Tuesday, September 24, 2013

The Post-Gazette to Charge for Online Access

Increasingly, traditional news organizations are charging for online content.  The Wall Street Journal, for example, makes a certain amount of its content available for free but as that information is archived, it is then available only to online subscribers.  Those same subscribers have full access to the Journal’s content.

This is a model more and more national, regional, trade and local media are emulating.

The Pittsburgh Post-Gazette first dipped its toe in the pay-for-content waters with PG-Plus.

More recently, the Post-Gazette announced that starting October 1st, the newspaper will charge $9.95 per month for digital-only readers.  This will give them unlimited access to the Post-Gazette’s “website, smartphone app, tablet app and to electronic editions of the newspaper.”

Those who receive home delivery of the paper editions of the publication will have unlimited digital access.

Non-subscribers will have limited online access to a certain number of stories per month.

According to the Post-Gazette, it receives one million visitors to its online edition each week.

Post-Gazette president Joe Pepe said this via the newspaper’s report on the change on its site: “The decision to implement a paymeter grows out of our fundamental belief that our customers recognize the value in our local news products.  This model allows us to continue to provide quality journalism to our readers.”

In its announcement, the Post-Gazette pointed to the “paymeter” trend, saying this move puts it on the same path as the Journal, the New York Times, the Washington Post, and even sister publication the Toledo Blade, all of which now charge for content.

The PG’s Challenge

The Post-Gazette’s primary business challenge is it’s not the Wall Street Journal, the New York Times, the Washington Post, or even the Toledo Blade.

The first three major dailies I mentioned are national brands, premium news brands, that a national audience has shown it will pay for and support.  Still, at least the Times and the Post have encountered their share of financial hardships of late, enough to raise the question of whether charging for content is something they can do or must do (more on that in a bit).

The Blade’s situation is a little different.  Like the Post-Gazette, it’s a local paper.  Unlike the Post-Gazette, it has no real competition.  The Blade can charge and if Toledo residents want to catch up with news online, they can be forced to pay. 

The Post-Gazette has to contend with the Pittsburgh Tribune-Review, its major print and online competitor.  The Tribune-Review does not charge for its online content.  While the two publications have distinct differences in the way they cover the news, the fact is online readers have a viable free alternative to the PG if all they want to do is get the latest scores, weather, news and obits. 

It’s possible that the Post-Gazette isn’t so much driven to this decision because it can, but rather, because it must.  A publication that can charge is one that recognizes its value and its demand among consumers and knows it can charge a premium.

A publication that must charge is one that is faced with the escalating costs of operation and must find ways to cover increasing costs against decreasing revenue sources.

Across the country, old-line news organizations like the Post-Gazette continue to maintain expensive printing operations, news room staffs, delivery and distribution systems, and even legacy costs such as retirement plans and expensive benefits programs.  They struggle to meet these obligations while consumers migrate to free online news sources.  Circulations decrease, diminishing the advertising clout newspapers once had (reducing ad revenues along the way).

The solutions to such major business challenges are not simple, but charging for online content may only complicate the problem.

This situation reminds me of a committee I once served on for a Catholic school.  Every year, enrollment decreased and tuition increased.   The communications challenge was conventionally seen as centered on creating awareness of the value of the education.  If only people would understand the true value of the education, the problem would be solved, administrators assumed.

Actually, the problem was the price increase.  Everyone has a tipping point.  At some point, no matter how much people love a product or a service, they will decide they simply can’t afford it. 

Once the news organization begins to charge, that one-million-visitors-per-week number will surely drop significantly.  And still, the newspaper will continue to carry the financial burdens of any old-line major daily.

The questions that have to be on the mind of the Post-Gazette’s leadership have to be: Will enough people pay for online access?  How many will migrate to the free site of our competitor?  What will we do if we don’t amass enough online subscriptions?  How much is enough?  How much time do we give this? 

Those are just a few of many difficult questions as the Post-Gazette wrestles with this unprecedented period of transition.

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