Local Papers Find Hints of Success With Online Subscriptions

When the hedge fund Alden Global Capital bid to buy the newspaper chain Lee Enterprises in November, many journalists at Lee’s newspapers opposed a sale because Alden had slashed newsroom costs at the newspapers it owns.

Lee’s largest shareholder, Cannell Capital, had a different complaint. J. Carlo Cannell, the firm’s leader, believed Alden’s offer was far too low. His reason: The price did not adequately figure in the potential of digital subscriptions.

“Lee has an enormous opportunity,” Mr. Cannell said in a recent interview. “I think sooner rather than later they’re going to get to a million subscribers.”

Such optimism may sound strange. More than 2,100 local newspapers have closed since 2004, researchers at the University of North Carolina say, as people turned to the internet for news and big tech companies gobbled up digital ad revenue. The number of newspaper journalists fell to 31,000 in 2020 from 71,000 in 2008, according to the Pew Research Center.

But publicly released corporate data and interviews with executives of local newspapers appear to buttress, at least to some extent, Mr. Cannell’s optimism about local papers’ potential to sell digital subscriptions.

Lee, the fifth-largest chain by national circulation and publisher of The Buffalo News and The St. Louis Post-Dispatch, reported 57 percent annual growth in digital subscribers this month. The chain now has a total of 450,000 online subscriptions — and is halfway to its goal of 900,000 by 2026.

Gannett, the largest chain, reported in November that digital-only subscriptions rose 46 percent from the previous year, to 1.5 million. The company publishes about 250 daily papers in the United States, including The Detroit Free Press, The Arizona Republic and USA Today, its only national title.

A nearly empty newsstand in downtown Chicago last April. Local papers, which have been decimated in many places, may be finding a new life with online subscriptions.Credit…Taylor Glascock for The New York Times

Hearst’s newspapers unit, with titles including The Houston Chronicle and The San Francisco Chronicle, ended 2021 with more than 300,000 digital subscriptions, a 50 percent increase over the year before, and nearly doubled digital subscriber revenue, said Jeffrey M. Johnson, the unit’s president.

These numbers are, at best, a start. They do not remotely compare with the subscription numbers of not 20 years ago, when, for instance, The Detroit Free Press — now one of Gannett’s 250 daily newspapers — sold 350,000 print copies a day. While digital subscriptions are buoying diminished metro dailies, it is less clear if they can rescue news deserts, those typically less-populated areas where local news coverage has all but gone away.

But for an industry accustomed to doomsaying, the willingness of people to pay for digital access is giving many publishers hope that they have found a way to survive — and, according to the most optimistic, even thrive.

“These businesses have gone through challenges,” said Mr. Johnson of Hearst, “but the strength of the consumer subscription business is reshaping the future.”

Mike Reed, Gannett’s chief executive, said, “There’s a big misperception out there that there’s a big hole in local journalism, and I think that narrative’s been created by people who aren’t sitting in local markets.”

Publishers have thought for many years that online subscriptions might be the best path back to a level of regular revenue that could support continued investment in their newsrooms. But it has been elusive.

Many newspapers that first found success emphasizing online subscriptions had national reaches, including The Wall Street Journal (which has had a paywall since 1997) and The New York Times (since 2011). When Jeff Bezos, the founder of Amazon, bought The Washington Post in 2013, he said the paper needed to make better use of its brand to exploit the internet’s “huge gift” of nearly free distribution. The paper could do so, he thought, by emphasizing national coverage that could sell digital subscriptions to readers around the country and world.

Jeff Bezos, who bought The Washington Post in 2013, believed that its breadth of coverage could be a selling point for digital subscriptions.Credit…Justin T. Gellerson for The New York Times

National or global appeal is not realistic for most local newspapers, which stand to sacrifice loyal readers if they cease covering their core geographic areas intensely. The most ambitious speak of dominating their states. The Minneapolis Star Tribune has sought to expand its coverage of Duluth, Minn., said Steve Yaeger, the chief marketing officer. Patrick Soon-Shiong, owner of The Los Angeles Times, recently mused to PressGazette about wanting four million subscribers in California.

But the past several years have revealed that by doing well in one’s backyard, one can support a staff large enough to cover it ambitiously.

The Los Angeles Times has more than doubled digital subscriptions in the past two years, to 450,000. The Boston Globe, which says it makes enough digital revenue to support its newsroom, increased its digital subscribers in the last two and a half years to 226,000 from 100,000, according to figures provided by the newspaper, which John W. Henry bought from The New York Times Company in 2013. The Philadelphia Inquirer’s digital-only subscriptions grew 28 percent last year, to north of 60,000.

“We don’t need to go outside our area to reach a really nice and sustainable piece of profitability,” said Grant Moise, the president and publisher of The Dallas Morning News. With 176 journalists, “The News is at least two times bigger than any TV station, radio station or local competitor,” he added. “We need to own that.”

Not everyone is bullish about digital subscriptions’ ability to save local newspapers. Two media scholars, Iris Chyi of the University of Texas at Austin and Sun Ho Jeong of Ewha Womans University in Seoul, studied 20 metro dailies across the country and found that median digital subscribers nearly doubled between 2016 and 2019 and then roughly doubled again between 2019 to the third quarter of 2020 before plateauing. Meanwhile, median print subscriptions fell by more than half from 2016 to 2021, they said, which, combined with digital subscription rates that were roughly six times cheaper than print ones, resulted in many newspapers’ losing subscription revenue overall.

“Just because print is declining doesn’t mean digital is the salvation,” Ms. Chyi said.

Yet while Ms. Chyi noted that low digital rates — particularly introductory ones for as little as 25 cents per week — imposed a ceiling on revenue, many newspapers have advanced to higher rates. The Globe was a pioneer in pricing its digital subscription as a premium product, charging $6.93 a week, which amounts to 99 cents a day, as early as 2015.

Also, dozens of digital-only local news upstarts have cropped up across the country. Freed of many costs associated with legacy newspapers — real estate, print distribution, larger newsrooms — they are designed to reap an overwhelming proportion of their income from readers, either in donations or subscriptions.

But tellingly, said Ken Doctor, a longtime industry analyst who in 2020 started a digital news site, Lookout Local, in Santa Cruz, Calif., the upstarts are most common where legacy daily newspaper owners have most divested from their newsrooms, creating “a news and information vacuum.” (The Santa Cruz Sentinel is owned by an Alden subsidiary. An Alden representative declined to comment for this article.)

Executives are finding that there is no shortcut to selling digital subscriptions. “The question in each individual case is whether the quality and exclusivity of the local news content and the digital product experience are worth paying for,” said Jim Friedlich, the chief executive of the Lenfest Institute for Journalism, which owns The Philadelphia Inquirer. “When these conditions are met, local news consumers have opened their wallets graciously.”

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