Subscriptions versus Advertisements – Community Newspaper Business
Models in a Digital Age
By Randy Short
Senior Honors Thesis School of Media and Journalism University of North Carolina at Chapel Hill
April 5, 2016
Approved:
Table of Contents
CHAPTER 1: INTRODUCTION AND LITERATURE REVIEW 3
DIGITALADVERTISING 5
PAIDCONTENT 7
CONSUMPTIONHABITS 10
COMMUNITYJOURNALISM 13
PURPOSEOFTHERESEARCH 15
RESEARCHQUESTIONS 16
CHAPTER 2: METHODS 17
SELECTIONOFCASES 18
SELECTIONOF THE WHITEVILLE NEWS REPORTER 18
SELECTIONOF THE RUTLAND HERALD 20
SELECTIONOF THE SOUTHERN PINES PILOT 21
IN-DEPTHINTERVIEWS 21
AVAILABILITYOFINFORMATION 23
CHAPTER 3: RESULTS 24
THE NEWS REPORTER 24
THE SOUTHERN PINES PILOT 30
THE RUTLAND HERALD 36
CHAPTER 4: DISCUSSION AND CONCLUSIONS 42
DISCUSSIONOFRESEARCHQUESTIONS 43
ALTERNATIVEREVENUESTREAMS 48
INDUSTRYTRENDS 52
LIMITATIONSOFTHERESEARCHANDAREASFORFUTURERESEARCH 55
CONCLUSION 56
WORKS CITED 58
Chapter 1: Introduction and literature review
The news media industry has undergone a disruption during recent decades. The Internet changed how readers access and consume news. Twitter, Facebook and other social media sites have accelerated the transition of news media from traditional print outlets to digital media.
As newspaper advertising revenue has continued to decline, digital news advertising has expanded. In 2014, digital news advertising grew 18 percent, keeping pace with the 17 percent increase in 2013. Digital news advertising now totals $50.7 billion.
Historically, advertising accounted for more than 80 percent of total revenue for newspapers (Poynter, June 2015). However, since print advertising revenues began to decline in 2007, newspapers have attempted to generate revenue through other streams, mainly subscriptions and pay walls. In 2015, subscription revenues were greater than advertising revenues for newspapers worldwide for the first time in history (Poynter, June 2015), marking the shift in how newspapers must fund themselves.
In 1997, the Wall Street Journal became one of the first national newspapers to implement a pay wall (The Week). The WSJ’s hard pay wall restricted all content except breaking news and opinions unless readers paid for a subscription. Within the year, the site had 200,000 subscribers.
For small, community newspapers, the shift to digital might represent a larger unknown. Community papers face smaller circulation and have fewer resources than large, national outlets. However, community papers also have the advantage of loyal readers and fewer competitors.
To understand how community newspapers companies can navigate the shifting news landscape, I researched the most appropriate digital business models for community news companies. The topic of digital media business models encompasses the conceptual areas of digital advertising, paid content, news consumption habits, and community newspaper’s place in the community. A company must align its revenue streams to the habits and values of its customers. Digital advertising will only be viable given high traffic and demand from advertisers. Paid content will only be viable given differentiated content and readers who are willing to pay. The literature on these conceptual areas helped inform my research by providing a theoretical foundation upon which I can add.
Digital advertising
Kind, et. al. (2009) added to the research on the viability of advertising as the main revenue stream by constructing a mathematical model that relates advertising revenue as a function of competition and differentiation. The author’s mathematical model showed that advertising revenue is constrained by the number of media products. As the number of competing, undifferentiated media outlets increases, advertisers have greater selection in choosing where to place ads.
Taken in the context of the formula created by Kind, et. al., Greer’s conclusion that advertising is a viable revenue option is questioned. Greer’s conclusion that advertising could be viable was based on the number of advertisements per site. However, as Kind, et. al. showed, a growing number of undifferentiated media sites creates a larger supply of advertising space, which in turn puts downward pressure on the price media sites can charge for advertising. In order to maintain constant revenue amid falling advertising prices, companies would have to sell more advertisements.
ads to sell. Among undifferentiated competitors, the outlet with the fewest ads may be preferred by readers, meaning companies could benefit from selling fewer ads. Although the strategy seems counterintuitive, the decrease in supply for advertising space would position the company to charge higher prices for the advertising space.
McPhillips and Merlo (2008) add another wrinkle to the interaction between media outlets, advertisers and readers. With an increase in media outlets, “audiences are spread more thinly across different media opportunities” (239). If advertisers believe they are not reaching enough of their target audience, they will be unwilling to pay higher advertising prices. Fragmented audiences have made advertising less efficient. Further research relating the cost per mile and cost per unit of ad prices would add context to how advertisers have reacted to audience fragmentation.
The research of Greer and Kind, et. al. concluded that digital advertising could be viable but that outlets relying on advertising are subject to market forces complicated by three parties. Greer’s research also occurred in 2004, as the shift from traditional media to digital media was still under way. Given the profound changes during the past decade, her research may not be completely relevant to the current media landscape.
the academic framework to the real world may not be valid. The real industry dynamics are more complicated than the model.
Despite the gaps in the research, the literature on digital advertising provides a starting point for my research. As Kind, et al. state, “A high reliance on advertising revenue seems to be the only viable business model for electronic newspapers that cannot offer unique content” (1113). I can use this statement to guide my research as I look into how undifferentiated outlets interact with readers in deciding how to generate revenue.
Paid Content
readers of the New York Times can currently read 10 free articles a month before access is restricted to readers with subscriptions.
In a study of 2,312 articles from the Wall Street Journal’s website, Vara-Miguel, et. al. (2014) analyzed how section, topic and territorial scope influence whether an article is free or behind a pay wall. During the time period (from 2010 to 2012), more content was moved behind the pay wall. In 2010, 73.8 percent of the content was free, while only 43.7 percent of the content was free in 2012. Of the variables considered, the authors found that the article’s topic is the strongest predictor of whether the content will be behind a pay wall. Given this finding, the authors concluded that “payment is closely linked to dissimilar and more specialized content with higher added value that is not easily imitated by the competition.”
The theoretical work done by Kind, et. al. supported the conclusions from analysis of news content done by Vara-Miguel, et. al. The mathematical equation constructed by Kind, et. al. showed that more highly differentiated news outlets can charge higher subscription prices without losing customers to close competitors. Companies that produce unique and valuable content can charge subscription prices because readers cannot find the content elsewhere.
price sensitivity. For the price estimates of monthly subscriptions, respondents gave a range of 18 cents to $1.31. Based on this narrow range, Donatello agreed with Kind, et. al. and Vara-Miguel, et. al., that price relates to differentiation of content. Outlets that provide unique content that is not replicated by competing outlets can charge more for content because there are few to none substitutes. On the other hand, Donatello
concluded that the narrow range “denoted a market devoid of pricing flexibility for publishers whose offerings remain undifferentiated” (141).
