Newspaper Publisher Says Free Content the Problem, Not the Cure

While many in the newspaper industry seem headed toward making more and more content available for free online and pursuing an advertising strategy, the publisher of the Arkansas Democrat-Gazette, Walter E. Hussman Jr. wrote yesterday in the Wall Street Journal that free content may be the problem that ails the newspaper industry rather than the solution.  In his provocatively titled column, “How to Sink a Newspaper,” Hussman explains very clearly why his paper hasn’t gone the free route and instead keeps its online content behind a pay wall.

Some of the highlights of his argument:

• Young people don’t have newspaper subscriptions because they’re smart enough to know that there’s no reason to pay for content that they can get online for free
• Newspaper web sites generate 78% of revenue from classified advertising (Borrell Associates)
• Newspapers generate between $500 and $900 per subscriber to their print editions and $5 to $10 per unique web site visitor
• The online edition of the Wall Street Journal has more paid subscribers (931,000) than the print editions of all but three newspapers (WSJ, NYT, USA Today)
• The Columbus Dispatch dropped its online pay subscription model on January 1, 2006, while the Arkansas Democrat-Gazette maintained its pay model.  For the six months ending September 30, 2006, the Columbus paper lost more daily subscribers than the Arkansas paper in that time period (-5.8% vs. -0.4%).  However, Sunday subscription losses were about the same at -1%.
• American newspapers spend $7 billion on newsgathering and AP adds another $600 million. 

I discuss this at some length in my latest podcast, but this issue merits further discussion and thought.  While I am a big believer in the concept that Content Does Not Want to be Free, I also don’t think pay subscription walls are necessarily the answer for the newspaper industry. 

Part of the problem for newspapers is that it becomes increasingly difficult for them to differentiate themselves from each other.  For most newspapers, an increased focus on local news would be the best way to retain subscribers and eyeballs.  Ultimately, state/national/international/sports/business news all has so many outlets focusing on it that it becomes hard for smaller papers to have their own unique selling proposition to readers.

To me, the most powerful newspaper web sites are the ones that extend the value of the print edition by incorporating the content of the print product along with community tools and multimedia supplements that go beyond what can be distributed in newsprint.  In addition, the web site serves as a great resource for breaking news or supplemental information, original source documents, and stories that may not have been able to make the print edition due to space considerations but may still be worth distributing.

I hope to be able to write more on this topic in the near future as I have had a number of recent posts on the newspaper industry and it has really gotten my mental gears churning.

In the meantime, Jeremy Liew offers some good insight and some potentially profitable advice for Mr. Hussman. Others addressing this bit of contrarian advice include: Bob Glaza and David Reich.

For a complete frontal assault on Hussman’s view, check out Jeff Jarvis, though I think it is hard to dismiss the concerns Hussman raises quite as easily as Jarvis does.