The Arkansas Democrat-Gazette was able to achieve three important goals with one bold strategy. The publisher dramatically reduced cost by cutting down on print, got readers habituated to reading the digital edition and reduced churn to 1% (compared to the industry average of 3%). That’s the lowest rate of churn seen by researchers at Medill Spiegel Research Center across their detailed data analyses of more than 20 news outlets in recent years.
A churn rate of 1% means that you expect your customers to be around for 100 months, which is over eight years, which is phenomenal.Ed Malthouse, Research Director, Spiegel Research Center
An existential question
“Local news publishers across the country are asking themselves this existential question: How do I convert subscribers from print to pixels?” writes Mark Jacob, Editor, Medill Local News Initiative. “Successfully overseeing that transition would allow local news companies to save the cost of manufacturing and distributing a printed newspaper, and it would help readers build a digital habit for the long term.”
“I’m real pessimistic about print,” adds Democrat-Gazette Publisher Walter Hussman. “I just don’t see how a print model can work seven days a week for a daily newspaper in the United States. I don’t care what size you are.”
And so he set out to wean his subscribers away from print to digital and two years down the line the results are encouraging.
The publisher’s strategy involves lending iPads to subscribers to read the online replica of the print edition. It is laid out like a traditional newspaper and when readers click on a story it is presented to them in an easily readable format.
Subscribers can keep the iPad for the length of their subscription. Most of them continue to get a print edition on Sunday. That adds to the publisher’s profits as it generates substantial revenues from advertising on that day.
“I feel like I’m reading more of the newspaper than I ever did before”
Hussman also told subscribers why they could not continue with the print edition. “I tell them,” he said Hussman, “we might still be able to deliver a print edition to you but it’s not the kind of paper you’re going to want to read, it’s not the kind of paper I’m going to want to publish.”
It’s going to have a whole lot less news in it. It’s going to have a whole lot fewer reporters and editors covering things. That’s what a lot of newspapers are doing, but in my opinion, there’s no future in that.Walter Hussman, Publisher, Democrat-Gazette
The messaging seems to have worked as Karen Delavan, a semi-retired registered nurse in Little Rock said, “I think it’s inevitable. I realize that printing…the paper is expensive, the ink is expensive, delivery is expensive.”
There were also people like Toni Boyer Stewart who welcomed the move. She “was sick of papers piling up,” said the University of Arkansas employee. And a couple of months after she got the tablet she was surprised at how much she loved it. “I feel like I’m reading more of the newspaper than I ever did before,” she said.
“The secret sauce”
The publisher began experimenting with this strategy in 2018 in Blytheville. The city was costly to serve because of its location in the northeast corner of the state. It took three tries beginning with their best salespeople going door-to-door to convince subscribers about the benefits of reading the Democrat-Gazette on the iPad. The next attempt involved subsidizing the iPad such that a $350 device cost subscribers $49, but that also did not work.
They saw encouraging results in the third try in which they just gave an $800 iPad Pro to readers and backed that up with one-on-one training sessions. Subscribers were individually guided on how to consume news on the device.
Hussman acknowledged it was expensive, “It’s costing probably, I think the last estimate was $90 per subscriber to do all that training,” he said. “But it worked.”
Nearly 75% of the subscribers agreed to make the switch from print to digital or to Sunday print. Malthouse said iPad users showed less churn than those who read the digital replica on their own device.
So the question is: Is it because of the iPad or is it because of the training that comes with the iPad? I suspect it’s both, but I think the onboarding may be the secret sauce, because you are helping people to get the most out of this great device and app.Ed Malthouse, Research Director, Spiegel Research Center
“The key is: It looks like an old-fashioned newspaper”
The paper did lose some subscribers in the process. It also received pushback which mostly arose from newspaper reading being a lifelong habit.
One subscriber told Hussman that he was depressed upon knowing that print would be discontinued. “I’ve been reading this newspaper for decades,” he said. “I love it. I love having it. I love the tactile feel of the paper. I love holding it up right by my coffee. I love my dog going out to get the paper in the morning. I even like getting the ink on my fingers.”
“So I really hated this idea,” he continued. But then he checked it out on the iPad at the insistence of his wife and got used to it within three weeks. “I’ve been using it every day,” he said.
I cannot believe that I’m saying this: I actually like it better.Democrat-Gazette subscriber
The Democrat-Gazette’s monthly churn rate before the transition was around 3%. The significant lowering to 1% for tablet users suggests that the special features of the replica edition are a loyalty booster, says Hussman.
“A key to Hussman’s strategy is not forcing the readers to make two jumps at the same time – from print to digital, and from a traditional newspaper layout to a far different online format,” comments Jacob. “This is why the replica is so important. It looks like the print paper, except that readers click on the stories they want and see them displayed in an easier-to-read format. They get photos presented as they would be in a print edition, but if they click on them, they sometimes get access to an entire photo gallery or a video. But the key is: It looks like an old-fashioned newspaper.”
I think the big mistake newspapers made – and we made it too, you know – initially was trying to convert people to digital and then trying to change the format on them. We said: Why do that? Let’s let them keep the format they’re familiar with, the format they love.Walter Hussman, Publisher, Democrat-Gazette
“You get a whole lot more valuable subscriber with the iPad”
On the face this may appear to be an expensive solution but the team has worked on the numbers and they see profit potential.
Spiegel’s researchers calculated the customer lifetime value (CLV) associated with the project. “If a subscriber is going to be with you with a churn of 1% a month, they figured the average life [of a subscriber] was 8-point-something years,” said Hussman.
“And then they figured the average life of a subscriber who churned more often, say 2.5 to 3%, and they took the subscription rate and they figured the iPad subscriber was worth about $1,700 a subscriber, and maybe the other subscribers were worth like $600 or $700.”
Based on that math, “you get a whole lot more valuable subscriber with the iPad,” he explains. “You spend 300-and-something dollars on an iPad and another 90 bucks on training. You’re spending 400-and-something dollars. Well, look at the difference between a regular subscriber and one with an iPad. It’s far more than $400. Your investment’s a good investment.”
“The question is: How replicable is this?” asked Jim Friedlich, CEO, Lenfest Institute for Journalism. “Is the Arkansas experience a unicorn or is it a repeatable experiment? My hunch is that it’s a bit of both, that with the right set of circumstances, this could be done elsewhere.
“In Arkansas the circumstances include a news product that has been well nurtured and well maintained over the years and not bled dry as we’ve seen in other markets, a newspaper that’s still highly regarded and has a loyal statewide readership, and a publisher who has himself deeply committed to this task and has put very significant personal energy and reputation behind it.”
I think he’s onto something and we should be watching pretty closely.Jim Friedlich, CEO, Lenfest Institute for Journalism