Consider
72% of daily newspapers do not have a paywall
When paywalls go up, web traffic declines 20-40%
. . . but typically returns in 12-14 months
Story limits range from 5-25 per month; avg. is 11
Pricing: $2.87/mo. subscribers; $9.96/mo. non-subs.
Jackpot! Newspaper stocks up! McClatchy +40%, NYT +45%, Gannett +33%
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Source: CommonWealth Magazine
Newspaper Online Ad Sales
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Newspapers’ Share of Local Online Adv.
Source: Borrell Associates Inc., Adspending.com
Local Online Advertising, 2012:$18.5 Billion
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But Newsp. Share of Online Steadily Declining
Source: Borrell Associates Inc.
57%Share
24%Share
Advertisers Don’t Seek News Readers
When it comes to the lean-forward medium of online, the mass-media news model doesn’t work very well.
Numbers tell the story. Companies with only advertising content(not local news) dominate the local online marketplace.
That’s because local advertisers seek buyers in the onlinearena, not readers.
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Primarily Ad Content
Primarily News & Info Content
Top 25
Illustration: Banners Aren’t Seen
Traditional media websites rely heavily on banner advertising. But the “display” model only works with lean-back media like newspapers, TV or radio, where people are more receptive to ads.
An eye-tracking chart tells the story. Leaning forward, websitenews readers see everything BUT the ads.
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Eye tracking: Everything but Ads
The Best Online Content? Advertising!
Online mimics yellow pages directories – the other lean-forwardmedium. And the directories’ content is . . . you guessed it, nothingbut advertising.
Illustrated in the following charts, while TV and radio attract a lotof consumer attention, the minuscule amount of time spent witha yellow pages book attracts nearly 300 times more revenue per consumer minute.
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Average Daily Time Spent
© 2013 Borrell Associates Inc.
Television
Radio
Newspapers
Yellow Pages
4.00
2.23
0.18
0.04
Sources: A.C. Nielsen, RAB, New York Times, Columbia Journalism Review
(hours per day)
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© 2013 Borrell Associates Inc. Sources: Borrell A.C. Nielsen, RAB, New York Times, Columbia Journalism Review
Ad revenue per minute spentwith each medium—all adults
Television
Radio
Newspapers
Yellow Pages
$0 $2 $4 $6 $8 $10 $12
$0.4
$0.3
$7.9
$11.3
In Millions
A Minute of Your Time is Worth…
Local News: How Big a Draw?
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Local news has a steady following
Source: Pew Research Center’s Internet & American Life Project Local News Survey, January 2011. N = 2,251
Enthusiasts
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Getting real about expectations
Source: Pew Research Center’s Internet & American Life Project Local News Survey, January 2011. N = 2,251
Three-fourths won’t pay for local news online 23% would pay $5 to $10 per month
Note: These are just those “local news enthusiasts.”
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Getting real about expectations
If 72% are “news enthusiasts”. . .
and 23% of them would pay online fees . . .
16.5% of adults are the target.
Another Question
So…. Is that “non-local-news enthusiast” a good target?
Probably not: Only 8% say they’d pay for news.
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Conclusions
The audience for local news is big and enthusiastic But they’re most comfortable with traditional channelsWeb-based marketing seeks a buyer, not a reader Advertising-based “news” is more important on Web Therefore….
Erecting paywalls on news articles is a pretty good idea.
Why?
1. The vast majority of adults (87%) aren’t interested in local news online.Therefore: There’s no competitive pressure to make it “free.”
2. Advertisers don’t want to be around local news readers online.Therefore: Expecting riches from banner ads is a pipedream.
3. Revenue per print subscriber is typically10 times that of a unique visitor.Therefore: Eroding print readership by putting news online is a bad idea.
Wrapping Up: A History Lesson
Newspaper publishers three generations ago would havethought this discussion ridiculous. Here’s what a publishermight have said:
“Why are we spending so much time debating this? Of coursewe should charge! I’m more interested in the bigger opportunityof this newfangled medium called the Internet. Let’s invest heavily in it. Let’s own the local Internet space.”
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Publishers Used to “Get It”
Radio stations: 1920s
Television Stations: 1950s
Cable Systems: 1960s
WTMJ-TV
KCRG-TV
WSBT-TV
WBEN-TV
KRON-TV
WGN-TV
These TV call lettersall relate to a local newspaper’s name:
They started:
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But the Computer Age Confused Them
Videotext: 1980s
Audiotex/Fax-back services: 1990s
Computer bulletin boards – AOL/Prodigy: 1990s
Internet/free Websites, no ads: late 1990s
Rush to “Monetize” Websites: 2000-2004
Rush to charge for access: 2012Unlike radio, TV and cable, publishers failed to see the interactive world as separate ventures.
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The Lesson Most Haven’t Learned
Area of Opportunity
Newspapers Interactive Media
Where many newspaper publishers fail to see the same opportunity their predecessors saw: An altogether NEW entity.
Where newspaper paywalls fit in.
When a disruptor arrives, the “disrupted” often concentrates on the overlapping area, missing the bigger opportunities to create “new” business.
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Ask This Question
Is the Internet a sustaining technology toyour newspaper, or a disruptive technology?
(It’s both, of course. But erecting paywallsfits squarely in the “sustaining” camp.)
Do you want a significant share of the onlineadvertising spent in your market?
(Of course you do. But a “significant share”in one medium has NEVER, not ever, been attained without a
singular staff focused exclusively on selling that medium.)
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Recommendations
Charge for access to local news content!
Pursue ‘green’ area business with a separate staff
That staff can’t report to print managers. Period.
Beware of applying “mass media” model to online
Thank You!
Resources:
@goborrell @borrellassoc
Local Ad -Spending Data: www.adspending.com