E.W. Scripps, owner of more than a dozen daily and community newspapers and operator of the Scripps Howard News Service, reported this week that it lost $4.4 million in the first quarter—in the red, but an improvement over $8.9 million lost in 2011's first quarter. The Washington Post Co. reported last week that while overall income grew, newspaper publishing revenue fell by 8 percent in the first quarter. The New York Times also recently tightened its grip on its metered paywall, allowing readers to view only 10 articles (down from the previous 20) before paying a fee.
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The trends seem disheartening, but there appears to be a path forward for newspapers. For readers, there is good and bad news: Papers could feature more and more of the local news that they specifically want to read, but that content would be less and less free.
In order to attract and keep paying subscribers, newspapers may see an example in cable TV network HBO and shows like Game of Thrones, says Tom Rosenstiel, founder and director of the Pew Research Center's Project for Excellence in Journalism. That doesn't mean editors can take up broadswords and behead their sworn enemies. Rather, the idea is to focus on attracting niche audiences via specialized coverage.
"It might be that you've got a small group of people who really love that show and are willing to subscribe to HBO just for that show," he says, adding that some people might also gain access to an entire bundle of cable channels purely to watch one or two shows."The people who love Entourage are different from the people who love Game of Thrones," he says. But whether a person is paying for just one show or 50, adds Rosenstiel, HBO still gets the monthly subscription fee.
"The point is, that's the media landscape we're into now, where if this works for a small niche audience but it adds to your revenue, it works," he says.
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And there is growing evidence that people will pay for their local news, says Paul Gillin, social media consultant and founder of the Newspaper Death Watch blog.
"Regional papers are finding that [readers will] pay a low amount if the information is highly specialized to that region, which the Boston Globe is having some success with," he says.
The Globe announced last week that circulation has grown for the first time since September 2004 and that since the fourth quarter of 2011, its paid digital subscribership has grown 13 percent. It's a sign of hope for a paper that just a few years ago closed all of its foreign bureaus to cut costs. And as the Project for Excellence in Journalism pointed out in its 2012 State of the News Media report, Georgia's Augusta Chronicle and the Minneapolis Star Tribune have both also seen signs of success with paywalls.
Politico is also trying the niche approach with its subscriber-only Politico Pro products. Instead of aiming at a specific geography, like a metro paper might do, these aim at specific communities like those immersed in health or technology policy.
Though no single model will work for everyone, the trend of paying for news content, says Rosenstiel, is likely here to stay.
"When 2012 began, there were probably 150 daily newspapers in the U.S. that had online subscriptions. That number is going to more than double this year and even triple," he says.
And as the demand for news remains high, there is also room for revenue growth. Though total U.S. newspaper circulation has fallen off sharply in recent decades, the number of unique visitors to newspaper websites has overall trended upward since 2010, according to figures from the Newspaper Association of America.
The problem is that ad revenue isn't growing, which makes producing that news all the harder. The association's figures also show that combined print and online advertising revenue for newspapers has not risen since 2005. Last year, it fell by 7.3 percent.
That means free website access, as the Washington Post or USA Today feature, can have a mixed effect. "It gives [the publication] a readership advantage. I'm not sure it gives it a financial advantage, though," says Gillin, speaking of the Washington Post's free model.
Meanwhile, the New York Times' paywall has attracted a steadily growing base of paying subscribers. Gannett, which publishes more than 80 newspapers, is following suit, having announced that it will also start charging for online content, though the paywall will not apply to USA Today, also a Gannett paper.
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But an explosion of paid subscribers seems far less likely than a slower shift of readers from unpaid to paid content, as newspapers wait for consumer expectations to change—a cultural shift that could be slow in coming.
Rosenstiel again points to television. "TV for most Americans is not free anymore. And it's very foreseeable—it's plausible, at least, that that could happen in newspapers."
Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.
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