Media Watch: There's No Such Thing as a Free Newspaper

The Buffalo News’ recent advertising campaign—one intended to encourage nonsubscribers to pony up to read stories online—advised readers to "BNthralled," "BNcredibly proud," "BNThe Game." I’m not sure everyone gets the forced use of the first two letters of the ad campaign. But then again, not everyone gets the Buffalo News, either.

I recently moved downtown to a building that has 115 apartments. I’m probably the oldest person in the building by a few decades. Most renters are in their twenties. Every morning, the Buffalo News delivers two newspapers to the building’s subscribers. One of them is me.

You get the picture. Young people don’t read print newspapers. Presumably, some of them have read it online for free—until October, when they were forced to choose between paying to read or reading severely limited content. In a way, the move to charge for digital content can be likened to the Medicare scare that was debated during the presidential election. The News is financially sound now, but farther on down the digital road—say in 2023—who knows what the bottom line will be if the News maintains the status quo. In the meantime, charging for Internet content gets the ball rolling and pads the coffers at the same time.  

This isn’t the only way the News is looking to increase cash flow—after 100 years of printing nothing but newspapers, the News has branched out into the profitable printing business—but earning revenue for online content and improving iPad and android phone applications is undoubtedly the key to the News’ continued success.

Let’s do the math on the online possibilities. The News is asking nonsubscribers to pay $2.49 to $2.77 a week to have unlimited access to its Internet content via stories, blogs, and videos. (Digital subscribers save twenty-eight cents with automatic credit card payments.) Let’s round it off to $2.50 weekly so we’re talking $10 a month. If 5,000 sign up, that’s an extra $50,000 a month, or $600,000 a year, for the News. If 10,000 subscribe, that’s an extra $1.2 million a year. Thirty thousand is an extra $3.6 million. You get the idea.

Warren Colville, the president of the News who has been at One News Plaza for twenty-five years, declined to address this year’s profit figures but said the paper is "doing okay." He confirmed that the printed paper still secures more than ninety percent of the News’ revenue, with online advertising accounting for nine to ten percent—though it’s growing.   

Colville wouldn’t guess how many nonsubscribers would sign up for the new digital offering and has no expectations. "If we got that amount of money, it would be great," Colville said in response to projections. "It creates a sustainable business model way out to the future, which is really what we want to do. We just want people reading our content. Whether it is online or in print, it is critical for our future as a company."

In May, News owner Warren Buffett commented that newspapers "have been giving away their product at the same time they’re selling it and that is not a great business model. You shouldn’t be giving away a product you’re trying to sell." The News has taken that philosophy to heart.

"If people are reading us online, we want to get paid something for it," says Colville. "We still have to support the operation. We have 135 journalists. We have to pay that bill." (The 135 figure is considerably lower than it has been. Layoffs mean remaining workers are doing more, and an earlier emphasis on blogging has been sacrificed to give overlooked suburban communities more coverage. In other words, while the new apps and bells and whistles may look good, not even a fancy new advertising campaign can conceal everything that has been lost in downsizing.)

To determine a fair price for online content, the News hired a New Jersey company to do extensive research, which was then used to advise on rates. The resulting model limits nonsubscribers to ten stories a month, news section fronts (i.e., headlines only), and ad sections (a no-brainer).

"The main thing [in the research] was to determine the viability of doing this in Buffalo," Colville says. "We knew we needed to do something." That’s because print circulation has declined along with population, and as readers—young and old—have discovered the ease of getting the paper for free online.

News management carefully watched the online experience of other newspapers. The Wall Street Journal and the New York Times have been among the early successes. "We’ve certainly watched the New York Times, but we’re not the New York Times," concedes Colville, who points out that the Times gets national and international readership. The Times also relies less heavily than the News on Associated Press and other service content that is widely available online for free.

According to Colville, the News looked at what thirty different papers were doing online. "Just because it is working someplace else it doesn’t mean it is going to happen in Buffalo," he says, noting that the paper has been "carefully watching" the Rochester experience. "I would say our audience is similar," says Colville, "but they’ve approached it differently than we have."

The big difference is in the pricing. When the Gannett paper in Rochester, the Democrat & Chronicle, began charging for digital content, it forced re-subscribers into more expensive, combined digital-print subscriptions when their current print-only subscriptions ran out. The News has only raised the price of its Sunday paper—the newsstand price is now $2.50—but its print subscription price remains the same: $3.99 a week with automatic payment, $4.50 otherwise. And digital access is included.

As an added enticement, digital subscribers can opt to subscribe to the Sunday paper for only $1.99 a week, a fifty-one cents savings over the newsstand price. It’s probably true, Colville says, that the News makes most of its weekly revenue from sales of the Sunday paper, which is loaded with inserts; focus group results suggest that thirty-seven percent of Sunday buyers buy for the ads.

"It’s not that they don’t read the news," Colville says, "but we know the value of the inserts is tremendous. Anything we can do to build that up is good for people. We put the coupons and what they are worth on the front page every Sunday. We’re still a great source of content that anyone really can’t get anywhere else. That’s a given." Colville hopes that out-of-towners who still like to follow local teams will buy digital subscriptions in order to read their favorite sports columnists, though he admits that may be a tough sell, particularly if story links can be picked up via social network.

Colville doesn’t anticipate losing any advertising on the website if online readership decreases with the changes. "We have so much inventory, plus people will still be coming to us because they get the ten stories and section fronts," he says. "I don’t see this as a risk equation; I see this as something we need to do to protect the franchise. We’ve had to think of the company’s future and we want to do everything we can to have a long-term successful company."

"Everything" includes becoming a bigger player in the printing business. The News prints the New York Times as well as papers in Batavia and the Southern Tier,  and has done work for the Sabres, the Bisons, McDonald’s, Tim Horton’s, and Dunkin’ Donuts. "In the past two years, we’ve purchased three commercial presses," says Colville. "We’re trying to become more than we were."

Colville sees this an investment in both the company and the community. "Not too many papers are buying presses," he says. "I love it when I go down to the second [printing] floor and people go, ‘We’re so busy here.’ And then they’ll say, ‘Boy, it is good.’ It really makes you feel good we’re doing things to bring in a lot of good work."

Now that the Buffalo News is more than a newspaper, the big question remains: how long will it print one? Colville says he gets up every morning thinking about how the News can be a successful company "ten, twenty, thirty years in the future. I think we’ll still have a printed paper twenty years from now," he says. Pause. "Hopefully, we’ll have a lot more people reading us online."  

That would BNecessity if the paper is going to continue to flourish.    

 

 

Former Buffalo News TV critic Alan Pergament teaches at Buffalo State and Canisius, and blogs at StillTalkinTV.com.

 

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.