Vukanovic (2015) introduces micropayments as an additional form of paid
content. Media companies can charge on an on-demand or pay-per-view basis rather than charging a one-time subscription fee. Vukanovic submits that the 21st century media
industry is “increasingly interactive, immersive, ubiquitous, and digital” (65). Given these trends, media companies can more accurately segment their customers, allowing them to charge micropayments rather than full subscriptions.
students were willing to pay for content on a per-article basis, with 27 percent of students willing to pay between 1 cent and 5 cents per article.
Although the literature overwhelmingly suggests that readers have low WTP for news content, the literature shows that readers might have higher WTP for specific news topics, especially business news. Vara-Miguel, et. al., (2015) found that topic is the most predictive factor in determining if a story will be free or behind a pay wall. Donatello’s survey (2013) found that business news and information was the modal content type for which payment was made; in addition, readers gave business news the highest price estimate of all content types. Sindik and Garybeal (2011) also found that business and financial news was the most common content type that university students would be willing to pay for. The findings of Vara-Miguel, et. al., Donatello, and Sindik and Graybeal indicate that media companies could charge for differentiated content,
specifically business news. One shortcoming of this strategy is that business news does not appeal to all readers. In Donatello’s study, only 7 percent of respondents listed business news as one of their top two topical interests (Donatello 2013).
advertising revenue. Given that readers estimate monthly subscription prices at roughly $1 (Donatello 2013), he argues that “the potential revenue from content access would likely fall short of offsetting the concomitant loss of advertising revenue from instituting a paid content strategy” (142).
Consumption Habits
The most appropriate business model must respond to the behaviors of readers. Sanchez and Alonso (2015) conducted a survey of 1,067 students from 13 Madrid universities to understand the news consumption habits of university students. The 37-question survey showed that university students “have become accustomed to obtaining most content they want free of charge” (96). The results have implications on how media companies can generate revenue, as it relates to university student’s reference price for news content.
When considering and pricing subscriptions, companies must assess audiences’ willingness to pay, which measures how likely consumers are to pay for goods. Although WTP will differ between audiences and products, Chyi (2005) submits that media
consumers have no WTP for news content. In analyzing different demographic variables and their correlations to WTP, Chyi found that age had a significantly negative
income, gender and education were not statistically significant in predicting WTP, meaning media companies face a difficult task in identifying and predicting customers who might pay for content. If no demographic characteristic implies that a certain customer segment has a higher WTP, companies cannot target specific groups who are more likely to pay.
Willingness to pay might also differ by platform. As readers move to mobile devices to consumer news, they will apply the reference price they have learned in relation to other mobile content. A study by Gartner, an IT research and advisory firm, found that free apps accounted for 89 percent of mobile application downloads in 2011 (Gartner 2012). As Donatello (2013) concludes, “although consumers may be growing somewhat more accustomed to being asked to pay for content in addition to traditionally paid fare like music, movies and the like, those occurrences are still a minority” (42). If WTP is mediated by both content and platform and readers have established a low reference price for news content and a low reference point for mobile content, then charging for content would place the price of the news above the readers’ perceived value of the news.
relationship with a firm” (Gupta, page 141). Inputs into calculating CLV include the price paid by consumers, the direct cost of servicing consumers, the probability that consumers repeat their purchase, the cost to acquire consumers, and the time horizon for estimating CLV. Thomas, Blatterberg and Fox (2004) studied how the probability of retention related to subscription prices for newspaper companies. The authors concluded that retention is significantly sensitive to price, and that companies must have dynamic pricing strategies for returning customers and customers who are considering leaving (Thomas).
The research on CLV indicates that newspaper companies must consider several variables before implementing a pay wall. Companies must price the subscription so that future profit margins are sustainable and feasible. Companies must understand how the pay wall will affect retention and attrition, and companies must set a strategy for future prices for different customer segments who are retained or leaving. By using CLV as a framework, newspaper leaders can attempt to understand the long-term effects of a subscription on revenues and profits.
Community Journalism
and Figures). More than 70 percent of these papers are community newspapers with circulation less than 15,000. Despite the skew toward smaller, community papers, pay plans have become more common. By 2013, 450 of the roughly 1,400 daily newspapers in America had pay plans, according to Pew’s “2013 State of the News Media” report.
Small, community newspapers face different challenges when deciding to implement a pay plan for digital content. Community papers markets differ from larger markets in terms of readership demographics, readership engagement and economics.
Community papers also face the added complexity of connecting their readers to online content. The NNA reports that 30 percent of community market adults have no Internet access (Community Newspaper Facts and Figures), which greatly reduces the potential market for digital news. However, more than 51 percent of community
newspaper readers rely on their community paper as their main source of news, and the most often read section is the local news (Community Newspaper Facts and Figures).
Considering the theoretical model of Kind, et. al., that examined how differentiation and competition influence advertising and subscription revenues,
Despite the advantages of differentiation and competition, community newspapers must consider the disadvantages of smaller circulation sizes when deciding to implement a pay wall. As Gupta (2006) explains, a newspaper’s churn rate — or the percent of customers that choose to stop consuming from the company — factors into the
company’s customer lifetime value (CLV) calculation. The CLV is a function of the total profits that a company reaps from a customer during that customer’s lifetime; a
customer’s lifetime is estimated as one divided by the churn rate, so a higher churn rate shortens the expected customer lifetime (Gupta, page 153).
Implementing a pay wall will cause customers who are unwilling to pay for content to stop visiting the website. If implementing a pay wall increases a newspaper’s churn rate, the CLV will decrease as customer expected lifetimes decrease. For
community newspapers with smaller circulation, the loss of customers cannot be offset by an attempt to acquire new customers. Community newspapers’ CLV calculations — and thus their long-term revenue prospects — might be more sensitive to changes in pay structures because community papers have small circulation sizes and thus less opportunity to make up for lost customers.
concluded that “what we may come to expect from small family newspapers is a preserved working history of our baseline business model as media evolutions occur elsewhere” (90).
Despite Powers’ conclusion that community newspapers will adhere to traditional business models, more community papers are implementing pay walls. Jenner, et. al., (2014) found that 70 percent of daily newspapers had a pay wall in 2014, up from 47 percent in 2012. The authors found that metered or leaky pay walls where visitors are charged after a certain number of free views are most common. For publishers with circulation greater than 75,000, more than 81 percent used a leaky pay wall (Jenner).
