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October 19, 2014

Boston.com's New Strategies: Retention and Switch

Is The Boston Globe  really “going paid”? Well, yes, sort of, over time, with several asterisks on that term.

Today, the Globe said that come the second half of 2011, it will split its local presence into two websites. It will keep Boston.com, a site that is now a combo of city site and Globe news, and will launch BostonGlobe.com. Boston.com will remain free, and the BostonGlobe.com will be a a paid site. Paid, that is, or separately paid that is, if you’re not a Globe subscriber. If you are, the company says you’ll get online access included in your print subscription rate. If you aren’t, you can pay for access, price tba.

So the Globe takes the strategy much in preparation, most unannounced, at many newspaper companies. Overall, it’s an effort that says this: We need two strong revenue legs going forward into the murky mostly-digital future. Online ads themselves won’t bring in enough revenue to sustain us. In a way, it’s a back-to-the-future business model: advertising + circulation. The old model, in the U.S., was that 80% of revenue came from ads, 20% from circulation, and that brought in 20%+ profit margins for decades. Now, though, papers have been limping along, both print legs under continuing assault. And online, they could only hop on that single leg of digital advertising. Other than the Wall Street Journal and the Financial Times, no newspaper site has gotten much direct reader revenue.

The idea, then, in Boston, is to rebuild, over time, that strong two-legged business.

It is also a two-headed strategy: retention and switch.

In the shorter term, it’s a retention strategy. Many Globe print readers also read the Globe online and on their iPhones and Blackberries; thousands may be getting an iPad at the holidays. They keep on asking the question, “Do I really need to keep getting the print paper? I do a lot of my reading online.” The Globe’s pricing — bundling of digital access with print access — is meant to short-circuit that question. It no longer — come the second half of next year — will be the same question. “Just pay us once,” says the Globe, and read us everywhere, anywhere, and that’s a page borrowed from the plans of its parent c0mpany’s flagship, the New York Times.

The longer the Globe can hold on to print subscribers — whether they read the paper as much as they used to or not — the longer it can hold onto not only the circulation revenue (now 40% of the Globe-dominated NYT Co. New England Media group’s revenue), but the longer it can hold onto the ad revenue associated with the paper. So this is a staunch-the-print-bleeding, retention strategy, borrowing a page from the book of longtime bundled news advocate Walter Hussman of the Arkansas Democrat.

Second, it’s a switch strategy. Ask around and a number of your iPad-loving friends will tell you they don’t need the paper — or the web — for reading the news anymore. Some will wax on about the Wall Street Journal’s iPad product; others are high on browser versions of news products. If and as thousands, and hundreds of thousands, of readers forsake print and “online” for the tablet, this Boston.com strategy means that these tablet readers will still pay; they’ll just add to a new digital circulation revenue line.

Pricing, here, will be quite an exercise. How much do you charge for across-the-board print-online-smartphone-tablet subscriptions (and how can this new bundle let you further price up “print” subscriptions)? How much can you charge for per-device access?

The Journal set a $17.29 month — or $207.48 annually – price on its iPad product, with that switch potential clearly in mind. That compares to $249 for the (undiscounted) print edition. So, if a switch is big and real, the Journal keeps 80%+ of the circulation money, but can cut legacy costs of printing and distribution by 50% or more. Now, that’s a new business model — and one for which the Boston plan would be set up to take advantage.

The Globe is touting its new plan as a first in the country, and it is, of a kind. It smartly grabbed and built on the wide and deep Boston.com brand from the beginning, allowing it to take a position that was much more than “just the Globe.” Now, it can use that free site to keep growing digital advertising and marketing revenue, while executing its retention-and-switch strategy on the separate BostonGlobe.com site.

With two sites, readers won’t have to run into those scary, pay walls that make them turn to proliferating free media. That is a useful innovation, and one that reduces some of the fear that the site will hermorrage unique visitors and pageviews.

The biggest question here for the Globe, though, is how it participates in widely in Boston’s — and Massachusetts’ — public life. If Boston.com carries relatively little Globe content and if BostonGlobe.com provides relatively few page views before making readers pay, then its news and its voice will be less heard in the public sphere. There’s lots of news competition in the greater Boston area — much of it free — from the Herald, to New England Cable News, to the local commercial broadcasters to the Phoenix to the growing regional news presence of WBUR public radio. So readers have choices other than the Globe.

This is, of course, the conundrum of metros: How to get new digital reader revenue and maintain their voices. The metering approach, to be strongly tested by the New York Times early next year, is intended to do both. If BostonGlobe.com sets its dials well, and adjusts them smartly, it might accomplish both the reader revenue and voice goals. That’s a tough dance, though — and one reason that implementation’s still a year away.

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