By Erik Gunn
For WisBusiness.com
It’s the fundamental challenge facing media today: As communication migrates from the television, magazine page or newspaper to online, how can the industry make money?
For newspapers, free Internet ads like Craigslist have all but eviscerated that once-lucrative classified business, and the contracting economy has further shrunk automotive, real estate and retailing ads. Broadcasters, too, have seen the rise of digital media cut into their traditional franchise, but less dramatically.
“Broadcasters are not facing the same threat to their fundamental business model that newspapers are,” says Michelle Vetterkind, president of the Wisconsin Broadcasters Association. “They view the relationship between traditional and new media as one where they can work off each other.”
Still, there are layoffs in Wisconsin commercial TV land, and there’s increasing pressure to monetize the Web. But few if any broadcasters charge for Web content, while some are exploring paid-subscription products like cell phone headline services. But most view online as a way to be “ubiquitous to their audience,” the WBA president says, and continue to rely on the traditional advertising model there as well as on the air.
For newspapers the challenge is much greater, with varied and conflicting answers.
“There is a great debate nationally about how much content to simply give away,” and how much to charge users for, says Peter Fox, president of the Wisconsin Newspaper Association. Most newspapers started by putting content on the Web for free — a short-term, tactical decision, not a long-term, strategic one. “Now we realize we can’t afford to give away the product that costs so much to produce.”
Archives are one potential cash source. Gannett, which owns 10 dailies and a number of weeklies in the state, provides free daily content but charges for archives that are a certain number of days old. The Milwaukee Journal Sentinel, part the Journal Co. that also owns WTMJ-TV and WTMJ-AM, also charges for archives but opens them up for free to paid subscribers to the paper. Other news outlets currently make their archives free.
No data are available on how much income archives fetch, but consultant Ken Doctor says it’s “still in the low single digits” as a percentage of overall sales. “It has been a disappointing source of revenue,” adds Wisconsin-based newspaper consultant Dave Stoeffler. “Papers have had more success in selling archives to resellers like Newsbank or Lexis-Nexis.”
Other papers now sell digital versions, a still-nascent strategy.
In April, the Janesville Gazette took a different path. Converting from evening delivery (except Saturday and Sunday) to a seven-day morning cycle, the paper began delaying posting most of its big stories to its free Web site. The Journal Sentinel recently used the same gambit with an enterprise series about a crime lord, holding back online postings a few days after the print version.
The idea, says Gazette editor Scott Angus, is to reward paying readers and blunt circulation erosion. Web commenters to Angus’s announcement were skeptical, but he says the 20,000-weekday, 24,000-Sunday paper’s circulation has seen a slight uptick. That could also be due to the change in delivery time (PM papers have been on the decline for years) and a new Walworth County edition.
“We don’t suspect that this is a long-term fix,” Angus says. “We’ve got to find a way to make sure the dollars add up. We’re hoping this will give us some time.”
Bliss Communications, the Gazette’s parent, also has an online directory, Gazlo.com, with info on every business in Rock and Walworth counties. “Every single one gets a listing for free,” Angus says. Then businesses can pay to upgrade listings to one of two premium levels, one a customized web page. Bliss also owns papers in Monroe, Delavan, Marinette,Wis./Menomonee, Mich. and Ironwood, Mich., a magazine in Racine, plus radio stations in Janesville, Racine and West Bend.
When Rupert Murdoch’s News Corp. bought the Wall Street Journal two years ago, Murdoch talked of dropping that paper’s paid model altogether, but was convinced to keep it. This May, according to the British newspaper the Guardian, he predicted that within a couple of years users will have to pay for most Internet content.
There are Wisconsin models. Waukesha-based Kalmbach Publishing puts out 15 hobby and specialty magazines, including Model Railroader and The Writer, with a collective 1 million readers. Chuck Croft, Kalmbach’s executive VP, says some 800,000 people receive monthly e-mails generated by Kalmbach titles, and almost as many visit the magazines’ Web sites each month.
Much online content is free, Croft says, but “valuable content” — like a database of previously published model railroad track plans — is free only to paid magazine subscribers. The Web also generates further sales (about 15 percent of Kalmbach revenues, Croft says) through subscriptions, books, and special content, such as books or article packets in PDF. Paid instructional video might follow: “I think for us this is just going to be something that keeps evolving.”
It will have to, says Wisconsin State Journal Publisher Bill Johnston, who serves on a committee examining the problem for Lee Enterprises, part owner of the State Journal and owner of Wisconsin papers in Racine, LaCrosse and Chippewa Falls. “The reality out there is if we can’t figure out a way to charge for valuable content, he says, “it will be more difficult to sustain a business model.”
— Racine-based freelance writer Erik Gunn covers the media for Milwaukee Magazine and reports on politics, business, education and other topics for several publications.