Jenner, et. al., also surveyed publishers on who they consult with before implementing a pay wall. More than 85 percent of publishers asked other newspapers about pay walls, while 29 percent conducted focus groups and an additional 29 percent surveyed their audiences (Jenner). Jenner, et. al., submit that publishers must work to include audience feedback to implement and price a pay wall.
Purpose of Research
My research relates to the intersection of these trends. My research examined the success of different types of pay plans for community newspapers and provide insights into why the management teams selected their respective business models. With print advertising declining, building revenue streams from digital content is crucial for community newspapers. My research provided a framework for understanding the pros and cons of digital pay plans for community newspapers.
Research Questions
My research aimed to answer research questions relating a company’s readership, content and strategy to its business model. The research questions that guided my
research are:
RQ 1: How does the implementation of a pay wall affect readership —both print and digital — for a community newspaper?
RQ 2: What considerations do community newspaper executives have when determining how implementing a pay wall affects long-term revenue trends? RQ 3: What considerations do community newspaper executives have when
determining which type of pay wall to implement?
To answer these research questions, I conducted a case study of three community newspapers and their websites. The case studies included in-depth interviews with company representatives.
Chapter 2: Methods
To understand the relationship between a community newspaper’s online content, readership and revenue streams, I conducted a case study of three news websites of community newspapers that implement different pay wall strategies: The Whiteville (NC) News Reporter has no pay wall; the Southern Pines (NC) Pilot has a leaky pay wall; and the Rutland (VT) Herald has a hard pay wall.
strategies behind business model decisions for specific community newspapers, rather than broadly researching many newspapers. The depth afforded by case studies made it the appropriate methodology for my research.
I conducted interviews with executives from each outlet. The interviews provided insights on the strategy behind content and pricing decisions. Each outlet’s strategy relating to its business model will be informed by how its readers reacted to changes in paid content. The trends will also help indicate where the outlets need to position themselves in the future to continue monetizing digital content.
Bonnie S. Brennen (2013) outlines three types of interviews used in media research: structured, semi-structured and unstructured (Brennen). I used semi-structured interviews because of the balance of consistency and flexibility between interviews. Semi-structured interviews are “based on a pre-established set of questions that are asked to all respondents” (Brennen, 28). However, semi-structured allow for a different order of questions and for follow-up questions. Through a semi-structured interview, I asked the same set of questions to all of the papers’ representatives, which provided a basis of comparison. A semi-structured interview also allowed me to tailor follow-up questions to the specifics of each newspaper, which provided more depth to the interviews.
the three community newspapers included in the research. However, if other community newspapers share similar characteristics — in terms of readership demographics,
circulation trends, competition, etc. — with any of the three papers included in the research, they can glean insights into how the results of the research could be applicable to their situations and business models decisions.
Selection of Cases
The community newspapers selected for the case studies represent papers with similar circulation but differing strategies for online content. The papers’ circulations range from 10,000 to 18,000, and the sample includes one paper each that implements a hard pay wall, a leaky pay wall and no pay wall.
Selection of the Whiteville News Reporter
The Whiteville News Reporter is a semi-weekly newspaper published on
Mondays and Thursdays. The paper serves Columbus County, NC, and has a circulation of 10,000.
According to a 2010 research project conducted by Samuel Wardle, The News Reporter’s website attracts 2,000 daily visitors. The site’s readers are also loyal, with more than 84 percent responding that they would recommend the site to a friend (Wardle, 34).
County, meaning they are not served by the Reporter’s print edition (Wardle, 35). In addition, Reporter’s online readers are more educated than the typical Columbus County resident; 43 percent of online readers reported having a bachelor’s degree or higher, whereas 11 percent of Columbus County residents have a college degree (Wardle). Finally, online readers were younger than print readers. The average age of online-only readers was 35, while the average age of print readers was 60 (Abernathy).
That The News Reporter has a loyal online audience that trends younger and more educated than its print readers. The paper also does not charge for online content. Given these characteristics, the paper’s strategy could be informative of how community newspapers must weigh customer loyalty when considering a pay wall. Although The News Reporter has been the subject of case studies in 2010 and 2013, my research provided new insights into the paper’s business model. The 2010 study by Wardle analyzed readers’ loyalty and consumption habits; the 2013 study published by Penny Abernathy looked at the paper’s place in the community and its strategy concerning revenues and costs. My research built upon this research by providing updated data and specifically studying the paper’s decision not to implement a pay wall.
Selection of the Rutland (VT) Herald
Vermont (“The 2001 Pulitzer Prize Winners: Editorial Writing”). In 2010, the paper was the first daily newspaper in the state to put up a hard pay wall (Mitchell). Previously, the Herald kept more content outside its pay wall. The Herald continues to keep obituaries, breaking news and opinions outside of its pay wall.
According to a 2013 case study published by Poynter, the Herald’s managers considered competition, cost and page views before implementing the hard pay wall (Mitchell). Although the newspaper was the main source of news within the community, the paper faced competition for different newspapers and TV stations for online news.
R. John Mitchell, the Herald’s president and publisher, described in the study that the Herald’s revenue had been declining every years since 2007 (Mitchell). The
company’s revenue is 40 percent circulation and 60 percent advertising. Circulation revenue had been steady while advertising revenue was dropping. Prior to the hard pay wall, the company’s most popular online subscription option charged $2.99 a week for 52 weeks. After implementing the hard pay wall, the site charged $3.99 a week for the 52-week subscription. Digital circulation accounted for only 3 percent of revenue.
My research provided further insights into the strategy and success of the Herald’s hard pay wall. My research updated the Poynter case study with more recent data and provided forward-looking strategies from the Herald’s management. The Herald also served as an example of a daily community newspaper that implemented a hard pay wall, allowing me to compare and contrast the strategies and successes of different types of pay walls.
Selection of the Southern Pines Pilot
The Southern Pines (NC) Pilot is a semi-weekly paper published on Wednesdays and Sundays. The paper serves Moore County, NC, and has a circulation of 14,000 (Saylor). The paper’s website launched in 1996 and currently averages 7,000 daily visitors.
Unlike the other community newspapers included in my research, The Pilot has not been a part of previous case studies. The strategy behind The Pilot’s decision to implement a leaky pay wall juxtaposed the strategies behind the other pay wall business models.
In-Depth Interviews
provided qualitative reasoning and strategy behind the quantitative trends discussed by the newspaper executives. As Rosenberry explains, interviews “are valuable because they enable researchers to obtain information that cannot be gathered through observation alone” (Rosenberry, 57). Including interviews in the case study added value to the observed components by explaining why and how the observed components came about.
