I have been reading the tea leaves in the bottom of the online subscription cup.

My fortune-telling has been assisted by some very interesting international statistics.

The pattern in the bottom of the cup is telling me that the winner-takes-most paywall phenomenon that has characterised the US market may not be repeated in the New Zealand market in the longer term.

If we follow the American example of great success by the New York Times and Washington Post, The New Zealand Herald (which is the subscription leader in New Zealand with more than 110,000 online premium subscribers) will soak up the majority of those willing to pay for their news.

In the United States, where 21 percent have paid for online news in the past 12 months, more than half subscribe to either the New York Times or Washington Post and less than a quarter to local or regional sites.

In Britain, the heavyweight nationals – Telegraph, Times, and Guardian – command 55 percent of the paid online market and the very small percentage of Brits who are prepared to pay (only 8 percent) won’t look at paying for papers further down the food chain.

However, the latest Reuters Institute Digital News Report contains statistics that suggest winner-takes-most may not be a foregone conclusion. We could follow the Scandinavian experience.

Norwegian model
In Norway, where close to half the population pay for online news, the three biggest national titles do command a significant subscriber audience between them but so, too, do regional and local news sites. Almost half of the subscribers take either VG, Aftenposten or Dagbladet but almost 60 percent subscribe closer to home.

In Norway, according to the Reuters survey, local newspapers are seen as the “go-to” source for politics (71 percent), crime (73 percent), coronavirus news (53 percent), and things to do (46 percent).

“Our research this year also shows a link between how attached people are to their local community and levels of local news consumption,” the report states. “Respondents in both Austria and Switzerland are amongst those countries that feel most strongly attached and – like Norway – these are also countries where local news consumption tends to be higher and the value of local newspapers is more keenly felt…

“None of this is to suggest that publishers in countries with more attachment are not also suffering from the impact of digital disruption. We see blind spots and decline in most markets, but the fact that local newspapers in Norway are still valued for a local newspaper bundle of different information services gives them a stronger chance of persuading people to pay for online news.”

New Zealand is a country that traditionally has had a regional and local focus in paid-for news. There are historical reasons for that. Transport in the newspaper industry’s formative period was difficult and the country’s topography means it remains expensive.

Newspapers developed around regional and local population centres. Even if they don’t buy it each day, most people will be able to tell you the name of their local newspaper. It is a different story with free-to-air broadcasting.

After short private enterprise experiments, broadcasting became government-owned and news management centralised. Network technology solidified the national focus of television in particular.

Closest to national daily
We have never had a national daily general newspaper. The closest we came was National Business Review’s five-year stint as a daily from the late 1980s. Efforts a decade later to fly The New Zealand Herald into Wellington and the South Island (The Dominion was briefly flown into Auckland) were expensive exercises that could not be sustained as revenue declined and internet use grew.

And, in any event, the Herald was an additional purchase for the majority of buyers in those centres, not an alternative.

Like most countries, New Zealand is still feeling its way through the conundrum of payment for news in the digital age. There are various forms of subscription in the online news market but the most obvious (and numerically superior) is the paywall.

The New Zealand Herald had first mover advantage on paywalls in the daily general news market (National Business Review had long ago introduced an expensive and impenetrable paywall on anything worth reading on its site). It also has far and away the largest regional population base.

So, although it has done remarkably well with its premium subscriptions, it is premature to put the title up there with the winner-take-most titles The New York Times, Washington Post and Britain’s Daily Telegraph.

Stuff has yet to take the subscription plunge but it will come in one shape or another. The donation strategy it currently pursues is drawing support but it is too haphazard in terms of contributions to cashflow. It relies on goodwill and there is no real downside to not donating. How it characterises its subscription strategy will be the key to success or failure.

