Newspaper publisher Postmedia Network Canada Corp. is launching an experiment to ask readers to pay for content on its websites.
The publishing company has chosen two relatively small markets for its papers – Montreal and Victoria – to test out a “metered” model on the websites of the Gazette and the Times Colonist newspapers. Starting at 1 p.m. ET on Wednesday, readers were able to access a limited number of free articles on the websites before being asked to pay.
The move is a pilot project for Postmedia as it considers a paid model for all its newspaper websites in the future.
“This is an opportunity, trying it at two ends of the country, and to test the market with a couple of models to see if the public value the content to the degree of what we think it’s worth,” Postmedia chief executive officer Paul Godfrey said in an interview on Wednesday.
The system being introduced today was inspired by The New York Times Co., which unveiled the pay wall for its flagship paper in March. The New York Times website allows visitors to read a maximum of 20 articles for free each month, before being prompted to subscribe. The two Postmedia papers are using the same limit of 20 free clicks on “premium content” including articles, columns, photo galleries and videos.
Those moves are part of a larger effort by the newspaper industry to find a way to replace revenue lost to declining circulation and a difficult advertising market. Postmedia, which was purchased by an investment group out of the ashes of the bankruptcy of CanWest Global Communications Corp., is also looking to boost its profits as it prepares for a public listing.
The experiment is a low-risk one, because neither the Gazette nor the Times Colonist receive large volumes of web traffic. The Montreal paper received about one million unique visitors to its website in April and the Victoria paper had about 283,000, according to ComScore. By comparison, The Globe and Mail’s family of sites received 3.6-million unique visitors in that time.
Like the Times, the Montreal Gazette will offer free website access to its print subscribers. Those who don’t subscribe to the printed paper will be asked to pay $6.95 per month, or $69.95 per year for unlimited access to the website.
The Victoria Times Colonist is trying out a slightly different model. It will charge $9.95 per month, or $99.50 per year, for those who don’t get the newspaper delivered to them. Print subscribers will have to pay $2.95 per month to go past the 20-article limit on the website.
Mr. Godfrey said the test markets offer a glimpse into how the pay model might perform in the west as well as in the east. It also allows Postmedia to gauge the response for local stories in a small market that is highly affluent, Victoria, and how it differs if at all from the response in Montreal, which is a larger metropolitan area.
Since taking the reins of the former CanWest chain of newspapers last July, Mr. Godfrey has trumpeted Postmedia’s “digital first” strategy. The company has seen gains in digital revenues – in its most recent quarter, ended Feb. 28, digital was up 8.3 per cent, while print advertising and print circulation continued to post losses. However, the digital side of the business still made up a relatively small chunk, 8.9 per cent, of Postmedia’s total revenues in the second quarter.
Asked if Postmedia could soon begin charging for access to its content via mobile devices, Mr. Godfrey said he is “examining everything.”
“Online is fine, but online revenues, even at this stage and even for something like the New York Times, isn’t more than 15 per cent of revenues yet. They have to build a better model,” said Canaccord Genuity analyst Aravinda Galappatthige.
But establishing pay walls may be more difficult in Canada than it is in the U.S., Mr. Galappatthige said. The Canadian audience for a media product is already smaller, meaning that newspapers could be even more affected by a drop-off in visits to their sites by readers who choose not to pay.
“You need a certain critical mass in terms of online audience in order to get a proportionate amount of online advertising,” he said. “They’re trying to limit it without affecting [the number of] unique users to the site.”
Other newspapers, including The Globe and Mail, have experimented with pay walls in the past, but backed away from it. The New York Times took down its latest pay model in 2007, but since it revealed last year that it would introduce the metered model, speculation has mounted over how quickly others in the industry would follow suit.
“We waited to see how the New York Times was going to do it, because they are a world leader,” Mr. Godfrey said. “It’s time. We’re going to try it out.”