The in-depth interviews in this study covered the topics of the outlet’s position in the community, the digital business model of the outlet, and the strategy behind that specific digital business model. Below are the key topics to explored and examples of the types of questions asked. Interviewees also raised unanticipated topics. These emergent topics were explored at my discretion and were incorporated into future interviews if they proved relevant to the study.
The list of questions that I asked to the executives included: The newspaper’s position in the marketplace
What market do you think your outlet competes in?
What do you think is your outlet’s position in the digital news market? Trends in revenue and circulation
What have been your outlet’s trends in circulation?
What have been your outlet’s trends in advertising prices?
What have been your outlet’s trends in advertising revenue? What have been your outlet’s trends in subscription revenue? What have been your outlet’s trends in overall revenue? Strategy behind the digital business model
Did the strategies of other newspapers in your state influence your decision on a pay wall?
Have you considered other forms of paid content, such as micropayments? What strategy do you plan to implement in the future to appeal to Millennial
readers?
How is your outlet’s strategy to continue to grow revenues? Do you believe that strategy is sustainable?
Specific to Whiteville
Why does you paper not implement a pay wall?
Have you considered implementing a pay wall? Why or why not? Will you consider implementing a pay wall in the future?
Specific to the Southern Pines Pilot
Why did your paper implement a leaky pay wall? Why did you paper not implement a hard pay wall? Specific to Rutland Herald
Why do you keep obituaries outside the pay wall?
Availability of Information
The utility of the interviews depended on the information provided by the company executives. If the executives were unwilling to provide specific data or answer specific questions, the information available for comparison was limited.
Chapter 3: Results
Through interviews with executives at each paper, I examined how the demographics and readership, online content and business models, current revenue streams, and new revenue streams of the papers factor into the strategies of each paper. The executives explained how demographics of their reader base directly inform the papers’ online business models and readers’ expectations of the papers. While the papers face different demographics within their communities, the two papers with the lower levels of pay walls have started digital ad agencies in an attempt to monetize their abilities to create and market online content.
The News Reporter
The News Reporter is a biweekly paper based in Whiteville, North Carolina. The town of Whiteville has a population of 5,000, but the paper serves all of Columbus County and covers only Columbus County news. Columbus County has a population of 58,098 (“Columbus County, North Carolina QuickFacts”). The News Reporter has a circulation of 10,000 (High).
The paper has been owned and operated by the High family since 1938. Les High joined the paper in 1984 and has been the editor since 2000. Stuart High — Les’ sister — is the paper’s special project coordinator.
I interviewed Les High, the editor of the paper, about The Whiteville News Reporter’s online strategy. The paper does not have a pay wall for content on its website.
Demographics and readership
“When an older subscriber dies, it’s hard to replace him with a 20- or 25-year old reader,” High said.
Every week, Whiteville offers free e-editions — which is a PDF of every page of the print edition — to high schools and creates smaller papers for middle schools and elementary schools in the community. The paper is attempting to promote younger community members to stay informed (High). The promotions also give the paper visibility to younger readers in an effort to forge the loyalty with readers at a younger age (High). Loyalty is engrained at a younger age.
The small and rural readership of the paper creates challenges when attempting to monetize online content. As High explains, whereas larger markets could viably impose a pay wall, Whiteville’s readership is too low and the poverty level too high to justify an online subscription model.
High explains that the proliferation of news online and through social media such as Facebook has eaten away at the paper’s print circulation. However, circulation is also susceptible to economic cycles. Print circulation fell from 10,500 to 9,600 following the economic downturn in 2007. The Great Recession contributed to the dip in circulation. High estimates that the paper lost 1,000 readers during the Recession, with the loss of those readers not attributable to the Internet.
To complement the biweekly Monday and Thursday circulation of the print edition, the website features truncated stories. The website posts up to five stories a day that are five- to six-paragraph summaries of the print stories. The website averages 155,000 pages views per month.
High does not worry that posting content online will detract from the print edition. “Our philosophy is however people get their news, they ought to get it from us,” High said. “If we don’t deliver that news to readers, someone else will. We want to be first.”
Whiteville also has loyal readers, with its net promoter scores nearly equaling those of the Wall Street Journal (Wardle). A net promoter score is a measure of customer loyalty that is calculated by asking customers on a scale of one to 10, how likely are they to recommend the company to a friend. The promoters are the ones ranking nine and 10, neutral customers rank seven and eight, and detractors rank one to six; the net promoter score is the number of promoters minus the number of detractors (“Measuring Your Net Promoter Score”).
Allowing readers to consume news online free of charge reinforces the loyalty. If readers could not access the daily news online, they might turn to other online news sources, which could fracture the relationship with The News Reporter.
Although the paper does not charge for online content, High does recognize the importance of online content. The paper invested in a new website that debuted in March 2016. Along with a visual redesign of the website, the online strategy is shifting.
Writers will be increasing the number of posts from five per day to up to 10 per day. The posts will also include more visual content. The main page of the website will house increased slots for photos, slideshows and videos. Reporters will be expected to shoot more photos and videos to support stories, and the website will feature the more visual content (High).
With the launch of the new website, the company is also implementing a new online advertising strategy. The company will begin selling ads through a percent share sale model (High). In this model, only one advertiser will be featured on the site at a given time. The percentage of the time that an advertiser appears on the website is proportional to the amount that it pays of total advertising. For example, if 10 companies each paid equal amounts, a single banner ad on the site would rotate between the 10 companies. High estimates that the paper will charge $350 per month for the online advertising. This model reduces the number of ads on the site and allows one advertiser to be the single advertiser on the site for a given time.
experience. More than 65 percent of digital traffic to the paper’s website comes from mobile devices, so the paper wanted to improve the quality of its mobile offering (High).
With the print and online editions offering different pieces of content, High hopes to cross-promote the two editions. For example, if one picture runs in the print edition, the print story will reference the website where readers can find more pictures or videos supporting the story.
“The paper and the website will try to complement each other, and I think you’ll see a lot more traffic on the site,” High said.
Current revenue streams
With 10,000 paid subscribers, High estimates that only 3,000 or so would pay for online content. In a hypothetical situation where the paper charged for online content, High believes that the subscription revenue would not offset the lost advertising revenues.
“There’s not enough revenue to justify closing people out of the site,” High said, “so we do not have a pay wall, and that helps drive traffic.”
Digital advertising accounts for only 3 percent of revenue, so the company did not want to cut into print circulation (High). Even increasing online advertising rates in an effort to generate more revenue would not significantly change the business model. Print circulation and advertising continues to be the main revenue driver.