If it sells itself as a national news source serving all of the country it may come second. NZME is already pursuing that strategy with the Herald brand. It is banking on New Zealand following the US/UK model and last November unveiled plans to make the Herald “New Zealand’s Herald” by, among other things, rebranding its regional titles – Bay of Plenty Herald, Rotorua Herald, Hawkes Bay Herald and so on.

NZME has first-mover advantage
If the US/UK model is working here, NZME has a clear first-mover advantage. If, however, the New Zealand market does not perform to that model, Stuff may capture the same sentiment that is manifesting itself in Norway. If it capitalises on the legacy value of its regional titles as subscriber brands, that could be more successful than the perception of a bunch of JAFAs playing fast and loose with a local masthead that has been around for more than a century.

This does not necessarily mean a host of separate news sites that could be a nightmare to administer. Technology is now clever enough to construct individual and group offerings that are tailored to need. What appears to be a separate site may, in fact, be a subset of Stuff determined by algorithms.

Stuff might like to look to Canada’s Globe and Mail (whose publisher is one-time New Zealand Herald chief executive Phillip Crawley). It has developed artificial learning technology, which it calls Sophi, to automate and optimise a host of publishing decisions around its paywall.

It can, for example, determine what covid-19 information to put behind the paywall and what to provide free for everyone to access. It is a powerful engine that is now used by 11 different publishers across 50 outlets.

The leaves at the bottom of my cup tell me that regional and local brand identity will play a crucial role when the major paid-for news outlets go head-to-head in a subscription contest.

Time will tell whether the dregs of my cup are better at foretelling the future than the cup of someone’s desk at NZME. If I have any advantage it may be that I make a very nice cup of Taylors of Harrogate Yorkshire Tea.

Dr Gavin Ellis holds a PhD in political studies. He is a media consultant and researcher. A former editor-in-chief of The New Zealand Herald, he has a background in journalism and communications – covering both editorial and management roles – that spans more than half a century. Dr Ellis publishes a blog called Knightly Views where this commentary was first published and it is republished by Asia Pacific Report with permission.

Article by AsiaPacificReport.nz

By RNZ

The New Zealand Herald’s new premium paywall could turn readers to digital competitor Stuff, according to Auckland University of Technology communications lecturer Dr Merja Myllylahti.

The Herald started charging for some of its content at the end of April; a move many in the industry viewed as risky.

In fact, the first full month of digital news websites’ audience numbers since the paywall was introduced showed the Herald dipping and Stuff gaining in both unique viewers and page views.

However, the paywall has since yielded positive results with 10,000 people subscribing to the premium content within the first six weeks.

READ MORE: NZ Herald launches premium paywall – how will it impact on other media?

A Pacific Media Centre contributor and co-director of the Journalism Media and Democracy (JMAD) research centre at AUT, Myllylahti said the early sign-ups bode well for the paywall, but the Herald will need to keep a close eye on the numbers over the next couple of months.

“It’s encouraging early signs, but we have to be careful because when that two month offer runs out, a lot of people might have taken that offer for two months, and then they might drop out,” she says.

10,000 is also the paper’s first-year goal.

“We’re obviously thrilled,” said Herald editor Murray Kirkness.

“I think people now understand that if you want something you now have to pay. For a long time in the digital world that perhaps wasn’t the case.

“In the news sense, no matter where you look around the world – certainly in the western world – it’s now almost the norm to have some paywalled content rather than it all being free,” he says.

Annual subscriptions to the paywall cost $199, or readers can pay $5 per week to access the premium content. For the first couple of months the Herald is offering a discounted rate; half price access, as a sweetener to get people on board.

Just over a third of the current 10,000 subscribers signed up for a whole year, leaving two thirds paying per-week.

“We’re obviously aware of churn, and that’s something that any subscription model has to deal with every day,” said Kirkness.

“Of course, we’ve had subscribers for a very long time in terms of print… so we’re well used to managing that business arrangement.”

The Herald has opted for a soft paywall, so most of its stories remain free to readers.

However, in New Zealand and around the world newsrooms are trialling other models too.

