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Source: localnewsinitiative.northwestern.edu, November 2022
One ray of good news during the Covid pandemic: More U.S. consumers read and subscribed to local news publications.
But industry experts feared that rising tide might ebb in 2022 as people headed back to work and inflation began to crimp household budgets. Indeed, there have been signs that readership was falling off. In September, the Poynter Institute for Media Studies reported that pageviews and unique visitors have fallen about 20 percent at local newspaper sites in 2022, a scary metric at a time when costs are rising and traditional advertising revenue continues to fall.
But data from the Medill Subscriber Engagement Index shows that even as the pandemic eased, subscriptions have continued to rise at all three categories of newspapers tracked: large, medium and small.
“The headline is that the bottom has not fallen out,” says Ed Malthouse, the Erastus Otis Haven Professor and Research Director for the Medill IMC Spiegel Research Center at Northwestern University’s Medill School. Malthouse is the data scientist who oversees the Medill Index, which was launched in 2021 and now includes data from more than 100 news organizations around the country.
Among eight large metropolitan dailies surveyed in the top tier of the Index, six showed sizable increases in subscriptions from September 2021 through August 2022. One showed only a small increase and another showed a significant decrease. (Publishers have agreed to contribute their data to the Index with the provision that they are not identified by name.) Medium-sized and smaller publishers also saw an increase although not as great. Meanwhile, reader regularity, the frequency with which readers go online to view news, held steady at all three tiers.
None of that surprises Matt Lindsay, President of Mather Economics, a consulting firm that specializes in media and data analytics. “The number of digital news users during the pandemic went up 30 percent. The [subscriber] conversion ratio went up 50 percent so the total number of starts went up 80 percent,” he says. “We are seeing that pageviews have gone down but publishers are getting better at converting subscribers so they are maintaining their numbers of new subscriptions. There’s been a learning curve and now the big thing is retention and monetization, how to raise the average price that people pay.”
Ken Herts, Chief Operating Officer of the Lenfest Institute for Journalism, a nonprofit that owns a stake in the Philadelphia Inquirer, is optimistic that news publishers will be able to hold on to their new subscribers and continue to add to them.
“Penetration of potential subscribers is still very low and there’s a lot of headroom for growth,” says Herts. “A Reuters study found that about 20 percent of people are willing to pay for news but you have subscriptions in the half to one percent range at many publications. With good marketing, publishers should be able to get up to 2 percent subscribing and then they will have a very good business.”
The Inquirer is on track to reach 70,000 digital subscriptions in the near future, exceeding its 61,000 print subscribers. The same trend is apparent at the Boston Globe, the Los Angeles Times and the Minneapolis Star-Tribune. The Boston Globe has reached 240,000 digital subscriptions, about 70 percent of which are full price, roughly $28 a month. Last month, the parent of the Dallas Morning News reported a 12.4 percent increase in digital subscribers and an almost 40% jump in digital-only subscription revenue during the third quarter of 2022, even as traffic to the company’s website fell more than 30 percent during the year.
Adept digital marketing is key to acquiring new subscribers, something that many newspapers didn’t excel at before the pandemic, industry experts say. The parent of the Dallas Morning News actually bought its own digital advertising firm. Gannett, one of the nation’s largest operators of local news outlets, has a growing and profitable digital marketing unit that helps local businesses like plumbers and dentists increase their digital presence.
Other publishers haven’t gone that far but they have recruited digital marketing professionals to boost their subscription acquisition efforts. They’re also attending conferences and participating in “digital accelerators” to learn from other subscription-model businesses like Dollar Shave Club, a California company that has been delivering razors and other personal grooming products by mail since 2011. “You do have to invest in digital marketing but it’s not just marketing by itself,” Herts says. “It’s finding the readers where they are and engaging them with differentiated content so they become regular readers and then creating a newsletter strategy to keep people coming back.”
Tim Franklin, Senior Associate Dean and the John M. Mutz Chair in Local News at Medill, sees the upward trend in subscriptions as another sign that the industry is successfully transitioning to a new business model. “If publishers can retain the people who wanted health news about the pandemic, those are folks who you can build a strong foundation with. That’s hugely important for the industry as it continues to pivot to a reader-revenue business model from an advertising-revenue model.”
Franklin and Malthouse warn against publishers celebrating prematurely and assuming that subscriptions will continue to rise. Countervailing forces in the news business include ongoing declines in print circulation, falling advertising prices, inflation-related expense increases and concerns about subscription fatigue.
“People shouldn’t be letting down their guard. It’s a dangerous thing to assume the line would keep going this way,” Malthouse says. “The only reason it would is if publishers are providing value to their readers. They need to provide differentiated and curated content because users are pressed for time. If I’m a subscriber and you fill the page with commoditized content or beat me to death with ads, I will start taking the credit card away.”
