Walter Hussman, publisher of the Arkansas Democrat-Gazette, has an interesting OpEd piece in today's Wall Street Journal. Under the title "How to sink a newspaper," he says that free news for online customers is a disastrous business plan.
Not many years ago, Hussman recalls, if you wanted to know what was in the newspaper, you had to buy one. Now you just go to the paper's website and get the information for free.
News has become a commodity, he says, because it is offered free in so many places. When you try to sell something that people see as a commodity, he writes, you've lost much of the value in providing that commoditized product or service.
Hussman provides an interesting look at how newspaper news, which the newspaper industry spends $7 billion a year to research, gather and write, has become a freebie. In addition to putting their news content on their own websites, newspaper content, through the Associated Press, is available on portals like Yahoo, MSN and AOL. It's great for web users, but maybe not so great for newspapers.
Some major papers offer full online access only to paying online subscribers. The New York Times, for example, has Times Select, which for a few dollars a month lets you access everything that's in print PLUS some added features - mainly popular columnists - that you don't even get when you buy the newsprint version.
Hussman compared his paper to the Columbus Dispatch in Ohio. Until the beginning of 2006, both papers offered news content online only by subscription. Both charges $4.95/mo. and both sites had similar styles.
The Dispatch dropped its subcription model at the start of 2006 and began offering most of its news content free online. Web traffic increased and online revenues grew, but paid circulation fell by nearly 6%. During the same period, the author's Arkansas paper lost only .4% paid circ.
The difference is significant when you factor in results of a study showing newspapers generate revenues from $400 - $900 annually per paid subscriber, versus $5 - $10 per unique visitor per year to a paper's website.
Hussman says his paper is adding special content to its online edition -- more photos than the print edition has room for, and video coverage of some stories. They also offer breaking news by email.
But, he writes, they are taking care to offer value on their website that complements, rather than cannibalizes, what's in their print edition.
It sounds smart and I really hope it works. It can become a model for other papers, since they can't ignore people who want to get their information online. A problem, though, is papers are not working in a vacuum. Other media -- local TV and radio, local/regional magazines -- are all beefing up their websites to attract more users aned more advertisers. It's a serious challenge.