Hearst to begin charging for digital news

by Shira Ovide, Digits/Wall Street Journal

Hearst said its newspapers plan to hold back at least some content from their free Web sites, launching the publisher onto the vanguard of print media companies to begin charging for their digital news and information.

A top executive at Hearst, which publishes 16 newspapers including the Houston Chronicle and Seattle Post-Intelligencer, said the company is mulling how much of its online offerings to keep free, while reserving some content exclusively for people who pay.

“Exactly how much paid content to hold back from our free sites will be a judgment call made daily by our management, whose mission should be to run the best free Web sites in our markets without compromising our ability to get a fair price from consumers for the expensive, unique reporting and writing that we produce each day,” Steven Swartz, the president of Hearst newspapers, said in a staff memo (see full memo below).

As newspapers’ online advertising has slowed sharply or started to decline, a growing chorus has pushed for newspapers to give up their free Web sites, and instead charge money to access individual stories or sites. Cablevision Systems Corp. said Thursday it plans to turn the free Web site for its Newsday daily into a subscription site, potentially only for Cablevision customers.

If newspapers turn off their free Web sites completely, the number of surfers is almost certain to decrease, but the financial impact is unclear – largely because there are few large-scale models in existence. (News Corp.’s The Wall Street Journal is the largest newspaper to offer paid online subscriptions, but it has been doing so since the inception of its Web site more than a decade ago.)

Most newspapers sell less than half – some far less — of the available ad slots on their Web sites, often at rates a fraction of those in the print newspaper. Efforts that slow Web traffic and reduce the available ad slots may push up ad rates high enough to make up for the lost volume.

Mr. Swartz said Hearst plans to ramp up their free Web sites with more staffers, contributions from “prominent citizens in our communities,” links to a range of sources and channels focused on interest groups including moms and high school sports.

Reworking its digital strategy is a part of Hearst’s “100 Days” plan to cast a critical eye on longstanding newspaper-industry business practices. Mr. Swartz promised profound changes. “One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today,” Mr. Swartz said. “It is equally inescapable that during good times our industry developed business practices that were at best inefficient.”

Mr. Swartz also outlined plans for reworking newspaper advertising sales, including offering self-service options for small businesses and selling ads on non-Hearst properties like real-estate property Zillow and Yahoo Inc; using third-party printers to meet marketers’ demands for more color advertisements; and charging more money for subscriptions to the print newspaper and for newspaper content on Apple Inc.’s iPhone and other mobile devices.

Hearst’s plan for mobile devices may include development of an electronic reader similar to Amazon’s Kindle, according to a report in Fortune.

Hearst has an incentive to develop such a product. The closely held company is both a publisher of newspapers and magazines such as Good Housekeeping and Cosmopolitan, and an investor in E Ink, the technology provider behind the Kindle and other electronic readers.

“We are keenly interested in e-reading and expect that new devices and media platforms will be a big part of our future,” said Paul Luthringer, a Hearst spokesman.

More and more newspapers are willing to shake up longstanding business practices amid an industry crisis that is crushing many papers. Hearst has said it may close the San Francisco Chronicle and the Seattle Post-Intelligencer. Rivals including the Baltimore Sun and Washington Post are sharing some editorial resources. Papers from the Idaho Statesman to the Boston Herald are outsourcing their printing facilities, saying it doesn’t make economic sense for newspapers to operate standalone presses.

“I know these are difficult times for those in businesses like ours that are buffeted by so many forces,” Mr. Swartz wrote. “Yet I know that we have the wherewithal to emerge from this recession with a changed business, yes, but one that is back on a path of growth.”

article originally published at http://blogs.wsj.com/digits/2009/02/27/hearst-to-begin-charging-for-digital-news....

The media's job is to interest the public in the public interest. -John Dewey