Tuesday, March 24, 2009

Building Walls

I'm not a hockey fan but I'm fascinated by Jim Balsillie's attempts to buy an NHL hockey team for Waterloo - he may really be aiming for a team for southern Ontario, but I like to think his goal is Waterloo - so when news broke today that his favorite team, the Habs, is up for sale, I fired up Google News to see what the rumor mill had going.

One of the articles that caught my eye was from the Nashville Post. Balsillie's last attempt to buy a team was the Predators, so you can imagine that city is interested in the topic. But when I clicked on the link I got a message that unless I'm a subscriber, I have to pay $7.50 to read the article. It's difficult to imagine that anyone would pay that much (even a hockey fan). Just for fun I clicked the link to buy the article, and it opened an email: the only way to purchase an article is to write an email or call their subscription department. That inconvenience makes it even less likely that anyone has ever actually paid the $7.50, or that the paper even expects anyone to.

Their goal is probably to get people to subscribe: they may hope that faced with such a high price for an article, the reader will opt for a subscription. However, a little more clicking tells me that a subscription to online material is $99/year. Now, even Salon.com's premium subscription is $39/year (and I refuse to pay that). A hundred bucks is steep. There's no way an individual would pay that unless they're super interested in Nashville news - and are probably a local. The Nashville Post might prefer that; after all, newspaper revenue is all about ads, not subscriptions, and they may aim their ads at local businesses that don't care about readers outside the city limits.

That seems like a failed marketing strategy - especially since, when I check out their home page, I see that their ads are customized to the visitor (so I see ads for Toronto). It's not clear what articles they're putting behind the subscription wall, but it's not based on freshness; I clicked on several inaccessible articles that were posted today.

We hear a lot about the financial difficulties of print media, and this is just an exaggerated example of what newspapers are doing wrong. Profitability is linked to eyeballs, and eyeballs are not attracted to over-the-top fees (either $7.50 per article or $99 per year). In fact, now that I know that the Nashville Post puts their articles behind the subscriber wall, I won't click on links to them anymore - just as I stopped reading the LA Times a number of years ago. (The LA Times may have changed their policy, but I read hundreds of online newspapers, and I can't keep up with their marketing flipflops.)

Samuel Chi over at RealClearPolitics thinks that subscriber walls are inevitable due to declining ad revenue. He suggests that all print subscribers of Newspaper Association of America (NAA) papers should be offered a deal to get online access to all 2,000 NAA papers for one fee of $50/year. There are a number of problems with this, one being that internet traffic is international (trust an American to forget that); a bigger problem being that it will drive people to other media sources that are free, and further hurt the finances of newspapers. Ad revenue is down because it's a recession: when demand falls, raising the price rarely solves the problem.

It's not clear to me why newspapers are finding it so difficult to figure out the internet economy. Everyone else is trying to create sites that attract readers so they can make revenue from ads; newspapers are one of the biggest draws for readers that there is, and they're squandering their opportunity. Or at least some of them, like the Nashville Post, are. Since different articles attract different types of reader, newspaper articles could even provide advertisers with nice neat demographic targets. The internet business model is not even that different from the print business model: newspapers have always received the majority of their revenue from advertising.

A more interesting approach would be to reduce costs by producing a much smaller print edition, and make the bulk of the paper online-only - or just drop the print edition altogether. I don't read print editions ever, anymore, so this makes sense to me - but I can't be sure it would actually work. I have heard that printing represents 50% of a newspaper's costs.

By the way, I don't believe Balsillie would try to move the Canadiens. If he loves the team then surely he knows it has to stay in Montreal. Also, it's exciting to think that it might go back to Quebec francophone ownership, and gain back some francophone staff.


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