Other revenue streams
Moving forward, High expects print circulation and print advertising to be flat. Although print accounts for roughly 95 percent of the company’s revenues, The News Reporter is emphasizing a digital strategy.
“You have an emphasis on print because it’s so profitable,” High said, “but if you don’t do something digitally, you’ll be left behind.”
The paper’s tradition and reputation in the community attract clients to the digital agency.
“We’ve been here for over 120 years, so our reputation is very good,” High said. “The fact that we know advertising and we know our customers and we know what they need puts us in a good position to capture a large part of that market.”
However, the paper’s tradition and experienced staff have also been impediments in transitioning from print to digital. The News Reporter hired a new news editor last year, but the previous editor had been at the paper for 54 years. The rest of the staff has at least 10 years of experience at the paper, with most workers having 20 to 30 years of experience. Les High’s father, who still works in the paper’s printing department, still uses a type writer.
“We’ve lagged on digital just a little bit because we’re not posting to social media as much as other papers,” High said. “That’s directly attributable to our older staff.”
The Pilot
Background
The Pilot is a biweekly newspaper serving Moore County. The print edition runs Wednesdays and Sundays and has a circulation of 13,500. Moore County has a
In terms of competition, The Pilot competes against a twice-monthly newsletter that serves the western part of the county and an online newspaper (Woronoff).
I interviewed David Woronoff, the publisher and part owner of the paper, about The Pilot’s online strategy. The Pilot uses a leaky or metered pay wall, meaning any reader can access up to five stories online before needing a subscription to access further content online.
Demographics and readership
The Pilot’s community tends to be wealthier and slightly older than the overall population in North Carolina. The county has a median age of 45.0, and more than 22.6 percent of the county’s population is over the age of 65 (moorebusiness.org). In North Carolina, the median age is 37.2, with 12.9 percent of the population being over than 65 year old (“Moore County, North Carolina QuickFacts”). Moore County has a median household income of $48,348 (moorebusiness.org), which is above North Carolina’s median household income of $46,693 (“North Carolina QuickFacts”).
The Southern Pines-Pinehurst-Aberdeen area touts itself as the “home of
“Golf attracts a fairly sophisticated and fairly wealthy group,” Woronoff said. “They’re primarily retirees from larger metropolitan areas, so their demands and expectations for their newspaper are much higher.”
He explains that the content and quality of the paper are directly influenced by the expectations of the older and more affluent readership.
For example, readers’ expectations have led to The Pilot running longer papers than its competitors. The Pilot generally prints a 40-page paper on Wednesdays and a 60-page paper on Sundays, while other community newspapers publish 12- to 16-60-page editions (Woronoff). The Pilot has been recognized for its quality; in 2015, the National Newspaper Association awarded The Pilot as the best community newspaper in the country (Woronoff).
“We put out a better paper, and people respond to that quality,” Woronoff said.
Online Content and business model
The Pilot publishes stories daily on its website to complement its biweekly print edition. Writers post stories as soon as they’re reported, so Woronoff does not hold content for the print edition. Readers like the daily postings online because they can get the news sooner if they want it, Woronoff said.
edition, while other readers face a metered — or leaky — pay wall. Readers without a subscription can access five stories online before content is blocked.
In the early years of the website, traffic grew rapidly because the online content was free and unlimited for all readers. The growing traffic paralleled a drop in print circulation as readers opted for the free online content rather than paying for the print edition. The Pilot implemented the metered pay wall three years ago in response to falling print circulation (Woronoff).
“A customer who doesn’t pay isn’t much of a customer,” Woronoff said. The pay wall ensured that print readers could not get the entirety of The Pilot’s content for free.
The pay wall helped counteract the falling print circulation, as print circulation has stabilized in the years following the pay wall. However, Woronoff did not want the pay wall to stymy all traffic to the website, so The Pilot made the pay wall purposefully porous. The website can still be accessed through mobile devices or Facebook without counting towards the meter.
Although The Pilot’s readers trend older, they have adopted mobile devices as a preferred way to consume news online. More than 50 percent of The Pilot’s digital traffic comes from mobile devices (Woronoff).
In reaction to the surprising adoption of mobile, The Pilot shifted to a new website design this year. Prior, the paper’s website and mobile site were separate. Now the paper’s website is a single site using responsive design, which optimizes the page depending on what device a reader is using (Woronoff). The new design has improved the quality of the mobile website.
“You have to be where your customers are, and mobile is growing at a faster rate than desktop,” Woronoff said.
Woronoff expects that mobile and desktop growth will continue to outpace print growth, so the company is taking several initiatives. Woronoff does not want the website to be an extension of the print edition, but a totally separate product. The website will have the news of the print edition but will also expand to include content that cannot be supported in the print edition. Music, audio, video and other content will differentiate the website from the print edition (Woronoff).
Current revenue streams
Print advertising continues to be the primary concern for advertisers, so print advertising still commands higher prices. A single full-page ad in The Pilot costs $1,000, while the most expensive online ad is $400 for a full month of online advertisements (Woronoff).
“We don’t want to take someone out of the paper to put them online,” Woronoff said. “You’re changing dollars for dimes, and that won’t work for very long.”
A subscription to The Pilot costs $50 per year and includes the paper and digital editions (Woronoff). With print circulation and print advertising still generating the largest portion of revenues, the pay wall decision was made more to protect print circulation than to monetize digital content.
Although Woronoff expects that The Pilot’s online advertising rates will gradually increase over time, he does not expect online advertising to become a significant revenue driver. For example, even a drastic 10 percent increase in advertising rates would not make a dent compared to the value of print circulation and print advertising, he said.
Other revenue streams
Woronoff does not view the Internet and digital media offerings as an evolution of print media but rather has a new technology that diverges from traditional print media. As such, the practices and business models that applied to print media cannot be cobbled onto digital media offerings.
Readers view online advertisements as a nuisance, as Woronoff explained. The effectiveness and return on investment from digital advertisements is a fraction of effectiveness of print advertising. Related to (and possibly caused by) these trends are the facts that advertisers do not value digital advertising as much as they value print
advertising. Attempting to apply the print media business model of selling advertisements on digital content does not please readers or advertisers.
“Upselling a print advertiser onto our website is a zero-sum game,” Woronoff said.
Woronoff said that specific business model of selling advertisements is not the ideal method for generating revenues on digital content. However, the underlying
business model for any media content — whether its print or digital — will always be the same, so newspapers can still monetize their digital content in new ways.
