More Newspapers Hopeful About Paid Content, Thanks to Tablets

Digital shift could change newspaper revenue model

There finally seems to be some optimism in the newspaper business. Thanks to the consumer's love affair with the iPad, newspapers have discovered that people will pay for content.

"You only have to go back three years; tablets weren't around," Doug Franklin, president of the Cox Media Group, said during a Newspaper Association of America panel in Washington, D.C., April 3. "We're more optimistic because there is a pathway to the digital migration. The tablet brings new audience and new revenue streams."

Before the iPad came along, newspapers were stuck in the free online content trap. The Apple device makes people more eager to consume digital editions of newspapers and more important for the newspaper business, provides an easy way for people to click a "buy" button.

"After many years of going all in, in the free Web, it's not the answer, even though we tried very hard," said Chris Peck, editor of The Commercial Appeal, Scripps Interactive Newspaper Group's Memphis paper, which erected a paywall in September 2010. "Apple is hard to deal with, but they also did us a gigantic favor of shifting the consumer to pay. The greatest opportunity is the notion of paid digital content on tablets and smartphones. I have a feeling it will be a thundering herd in the next few months."

Tablets can display a replica of the print edition, which helps consumers make the transformation to digital. For example, the average session to the replica edition of The Dallas Morning News on the iPad is 28 minutes, said Jim Moroney, publisher and CEO of the Belo newspaper. "Ultimately, the tablet will be a much better way for us to tell stories than the Web," Moroney said.

The industry adoption of paywalls will also increase the circulation revenue's contribution to newspapers, which once derived 70 to 80 percent of their revenue from advertising.

"We're asking our readers to pay more for the freight, and that balances the ad cycles," said Robert Gursha, vp of consumer marketing at the Star Tribune in Minneapolis. "We are looking for a 50-50 mix."