SUMMARY REPORT

Online
Revenue
Initiatives
2009
Highlights of initial results
from the paid-content survey
conducted by ITZBelden
in partnership with the
American Press Institute
 2009 SUMMARY REPORT

Online Revenue Initiatives

Charging for access to digital content has sparked one of the
biggest debates within the newspaper industry. The idea
seems to gain momentum whenever another news organi-
zation announces it is taking steps to move from free
to paid content online.

Newspaper executives are eager to know what their

peers in other organizations are doing. What are the
current practices in generating revenue from digital content? What are the
various pay models? Are they successful? What approaches are news organ-
izations taking to issues like site registration, electronic editions and track-
ing original content across the Web?

American Press Institute, working in partnership with ITZ Publishing and

Belden Interactive (operating as ITZBelden), set out to answer these ques-
tions. Initial results of an ongoing online survey, with responses from 118
(7 percent) of the 1,529 daily newspapers in the United States and Canada,
show that industry executives are exploring multiple options for increasing
revenue in the short term.

Among the findings:

n Nearly 60 percent of respondents are considering initiating paid
access for currently open/free news and information online, and nearly
25 percent expect to implement a paid strategy in the next six months.
This is a big change, considering that 90 percent of the responding
newspapers currently do not charge for content, and only 3 percent cur-
rently have a paid-only site.

n The respondents are actively exploring many new directions they

can take with monetizing content. When given 15 different options of
which pay models to implement, respondents indicate they are serious-
ly considering 11 of them, including online subscriptions, day passes,
premium content and instituting a pay wall after a certain number of
stories have been viewed.
n Capturing new revenue and preserving print are likely the key drivers of any final decision to
adopt a paid-content strategy. Thirty-four percent of respondents think capturing new revenue
opportunities is or will be the most important factor; 28 percent think it is or will be preserving
print circulation.

KEY DRIVERS OF DECISION MAKING

Capturing new revenue opportunities 34%
Establishing value for copyrighted content 18%
Preserving print circulation 28%
Driving product development/new revenues 13%
Replacing lost display ad revenues 4%
Replacing lost classified revenues 0%
Don’t know 3%
Other 2%

n There is no clear consensus on how well charging for content will work. Fifty-one percent of
respondents say it is likely that paid access will raise enough new revenues to significantly con-
tribute to the future of newspapers.

n Most of the respondents overlook the opportunities and discount the

convenience of e-editions, which give users the experience of reading a
newspaper online. Most are not charging for e-editions or are not charg-
ing enough. Only 67 percent offer an electronic edition of the paper on
their Web sites; 59 percent of those offer it free to their print subscribers.
Among those sites that charge for their e-editions, the median price for an
online-only subscription is $5.99 a month. The median up-charge price for
those who offer it to print subscribers for an additional fee is $4.99 a
month.

n Current prices for online subscriptions strongly suggest that “convenience” pricing is gener-
ally in play. That is, charges do not seem to be tied to rigorous price analysis or research into
what people are willing to pay. Respondents report a wide range of online subscription charges
(from $1 to $27.50 a month), yet they report surprisingly uniform levels of uptake on subscrip-
tions, typically 1 percent to 3 percent of print circulation -- regardless of price.

n While most of the respondents allow users to register for their sites, few require it and even
fewer are monetizing registration in any way. Only 27 percent require users to register, and 23
percent have a specific program for monetizing registration information in active use. This is
another area where the landscape may be changing: 36 percent of respondents indicate they are
considering a registration program.

WEB SITE REGISTRATION PROGRAMS

Allows registration 71%
Requires registration 27%
Considering registration 36%
Monetizing registration 23%

n There is some concern about unauthorized or uncompensated online use of content that origi-
nates in newspapers, but few papers are taking action on this issue. Forty-four percent of respon-
dents indicate they are very concerned about content “piracy,” but only 25 percent are actively
tracking the use of their content across the Web.
 n There is a potentially deep disconnect between news organizations and the audience for their
Web sites. For this segment of the research, industry executives' survey responses are compared
with user responses aggregated from Belden Interactive 2009 Local Market Surveys.

While 54 percent of news executives rate their online news and information as “very valuable,”
only 44 percent of news Web site users see it that way.

PROVIDERS VISITORS
Very valuable 54% Very valuable 44%
Somewhat valuable 39% Somewhat valuable 51%
Not very valuable 1% Not very valuable 3%
Not at all valuable 1% Not at all valuable 1%
Don’t know 6% Don’t know 1%
Only 9 percent of news executives indicate it would be “very easy” for their audience to find a
replacement for the online content their news Web sites are currently providing, compared with
19 percent of users.

PROVIDERS VISITORS
Very easy 9% Very valuable 19%
Somewhat easy 22% Somewhat valuable 33%
Not very easy 34% Not very valuable 28%
Not very easy at all 34% Not at all valuable 15%
Don’t know 2% Don’t know 5%
The audience that gets its local news and information online would focus on the Internet and TV
– not print – if their local newspaper Web site were no longer available. Sixty-eight percent of
users say they would turn to other local Internet sites; 45 percent would turn to television; only
30 percent would turn to the print edition of the paper. Compare that to the responses of news
executives: 75 percent of them say they think users would turn to their print editions if their
Web sites were no longer available.