“We cover the news of our community,” Woronoff said. “We get people to read it. Then we rent those readers to businesses in our community to sell their goods and services. That’s the basic model for every media company since the 19th century,” he
To apply the same business model of attracting readers and then creating a space to match buyers and sellers within the community, Woronoff believes community newspapers ought to create digital ad agencies.
“Let’s not sell advertising,” he said. “Let’s sell [local businesses] the tools to be effective marketers. We’re putting buyers and sellers together, but instead of print on paper, it’s pixels on silicon.”
The Pilot is outsourcing the work of the digital ad agency to a third party company based in Wisconsin (Woronoff). The Pilot will sell the contracts to local
businesses, while the third party company will create and manage the advertising clients; The Pilot keeps half of the money. Over time, Woronoff hopes to recruit and develop the talent necessary to run all of the digital ad agency operations in house.
Despite being a new offering from the paper, the digital ad agency had 120 interested parties during its first week. Woronoff credits the paper’s 196-year history in Moore County as the reason for the high initial interest. Since the first week, The Pilot has closed 18 contracts. Woronoff estimates that each contract could generate $500 in revenue per month, and he hopes to sell 75 contracts during the year, meaning the digital ad agency could generate $450,000 in new revenues during the first year.
The Rutland Herald
The Rutland Herald is a daily newspaper serving the southern portion of Vermont. The city of Rutland has a population of 16,495, and the paper has a circulation of 12,000.
The paper started in 1794, and the Mitchell family bought the paper in 1963. I interviewed Rob Mitchell, who is part of the third generation of the family to work at the paper and serves as the paper’s editor and online manager, about The Herald’s online strategy. The paper has a hard pay wall.
Demographics
The city of Rutland has a median household income of $41,561. According to the Census Bureau, 15.4 percent of the population lives below the poverty line. The city is the county seat of Rutland County, which has a population of 61,642. The median household income within the county is $47,027, with 11.8 percent of the population living below the poverty line (“Rutland County, Vermont QuickFacts”). The median household income across the state of Vermont is $52,977, with 12.2 percent of the population below the poverty line (Vermont QuickFacts).
The county is less racially diverse than the U.S. as a whole. More than 97 percent of Rutland County’s population is white, while in the U.S. as whole, 75 percent of the population is white.
Online content and business model
During that time, readers were canceling their print subscriptions to simply get the news free from The Herald’s website.
Mitchell points to the success of Apple’s iTunes as an example of how people are willing to pay small amounts for things that they value digitally, so he believed that the business model would translate to local news.
“We had to put a value on what we did, whether than was online or print,” Mitchell said. “The value that we provide is not ink on paper. It’s the stories; it’s the content.”
Before implementing the pay wall, Mitchell’s risk analysis included the adverse affects that pay walls have on online advertising. The standard assumption is that a pay wall causes traffic to decline by roughly 50 percent. However, for The Herald, the risk was minimal because only one-third of its online advertising came from local ads at that time, with the rest of the ads coming from low-paying Google ads.
In the three months after putting up the pay wall, traffic dropped roughly 40 percent. Readers responded negatively to the pay wall, with some readers becoming angry for having to pay for the news and others confusing the pay wall as the end of the print addition.
“We did not lose our core readers,” Mitchell said. “We lost some drive-by readers.”
Currently, The Herald has 7,000 online-only subscribers and nearly 3,000 print and online subscribers that actively use the website. Through surveying readers, Mitchell found that print and online subscribers generally have the same characteristics, except that online readers are roughly 10 years younger. Most of the print readership comes from the 45 to 65 age group, and most of the online readership comes from the 35 to 55 age group.
When the paper erected the pay wall, it also debuted an edition available on tablets and mobile phones. Mitchell explains that The Herald wanted to make the online subscription more valuable by offering an addition product that added to what readers already received in print or through the website.
Current revenue streams
The Herald’s pricing model for the online subscription provides flexibility for readers. A print and online subscription costs $4.29 per week, which equates to an annual rate of $223.08; an online-only subscription cost $3.49 per week, which totals $118.48 annually.
The Herald also offers 99-cent day passes that allow customers to access the full website for the day. Readers can buy a bundle of 20 days passes for $14.99.
“[A pay wall] isn’t the silver bullet,” Mitchell said. “But we’re really glad to have this revenue.”
Although print circulation still accounts for the majority of the company’s revenues, Mitchell concedes that it is also the largest cost driver, meaning that he supports a shift to digital.
“When you look at the business model, in some ways, I want our print circulation to go down because that’s one of our most expensive parts of our operation,” Mitchell said. “The faster I can transition people to online only, the cheaper it gets for me to deliver the paper.”
Rob Mitchell’s embracing of the shift from print to digital juxtaposes the commitment to print of John Mitchell, the president and chairman of The Herald and Rob’s father. The elder Mitchell “lives and breathes by average paid circulation” as a measure of the paper’s success, Rob Mitchell said. Rob Mitchell’s recognition that the industry must shift to digital comes in conflict with his sense of tradition.
“Saying that [I want print circulation to drop], I feel like I’m betraying some kind of sense of what we do,” he said.
Other revenue streams
Native advertising is defined as “paid advertising where the ad matches the form, feel and function of the content of the media on which it appears.”
Before The Herald will begin offering native advertising, the paper must answer several questions surrounding the form of branded content, Mitchell said. First, the paper is unsure what to charge for the native advertising. Also, Mitchell must determine how to staff the native advertising pieces. He said that he will not assign a reporter to write the native advertisement, but whoever is assigned the piece must have experience with reporting and writing.
“It’s got to be high-quality content,” Mitchell said. “We will clearly distinguish it from news stories.”
The Herald is also placing greater emphasis on video content, both in reporting stories and advertising. The paper moved an editor into a video production role who will produce one to two videos per day. Previously, the paper did not have the staff system built to produce videos, so now the video producer will be able to coordinate with writers and create promotional videos for advertisers.
In addition to the native advertising, The Herald is developing a smartphone application for the region. The app will include all the content from the website in a design that is created specifically for mobile phones.
“We’re working on different advertising types,” Mitchell said. “The static, digital display ads, we still get a fair amount of business from that, but it’s rapidly going out of fashion.”
As advertisers begin demanding new types of advertising, the advertising strategy must shift from a traditional advertising role to one centered on content.
“We need to find better way for our advertisers to connect with readers,” Mitchell said. “It’s just not the same as putting an ad in the paper.”
These shifts in The Herald’s online advertising strategy are the initial steps in creating a more consultative, agency relationship with advertisers. Mitchell explains that The Herald plans to restructure the sales room to move away from a sales-oriented strategy to accommodate the agency-like strategy.