Newsroom.co.nz has both paywalled content in its Newsroom Pro section, and asks for donations to continue its journalism. The National Business Review requires readers to subscribe to read its content.

Internationally, the New York Times and Washington Post let readers view a set number of articles a month before bringing up the paywall. Like Newsroom, The Guardian newspaper – which is run by a charitable trust – asks readers to support its journalism by making donations.

This article is published under the Pacific Media Centre’s content partnership with Radio New Zealand.

Article by AsiaPacificReport.nz

COMMENT: By Adrian Blackburn

After something of a love/hate relationship with The New Zealand Herald since I joined as a cadet reporter in 1957, I have decided to show some love by taking up this week a one-year $199 subscription to the paper’s new premium digital content offer.

This is in the context of a keen newshound who had made the Herald site for more than 15 years his alternative to a paid sub, with just the occasional purchase of a Saturday print Herald.

Good sign in terms of efficiency: the nzherald.co.nz website immediately (within seconds) enabled me to read the full David Fisher piece on the French beacon built on the Chathams which I had already open on my laptop.

READ MORE: NZ Herald launches premium paywall – how will it impact on other media?

When minutes later I spotted David’s piece spruiked on his FB page I thought I might have found a workaround for those unprepared to pay, but the same conditions (roughly only first 100 words free) still applied.

Earlier I confirmed that the new syndication agreements Granny has signed with the New York Times, Financial Times, The Times (UK) and the Harvard Business Review are not (as I suspected) in the too-good-to-be-true category of offering full digital access to their websites.

The Herald will just select some content to publish as it has done for years with existing agreements with the Daily Telegraph (UK), Washington Post and South China Morning Post (SCMP). Fair enough.

Put in context
Just to put the Herald’s Premium payment in context, you can get

Much of the Financial Times digitally for $NZ6.45 p.w. (or $11.25 for the lot),

Full Tele for GBP2 after a month free

The Harvard Business Review $NZ23 per month

The Washington Post US$45 per year (some free articles) but a separate payment for the archive

NY Times a few free articles, then US$1 p.w. (special offer, normally $3).

For Anglophiles the availability of 200 years of news archives of The Times makes its GBP5 per month (after a month free trial) look pretty inviting.

And the SCMP (now apparently owned by the Alibaba online sales empire) seems to offer full free access, including 20 years of archives.

I’ll be interested to see if the Herald experience persuades me to renew in a year’s time. As renewals roll over automatically I’ll need to be vigilant to cancel in good time.

Adrian Blackburn is lifelong journalist and writer. Staff writer on many publications, including The NZ Herald, Sydney Morning Herald, BBC World Service, Beaverbrook Newspapers, NZ Listener and NZ Woman’s Weekly. Author of The Shoestring Pirates (Hodder and Stoughton, 1974) a history of pirate Radio Hauraki. This brief commentary was originally a Facebook posting on Kiwi Journalists Association and is republished here with permission.

Article by AsiaPacificReport.nz

ANALYSIS: By Dr Merja Myllylahti

New Zealand’s largest newspaper, The NZ Herald, launched its digital subscriptions today for online content, making history at the same time.

Its paywall is the first for a general newspaper in New Zealand.

Back in 2011, The NZ Herald’s parent company APN (now NZME) launched a digital-first initiative which was deemed critical for its future digital revenue. As a part of that initiative, APN was considering digital subscriptions for The NZ Herald.

READ MORE: NZ Herald’s editorial – Premium, strategy an investment in our journalism

Eight years later, this future imagined by APN bosses has arrived and will affect other players in New Zealand media.

The National Business Review, a business newspaper, has charged its readers since 2009, and digital news outlet Newsroom already charges for its premium content.

The New Zealand portfolio of Stuff, which is now owned by Australian Nine, includes digital news site Stuff, print newspapers and the community site Neighbourly. Stuff has no paywall, but The NZ Herald’s move to paid online content raises the question of whether it will follow its competitor.

