Monday, March 05, 2012

Bleeding Out?

Newspapers Put Faith in Paywalls (WSJ-sub req):

Many newspaper executives say the subscriber numbers are beside the point. Distributing news to online readers is much cheaper than delivering papers, so digital readers are inherently more profitable per capita, publishers say. At the Star Tribune, the 14,000 people who are paying about $100 a year for a digital subscription to the paper are bringing about $1.4 million in annual revenue. Without printing and distribution costs, more of that revenue shows up in the bottom line, publisher Michael Klingensmith says.

Meanwhile, the Star Tribune's page views declined only about 12% since the paper began charging for full access to the website, so the revenue from new digital subscriptions exceeds revenue lost from declining traffic by 15 times, he said. "I would make that trade all day," Mr. Klingensmith said.

Yet in the broader context of the business, those figures hardly register. The Star Tribune in the six months through September had about 100,000 fewer weekday print subscribers than it did in the same period five years earlier. The current annual price of a daily print subscription is about $244.

Picking up 14,000 online subscribers has no doubt helped the Strib's bottom line, but it's difficult to imagine how the paper will survive the hemorrhaging of 100,000 print subscribers in just the last five years. Even if they have managed to stop that bleeding, a gut shot of that size is going to make recovery a difficult proposition.