“We’re not there to sell ads,” he said. “The next logical step is to move away from sales to consulting on what message you’re sending, what you’re trying to promote, using multiplatform approach.”
Although The Herald is shifting its advertising model, the mission of the paper is not changing.
Chapter 4: Discussion and conclusions
My research sought to examine community newspapers with different online business models to understand how newspaper executives decide on how and why to implement a pay wall. Through the case studies with The Whiteville News Reporter, The Southern Pines Pilot and The Rutland Herald, my research provided insights into how readership demographics; competition; reader reactions; print circulation and print advertising; and digital advertising influence the decision to implement a pay wall.
Through the case study interviews, my research showed that the online business model decisions are more complicated than simply weighing advertising versus
newspaper’s competitive advantages in content creation and reputation within the community, community newspapers are working to create digital ad agencies.
My research also sought to answer the following research questions:
RQ 1: How does the implementation of a pay wall affect readership —for both print and digital — for a community newspaper?
RQ 2: What considerations do community newspaper executives have when determining how implementing a pay wall affects long-term revenue trends? RQ 3: What considerations do community newspaper executives have when
determining which type of pay wall to implement?
In this chapter, I discuss the findings to answer the research questions as well as findings related to alternative revenue streams and broader newspaper industry trends.
Discussion of research questions
RQ 1: How does the implementation of a pay wall affect readership —for both print
and digital — for a community newspaper?
In the case studies, newspaper executives used a pay wall to stabilize print
Although The Pilot’s leaky pay wall still allows readers to access up to five articles, print circulation stabilized following the implementation of the pay wall.
In the case of The Rutland Herald, print circulation also stabilized following the hard pay wall.
Print circulation and print advertising are still the main revenue drivers for these community newspapers, so implementing a pay wall provided a mechanism to stop declining print circulation and protect the more valuable revenue streams.
However, the papers that implemented a pay wall saw dropping traffic on their websites. As online manager Rob Mitchell explains, a pay wall generally causes a 50 percent drop in traffic; in the three months following The Rutland Herald’s hard pay wall, web traffic dropped 40 percent.
For The Pilot, web traffic also dropped a significant amount, although The Pilot experienced less of a dip than The Rutland Herald. Following the leaky pay wall —which still allowed nonsubscribers to gain partial access — web traffic dropped 25 to 30
percent, said David Woronoff, the publisher of The Pilot.
RQ 2: What considerations do community newspaper executives have when
determining how implementing a pay wall affects long-term revenue trends?
that the pay wall would cause a drop in web traffic, and thus lower the paper’s bargaining power for online advertising rates, the papers compared the potential revenue from online subscriptions versus the potential lost online advertising revenues. Although the basic revenue calculus included potential subscription revenues minus the potential lost advertising revenues, other variables of the paper that influence those revenues factored into the pay wall decisions.
Demographics
Newspaper executives weighed both the size and the economic profile of their communities when determining if a pay wall would be viable.
In Whiteville, publisher Les High did not believe that the readership base was large enough to support a paid online subscription. The number of paid subscribers would not be enough to offset the lost online advertising revenues that would result from the drop in traffic due to the pay wall. Whiteville has a population of only 5,000, and Columbus County as a whole is more rural and less affluent. The county’s median household income is less than $28,000, and more than 20 percent live below the poverty line.
of North Carolina overall. The county’s median household income is more than $48,000, while the state’s median household is $46,000.
The Rutland Herald’s readership pool also tends to be more affluent, meaning the readers could afford to pay for the online subscription. Rutland County has a median household income of $47,000.
Competition
Community newspapers often face a unique set of circumstances in that they are the dominant source of news in their community but may not have the readership base to support a pay wall.
“In Rutland, we are the main, dominant source of local news,” Rutland online manager Rob Mitchell said. “The way forward may have been different if we were in a suburban area.”
If the papers faced more competition, they might lose more readers by implementing a pay wall. Readers could switch to substitute sources of local news without having to pay.
In the case of The News Reporter, High believes that the readership demographics could not feasibly support a pay wall. Even if a small portion of the readers could pay for the pay wall, the pay wall would restrict others in the community from receiving the local news.
As such, even if community newspapers monopolize local news, they cannot erect a pay wall due to other factors.
Reader reactions
For the papers that implemented a pay wall, readers had mixed reactions. Some readers felt that paying for news online was unfair, while others recognized the
importance of monetizing online content for the newspaper’s longevity.
The Rutland Herald tracked every email and phone call response from readers in the months following the pay wall. Mitchell explained that most readers were angry about having to pay for news online. Others also thought that the online pay wall meant that the print edition would be phased out. However, nearly 40 percent of reader responses were positive, with some readers accepting the pay wall because it ensured that the paper would be in business to serve the community in the future.
David Woronoff explains that readers were angry following The Pilot’s pay wall. Readers felt entitled to free online news and believed the paper was price gouging. Woronoff believes that The Pilot’s subscription price of $50 per year is fair, and the paper purposefully left the pay wall leaky so that readers could still access much of the online content.
Print circulation and advertising
community newspapers, so the papers were willing to sacrifice falling online traffic to stop the decrease in print circulation.
The Project for the Excellence in Journalism found in a study of 38 newspapers that 92 percent of overall revenue for newspapers comes from print circulation and advertising (4). The three papers included in my research had similar breakdowns of print vs. digital revenues; The News Reporter had only 3 percent of revenue from digital; The Pilot had only 5 percent of revenue from digital; and The Rutland Herald had 10 percent of revenue from digital.
The decision to implement a pay wall also did not hurt print advertising. Because print advertising is more effective and valuable than digital advertising, the pay wall decisions had little impact on print advertising relationships. In the case of The Pilot, the print advertising relationships actually helped the decision to implement a pay wall because advertisers bundled print and online ads together.
Digital advertising
Digital advertising rates are lower than print advertising rates and make up a smaller portion of total revenues. In the case of Whiteville, one full page print
rates and revenues are so low already that a change in rates does not have a material impact on the paper’s top line. Woronoff likened the low online advertising rates to a famous Ross Perot quote by saying that even doubling online advertising rates would not significantly add to the paper’s revenues.
“If you’re worth a penny and you find a penny, you just doubled your net worth,” Woronoff quipped. “But you’re still only worth 2 cents.”
RQ 3: What considerations do community newspaper executives have when
determining which type of pay wall to implement?
The considerations on the type of pay wall were similar to the considerations discussed in RQ 2. However, the considerations over the type of pay wall were also influenced by the paper’s strategy and the goal the paper was attempting to accomplish with the pay wall.
