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Postmedia Network president and CEO Paul Godfrey. (Darren Calabrese For The Globe and Mail)
Postmedia Network president and CEO Paul Godfrey. (Darren Calabrese For The Globe and Mail)

Postmedia plans to charge for online articles Add to ...

Canada’s largest newspaper publisher is the latest in the industry to say the future can’t be free.

Postmedia Network Canada Corp , publisher of the National Post and other daily and community papers across the country, will soon be asking more of its readers to pay for online articles.

Chief executive officer Paul Godfrey confirmed on Friday that in the coming months, Postmedia will begin expanding its “metered model” – which gives online readers a limited number of free articles before prompting them to pay for access – to the websites of its newspapers across the country. The announcement is not a surprise: Postmedia began testing this model in May on the websites of the Montreal Gazette and the Victoria Times-Colonist. (Postmedia sold the Victoria paper last week.) But this is the most definitive statement yet of how that experiment has gone.

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“The numbers [of paid readers]are growing. They’re growing slowly, but they’re going in the right direction,” Mr. Godfrey said in an interview Friday, speaking about the early results of the experiments in Montreal and Victoria. “Ultimately, it will be across the chain.”

Charging for digital access is fast becoming a priority for newspaper publishers struggling to make up for declines in their print business.

Postmedia based its experiment on The New York Times Co., which debuted a metered model in March on the website of its flagship paper. The New York Times has since managed to rack up 324,000 digital subscribers, according to the most recent numbers. This month, The Times Co. erected a pay wall at the website of another paper it owns, the Boston Globe.

“A decade ago we started to give it away on the Web … everybody in the newspaper business is looking in the rearview mirror and saying, what the heck did we do?” Mr. Godfrey said.

Since Postmedia emerged from creditor protection last year, taking on the former print assets of CanWest Global Communications Corp., Mr. Godfrey’s focus has been on developing his digital strategy. Digital revenues have been rising steadily, but still account for just 9.5 per cent of total revenues. Meanwhile, print circulation and advertising revenues have been falling.

“It’s tough to get people used to the idea of paying for anything online. And at the end of the day, it’s such little money,” said Canaccord Genuity analyst Aravinda Galappatthige. “…At some point they [newspaper companies] will all have to do it.”

Postmedia reported Friday that print advertising revenues fell 5 per cent in the fourth quarter, to $145.6-million, and print circulation fell 2.5 per cent to $58-million, based on the combined results for the same period last year, when the papers were under CanWest ownership for part of the quarter before emerging under the Postmedia banner. The company cautions that the numbers are not directly comparable because of the change in ownership.

The Toronto-based company reported a net loss of $2.3-million in the three months ended Aug. 31. Revenues totalled $230.3-million.

Mr. Godfrey held a meeting with staff in the National Post newsroom on Friday to announce that 13 years after it was founded, the paper is making a profit for the first time.

The financial improvements at the company are largely the result of a year of aggressive cost-cutting across the chain of newspapers. It is now paying $17.3-million less in compensation – salaries to employees – than in the same period last year.

Mr. Godfrey says the biggest cost-cutting initiatives are now behind them, and the coming year will be focused on generating revenue; including the expansion of the digital subscription model.

“Newspapers are going to need this going forward,” he said. “It’s only a matter of time.”

 
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