HawaiiWritten by Jason Ubay On 08 June 2011

A story in yesterday’s Honolulu Star-Advertiser confirms that it will be introducing paid content this summer. Hawaii Business magazine writers Bev Creamer and Jerry Burris reported the same in “Paying for Local News,” which appears in our June 2011 issue. They write:

“Certainly the Star- Advertiser is the vast bulk of what we do (in advertising revenue),” [says Dennis Francis, president and publisher of Oahu Publications Inc.] The Star-Advertiser’s website is included in part of those revenues, but plays a small role, he says.

Francis says his operation has been watching the various experiments nationally as news organizations seek more profits from their websites. The Star-Advertiser intends to charge website users starting this year, although managers have yet to determine exactly how that will be done and what will be charged, Francis says.

“That’s certainly a big challenge, because no one’s figured it out yet. Most newspapers in the next two years, I think, will be going down that road. They’re all approaching it somewhat differently.

“It’s still an area with opportunity to grow,” Francis continues, “but it will not be a substantial part of our revenue. I’m not going to be crazy and think it will someday replace a Macy’s or a Longs or a Sears when it comes to advertising.”

This should come as no surprise. With less print subscribers and the rise of Craigslist, newspapers lost its major source of revenue: print advertisers and classified ads. The New York Times went to a paywall back in March. (Early results showed a 5 percent to 15 percent drop in traffic.) Newspapers have tried and, except for the Wall Street Journal, many have failed.

Locally, Civil Beat started last year with a $20 monthly access fee. Since then, it has tried different price offerings. Pacific Business News has had some success with paywalls, locking its print stories for subscribers only. (Even Hawaii Business magazine has articles for sale on Amazon. How or why they’re up there is a mystery to me.)

The problem with paywalls is that it goes against the hackers’ ethos, “Information wants to be free.” Of course, free can’t buy meals, or pay for an iPad, much less produce content for one. In addition, news consumers have grown accustomed to free news online. I’m sure if they could go back to the ’90s, news organizations would have never given their articles away.

Online advertising produces revenue, but it is not nearly as profitable as its print counterpart. Web advertising is usually measured in Cost per thousand impressions, or CPM, which is basically a page view. This can scale up for a website with international reach like The New York Times or Huffington Post. Small market news websites cannot compete on page views versus these website giants.

Other online advertising options include PaperG, which creates virtual bulletin boards and custom display ads for local advertisers.

Other news models include Spot.us, where reporters pitch a story and readers crowdfund the idea. If enough money is raised, the reporter will produce the story. Noteworthy nonprofit models include Pulitzer-prize-winning ProPublica and NPR, which relies on grants and donations.

The saving grace for newspapers may be mobile. Jim Brady, formerly of TBD and the Washington Post, spoke at a conference for the Online News Association a few months ago. He said mobile’s the future because it’s very easy to purchase something. On a website, you may have to fill out a form, input credit card information, and do multiple clicks. On a mobile device, you can click a button and it knows exactly who to charge, and it’ll show up on your phone bill at the end of the month. If you’ve gone overboard on iTunes, you know what he’s talking about.

Clearly, there is no one answer, and successful news organizations will have multiple sources of revenue. As Dennis Francis says, the website may not be a substantial source of revenue in the foreseeable future, but from a business standpoint, it needs to extract some money from the operation. It all comes down to a simple question: Are news consumers willing to pay for this?

As a magazine journalist, I know I’m not immune to these trends, but since classifieds were never a large chunk of the revenue pie, magazines have fared much better. That isn’t to say I’m not on the lookout for a game changer, like, you know, a tablet.

For an in-depth look at what lies ahead, read Columbia Journalism Review’sThe Business of Digital Journalism,” which was released in May.

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About Author

Managing Editor, Hawaii Business magazine. He's also representing the mag on Facebook and Twitter at @hawaiibusiness. You can follow him on Twitter at @jubay.

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