For The Rutland Herald, the paper wanted to prevent readers from skirting a print subscription by getting the news free online. The paper’s pricing strategy provides flexibility for customers by allowing weekly and daily passes. The paper also keeps obituaries, which is one of the paper’s most popular sections, outside the pay wall.
community news. Also, as a biweekly paper, The Pilot runs eight editions per month. By setting the pay wall meter at five articles per month, The Pilot allows readers to access news from most of the editions.
As explained in the discussion of RQ 2, The News Reporter opted to implement no pay wall on its website because of the demographics of its community and the economics of the pay wall.
Alternative revenue streams
All three papers discussed a digital ad agency as a new type of revenue stream outside the traditional streams of subscriptions and advertising. Previously, newspapers made money by charging readers for access to their content, whether it was in print or digitally. Also, newspapers charged advertisers to access that reader pool through advertisements. The digital ad agency model is an extension of the model of matching buyers (readers) and sellers (advertisers), but it reflects the changing nature of
advertisers’ needs in the digital age.
The digital ad agency model goes beyond the traditional newspaper advertising role. Rather than selling advertisers a space to place their ads, newspapers are beginning to consult advertisers and local businesses on how to best reach readers.
— helping them with everything from search engine optimization to building websites to utilizing social media platforms” (18).
Both High and Woronoff mentioned search engine optimization, social media management and website creation as services that their respective ad agencies will provide.
Research on the prevalence and success of digital ad agencies run by newspapers is limited. However, one study conducted by the Project for Excellence in Journalism shows that papers are experimenting with nontraditional business models. The PEJ took data from 38 newspapers with different circulation sizes from different geographic areas to assess how newspapers’ print and digital revenues were changing (Rosenstiel).
The study, published in 2012, also included interviews with executives from 13 of the newspaper companies. To represent the fact that the majority of the nation’s
newspapers are small papers, 22 of the newspapers included in the study had circulations of 25,000 or less.
The PEJ study found that 44 percent of newspapers were experimenting with nontraditional business models — including event hosting, selling new products and consulting advertisers — and that digital ad agencies were the most common form of nontraditional revenue streams (Rosenstiel, 18).
However, smaller newspapers were less likely to be experimenting with
over 50,000 were attempting new models, while less than one-fourth of papers with circulations under 25,000 were attempting new models (19).
The smaller papers in the study also were generating less revenue from the nontraditional business models, with each paper averaging less than $10,000 in quarterly revenues from the new models they were attempting (19).
Community papers attempting to monetize a digital ad agency have the advantage of tradition and reputation within their communities, but they also face the challenges of staffing the digital agency.
Les High touted The News Reporter’s 120-year legacy in the community as a reason local businesses trust the paper to run their digital marketing. Likewise, The Pilot’s 96 years in the Southern Pines area helped draw initial customers to the paper’s launch of the digital ad agency, Woronoff said.
“Like in all businesses, it’s about the people,” he said.
The Rutland Herald is now beginning to offer more diverse digital advertising, such as videos. The paper had to change the role of one of its editors to video production because the paper was not staffed to do so before.
The concern over staffing the digital ad agency was echoed by executives in the Project for Excellence in Journalism study. In that study, executives opined that
“newspapers might not have the requisite staff to implement such a strategy on a
sufficient scale” (Rosenstiel, 20). The executives in the study noted that papers will have to retrain sales teams to sell the new digital products and restructure the compensation plan to incentivize the sales teams to sell the more unfamiliar products.
The creation of digital ad agencies comes in response to advertisers desiring greater connections with readers. According to the PEJ study, more than three-fourths of newspapers’ online ad revenue comes from display and online classified ads. However, those types of ads have proven to be ineffective, with click through rates as low as 0.1 percent. More dynamic forms of advertisings, such as targets ads and video, are expected to eclipse static display ads in the coming years (13).
Mitchell also noted that although the company generates most of its online ad revenue from display ads, The Rutland Herald is prioritizing new types of advertisements as display ads go out of fashion.
Industry trends
Newspaper executives expect print circulation to continue to decline, leaving them uncertain about the newspaper industry’s future. The executives interviewed in the PEJ study admitted that they did not know what the industry will look like in 15 years (Rosenstiel, 27).
High, Woronoff and Mitchell also expressed uncertainty amid the changing news media landscape. High and Woronoff described different sides of a paradox explaining why smaller, independent community newspapers may be better equipped to change as the industry changes: community newspapers often have fewer resources than larger, metropolitan papers, but they are also independently owned and do not need to meet corporate expectations.
High noted that his paper is trying to balance its strategy between short-run and long-run viability, which means putting a greater emphasis on digital even if it is not yet a major revenue driver. However, High said that smaller papers may not have the freedom to devote time to digital if it is not generating money.
Mitchell also explained how his paper’s limited resources make his decisions more pragmatic. He compared the paper to working at a startup, but one that does not have an initial public offering of the stock to fund the maneuvers.
“We don’t have the lifting power of bigger papers,” Mitchell said. “I wish we had a nice capital reserve fund. But we do have an advantage because we can respond to local trends.”
Woronoff lamented corporate ownership of newspapers as making those papers risk averse.
“It’s the nature of corporate ownership to deter risk taking,” he said. “At those papers, you keep your head down and do whatever you have to do to deliver your profit margin. It’s sucking the life and blood out of the industry.”
The executives in the PEJ study also described corporate ownership as the largest obstacle to change. With decentralized decision making and the bureaucracy of corporate newspapers, they cannot act as nimbly as independently owned papers.
“It’s important for newspapers to be in front of their communities all the time,” Woronoff said. “You don’t want to be behind them and have them pulling you along. You have to be entrepreneurial, and you have to be a leader. And you have to be a risk taker.”
“future of newspapers, rather than being determined entirely by sweeping trends, can be significantly affected by company culture and management—even at papers of quite different sizes” (Rosenstiel, 1).
The variation in success of the adoption of digital and the experimentation of nontraditional business models means that a paper’s outlook is not completely
determined by factors such as size, competition and demographics. For example, Mitchell posited that the implementation of the pay wall sparked a cultural shift at The Rutland Herald that will enable the company to continue pivoting in response to the industry shifts.
“We have to be proactive and think is new and different ways, so it was a change psychologically for the company,” Mitchell said.
Part of the changes included uprooting decades long habits built on print, Mitchell said. Mitchell added that the switch to digital is crucial even if it is outside the comfort zone for newspaper companies.
High also said that the experience of his staff caused The News Reporter to lag digitally because the staff built their careers on print. Prior to changing editors, The News Reporter’s editor had 54 years of experience, and the rest of the paper’s staff has decades of print experience.