My bet is that a similar move is unlikely.

Stuff has built its revenue model on e-commerce activities and is now selling broadband access, electricity and health insurance among other things.

Benefits of online traffic
For years, NZME and Fairfax Fairfax NZ (now part of Nine) avoided charges for their digital news content because of their duopoly in the New Zealand print and online news markets. The two companies feared that if one of them would introduce paid content, the other one would reap the benefits and gain in traffic.

On the other hand, traffic is perhaps not the main concern of The NZ Herald as it is targeting to convert a proportion of its audience to paid readers. For the first year, its aim is modest. It is aiming to gain 10,000 digital subscriptions.

To put the current situation into context, in 2018 Stuff had a unique audience of 2.1 million and The NZ Herald 1.7 million. According to SimilarWeb data, in the first quarter of 2019, Stuff had 34 million monthly visits compared to The NZ Herald’s 27 million.

For several years, NZME and Stuff pursued a proposal to merge. But when ruling against the merger in 2017, the Commerce Commission observed:

Both NZME and Fairfax have currently decided against introducing some form of paywall primarily because of the threat of readers switching to their competing online news websites and the risk of putting advertising revenue at risk.

That risk still exists, and it will be interesting to see whether Stuff gains in audience, traffic and advertising now that The NZ Herald paywall is going up.

The Commerce Commission was also concerned that if the merger had gone through, the combined company would introduce a more expensive paywall. As the merger was denied, this worry does not apply. But we don’t know how restrictive or pricey a joint paywall would have been.

Bundled with syndicated content
The NZ Herald paid content model is a “freemium” model. It allows readers free access to some content, but the premium content such as business news will be behind a paywall. It is also a very bundled model as the paper promises paid readers syndicated material from The New York Times, The Financial Times, The Times and Harvard Business Review, to name a few.

At this point it is not clear how much and what content exactly this large syndicate offers for The NZ Herald readers, but clearly the deal does not include full access to these sites.

The paper’s premium content editor, Miriyana Alexander, said:

While our major focus is on the delivery of the very best New Zealand journalism, we know that the addition of these four publishers, alongside the likes of the Washington Post and The Daily Telegraph will make for a terrific, unrivalled package of journalism and content.

As indicated in the table below, the annual digital subscription to The NZ Herald will cost NZ$199, compared to The Age’s and The Sydney Morning Herald’s NZ$294. Compared to prices of The New York Times (US) and The Telegraph (UK) it is cheaper, but compared to Le Monde (France) it is substantially more expensive.

All about business
It remains to be seen how much of The NZ Herald’s content will be behind a paywall and how much will continue to be freely accessible. Interestingly, academic studies of paywalled content have found that paywalled newspapers offer news sourced from newswires and syndicates for free whereas the most valuable content such as hard news, financial news, politics and opinion pieces have been hidden behind a paywall.

Alexander says the paper invests especially in business coverage, and it aims to be “the go-to destination for specialist, insightful and essential business journalism”.

The National Business Review and Newsroom Pro are competing in the same market, and they already have paid content strategies in place. I do wonder if the New Zealand market is really big enough for three players focusing and charging for business content.

One major decision is where to draw the line between free versus paid content. In France, Le Monde paywalls roughly 37 percent of its content, so readers have free access to the majority of its articles. According to Digiday, the paper found that putting more than 40 percent of its content behind a paywall had a negative impact on the potential of gaining new subscribers.

When the paper reduced the number of its paid articles last November, its traffic rose from 84 million to 97 million in a month, increasing its pool of potential subscribers.

Getting the balance rights seems to matter.

Dr Merja Myllylahti  is co-director of the Journalism Media and Democracy (JMAD) research centre at Auckland University of Technology. This article was first published by The Conversation and is republished here under a Creative Commons licence.

Article by AsiaPacificReport.nz