PROVIDERS VISITORS
Your print newspaper 75% Other local Web sites 68%
Other local media sites 55% Television 45%
Television 53% Regional/National sites 37%
Other local Web sites 48% Radio 35%
Radio 46% Your print newspaper 30%
Regional/National sites 42% Other local Web sites 17%
Other newspaper 31% Other newspaper 12%
Other 4% Other 5%
Don’t know 3% Don’t know 2%
n Faulty models are likely in place for assessing the opportunity and return on investment for
paid-content strategies. Survey respondents, apparently relying on automated logfile data, consis-
tently report unique visitor counts that are 10 times print circulation and 1.3 times greater than
local populations -- no matter the size of the market. (A separate analysis reveals no increase in
the net monthly visit rates reported by Omniture and Google Analytics since 2003.) The data
strongly suggest that the number of monthly unique visitors calculated by Omniture/Google
Analytics is exaggerated, and news organizations risk failure if they use these figures to project
future revenue based on a percentage of online audience that will convert to paid subscribers.
Recommendations

Based on these initial findings and observations of the industry, we recommend that news organi-
zations contemplating a conversion to paid online content – or any other revenue opportunity –
consider these key variables:

1. Know what your goals are.

Goals may be as varied as replacing lost ad revenues, driving product development and establish-
ing a value for copyrighted content to preserving print circulation. Each will require a specific
strategy and a process for evaluating progress. Knowing why you want to charge for access to
your online content will guide the decisions you will make along the way.

2. Know the size of your audience and how it behaves.

Among news executives, there is little understanding of basic reach and audience behaviors. In
fact, research from Belden Interactive reveals that newspaper Web site audiences come in three
basic flavors:

n Fly-bys: They visit once a month, mostly through search engines. There is wide variation
in the mix of viewers who live in and outside the market . Fly-bys are unpredictable and in
any given month can be 25 percent to 80 percent of total site visitors.
n Incidental loyalists: They visit one to three days a month, one to two times a day. They are
predominantly local.
n Core loyalists: They visit 20 days a month, two to three times a day. They are mostly to
overwhelmingly local.

3. Know your content.

For paid content to succeed, it must go well beyond repurposed print content and old models.
Audiences are most likely to pay for unique content that is not available elsewhere for free. Fully
paid blocks of repurposed local area newspaper content have not proven to be a significant rev-
enue source for news Web sites that have tried this strategy.

4. Know your user price points.

Current pricing for online content suggests the need to explore price sensitivity more fully.
Pricing will depend on the quality and desirability of the content as well as the suite of services
offered, such as improved search, personalized alerts or online reservations and shopping. Many
approaches may combine unique content and services with delivery platforms, like mobile, Kindle
or Audible. The amount of access will also determine price points. Will users pay by the story, by
the minute, by the day or by the month? Here again, knowledge of the audience is key to success.

n Single-story fees. Likely to appeal only to fly-by visitors; large resistance can be expected.
n Single-day pass. Likely viable for all types of site visitors; this may represent the greatest
total revenue opportunity and least resistance of all pay models.
n Subscriptions. Likely to appeal only to core loyalists; expect some resistance and accept
the likelihood of capped revenues. Of all the pay models, this is most familiar to newspapers
and the easiest to implement.

5. Articulate benefits from the user’s perspective.

Print precepts are still driving the thinking of most news industry executives, who are more com-
fortable with words than interactivity; obsessed with objectivity, credibility and professionalism;
and insistent on controlling the conversation. But digital media put the user in control. New infor-
mation products, services and content must be developed from the outside in – responding to con-
sumer “jobs to be done” – and the message to users must focus on how their lives will be better
because they subscribe.
About the Survey
An online survey was sent to top-level and online leaders at 1,380 daily newspapers. Contact
names and e-mail addresses came from API's extensive database of newspaper industry execu-
tives. The initial phase was conducted in August and early September 2009; by mid-September,
118 surveys – representing 7 percent of the 1,529 daily newspapers in the United States and
Canada – had been completed. The responses in this initial report represent a wide cross section
of large, mid-size, small and very small markets evenly distributed across the country.
Responses came from 20 independently owned newspapers and more than 30 corporate newspa-
per groups, with none submitting data from more than seven news Web sites.

A slide presentation of the survey results is available here.

It is still possible for news organizations to participate in this ongoing survey. For details, please
contact Greg Harmon at itzharmon@gmail.com / (415) 566-4348 or Greg Swanson at
itzgreg@gmail.com / (503) 241-3650.

About The American Press Institute

The American Press Institute (www.americanpressinstitute.org) is an independent educational
center based in Reston, Va. API provides skills-based training and leadership development in
the newsmedia industry, offering seminars, onsite programs and consulting for newspaper pro-
fessionals and organizations.

About Belden Interactive

Belden Interactive, based in San Francisco, specializes in audience research for Internet compa-
nies, with a focus on the news and information industry. For more information, visit
www.beldeninteractive.com, or call (415) 566-4348.

About ITZ Publishing

ITZ Publishing, based in Portland, Ore., provides a leading voice nationwide in Internet revenue
development for media companies. ITZ has also been retained by Journalism Online LLC to pro-
vide benchmarking studies to affiliates and help maximize online revenue opportunities.
For more information, visit www.itzpublishing.com, or call (503) 241-3650 or (800) 647-6917.