How DC Thomson is protecting local news with a paywall to offset ‘worthless’ social traffic
A tough print market, the rising risks of digital advertising, and economic uncertainty have forced many news networks to cut their local news coverage and focus on broad, national stories that will garner views and pique the interest of big-budget advertisers. As such, the future of local news is uncertain.
DC Thomson is using paywalls to safeguard the future of local news
This is evidenced in the financial dip the UK’s regional publishers are facing. Trinity Mirror, the UK’s largest regional publisher with more than 150 newspapers, reported a 19% slide in print advertising revenues across its national and regional titles in the first four months of this year, despite adding 83 print titles to its portfolio with the acquisition of Local World in 2015. Such steep declines meant that overall group revenue fell by 9% on a like for like basis.
Meanwhile Johnston Press, which owns the Yorkshire Post and the Scotsman, reported a £300m pre-tax loss in 2016, knocked by a 18% decline in statutory total advertising revenues across the group and a write-down in the value of its newspaper titles.
To counter such declines, Trinity Mirror slashed over 78 editorial jobs at its regional weekly and daily titles and in October last year, it announced the closure of Crawley News, OneMK, Luton on Sunday and the Northampton Herald and Post. Johnston Press chief executive Ashley Highfield has been leading a similar “disinvestment strategy” that has seen over 13 “non-core” titles sold in the past year.
Yet in the face of such staggering declines across regional press, DC Thomson claims to have found a way to protect print without cutting back on local news and resources by convincing online readers that quality journalism – either local or national, in print or online – is worth paying for.
Turning 'worthless' traffic valuable
The Dundee-based group, publisher of the Press & Journal, Sunday Post and The Courier, started putting up paywalls six years ago starting with its B2B title Energy Voice, “which was unusual for a regional publisher”, says Alan Melrose, digital commercial operations manager at DC Thomson.
“For us we are trying to protect print as well as local news and resources. We are not saying we produce hugely unique content, but we spend a lot of time putting together quality journalism and we believe there is value in that,” he adds.
After experimenting with a hard paywall with Energy Voice, which ended up capping its readership at 10,000 users a month, the publisher settled on a metered paywall that saw Energy Voice readers grow to 150,000. It employed this model for the launch of Aberdeen-based Press & Journal four years ago, and rolled it out to the Courier in October last year. It was then that DC Thomson rolled out MPP Global’s metered paywall technology across all three publications to replace the in-house built paywalls.
Each title employs a different free story count depending on the viability of getting readers to register versus subscribe, and subscriber messaging is tailored to the reader. For instance, readers referred to the newspaper sites from Facebook and Twitter will be served messaging that asks them to register for a newsletter or diverts them to further content on the site, rather than “doing the hard sell of asking them to subscribe”.
Melrose, who says social traffic is “pretty worthless” since readers are preconditioned to expect content for free, refers to social readers as the “advertising pool”.
“How we target users is about where they sit in that value process,” says Melrose. “From an acquisition channel point-of-view we know that social traffic is pretty worthless, the chance of getting someone from that channel to subscribe is really difficult, so what they are... the more pages we get them to see the more adverts we can serve. They are our advertising pool."
“Whereas if you get someone’s email address they tend to be much more engaged and much more likely to convert to paid subscribers,” he adds.
The Courier has seen 3% of its audience register to the site since October, of which 38% have signed up for the newsletter and 6% are paying subscribers. Press & Journal has seen 5.3% of registered users, of which 62% have signed up to a newsletter and 1.9% are paid subscribers.
The numbers are not groundbreaking, but given that the titles are battling against “two massive free sources of news – the BBC and the Guardian”, as well as social media platforms where readers are increasingly getting their news fix, it’s a small victory for the little guy.
“The challenge for the industry is how do you put value in your content if you don’t charge for it. We all know that advertising on its own doesn’t support our business model over the next five to 10 years. We have got to do something,” says Melrose.
'Scale doesn't work'
What’s more, where huge online publishers like MailOnline have been able to stave off charging readers for content by introducing new ways for advertisers to trade on its site using programmatic, local news publishers don’t see viable returns from this advertising technology due the small number of impressions they generate on site, Melrose claims.
“Given our scale, what we need to be conscious of is – as a regional publisher – our brand identity is so important to us. We get more value from selling to people who have got an affiliation to that brand identity rather than someone who is looking for an audience set regardless of who they are,” he says.
“That revenue stream is tiny in comparison to direct sell or a premium programmatic sell. Even in the regional publishing world we are not Trinity Mirror who have got that scale to make it work for them. Our strategy is more around pushing direct, higher yield better data-driven advertising.”
As an organisation rooted in super-serving a niche audience with its comics and local news, DC Thomson is cognisant it will “never be able to scale up as a business and rely solely on advertising,” Melrose says.
“Our focus, we are not going to scale up more than what we are, we are not chasing clickbait, we are bringing people in who are interested in us as an organisation. If we have got a paywall in place it generates more money than we end up losing,” he adds.
Data: the next piece of the jigsaw
The paywall is not only seen as a way for the publisher to make money from its readers; it also provides the publisher with valuable data about its readers that it can use to personalise the experience on site, while informing the creation of new products
“We are now indexing all of the content that people are consuming and segmenting those audiences using a tool called Alchemy and working out what products they will be interested in,” says Melrose.
These products, which will act as new revenue streams for the publisher, could be physical in nature like a book, journal or guide, or digital such as a shop, sub-site, affiliate marketing platform or newsletter.
It’s the same strategy employed by some of the UK’s biggest newspapers, following the Sun’s launch of betting and gaming division Sun Bets, and the Daily Mail publisher’s e-commerce platform Mail Shop.
“That will be the next piece of the jigsaw that helps us increase our revenue streams,” says Melrose.
The digital commercial boss says he is also considering making the newspaper sites “100% personalised” for registered users, after it saw a 12% uplift in the amount of pages readers were accessing per session over a three-month period on one of its evening titles when using a personalisation engine instead of a related articles widget.
The most important thing for Melrose is ensuring local news doesn't become obsolete in the pursuit of clicks and shares. Local news is "very important to society in general", he says, especially during times of political change when the voice of local communities matters most. But he admits it is "hard to see" how regional publishing will fit in the model of the big news organisations over the years as cuts to local divisions and declines in readership show no sign of slowing.
If DC Thomson has managed to convince a small corner of Dundee and Aberdeen that local news is worth paying for online, a strategy Johnston Press is primed to follow, perhaps the future isn't so bleak after all.