How Can Newspapers Remain Profitable in the Digital Media Age?

One Answer: Keep Print, Charge for the Website

Pile of newspaper ready to put in recycling bin.
Jill Ferry Photography/Moment/Getty Images

How can newspapers remain profitable in the age of digital media?

The digital media pundits think all news should not only be online but also free, and that newsprint is as dead as the dinosaurs.

But they should watch this video.

In it, Arkansas Democrat-Gazette publisher Walter Hussman explains how his paper continues to be profitable.

The formula is simple: Readers actually pay subscription fees to read the paper and companies actually pay money - good money - to advertise in the paper, yes paper, otherwise known as that low-tech stuff called newsprint.

And lest the pundits sniff that Hussman is some hick from the sticks who prints papers because he loves black ink on his hands, well, I'll let him speak for himself:

"This is not some philosophical argument that we're wedded to print," Hussman told CNN awhile back. "Print is what brings in the dollars right now." If online paid as well as print, he adds, "I'd be willing to junk the press."

In other words, print is where the money is. In fact, even in the age of digital media, most newspapers still get roughly 90 percent of their revenue from display ads - the ones found in the printed version of the paper.

Online advertising was once touted as the savior of the news business. And revenue from online ads has increased in recent years.

But studies have found that most people ignore online ads, which means newspapers can't charge very much for them. That's why the lion's share of revenue still comes from print.

As for the online side of things, the other key to the Democrat-Gazette's success is a paywall around the paper's website. It was put there way back in 2002 when most other papers were still under the illusion that if they made their websites free, revenue from online advertising would be the pot of gold at the end of the rainbow (we've all seen how that worked out.)

The Democrat-Gazette has 3,500 online-only subscribers, not a huge number for a paper with a weekday print circulation of 170,000 (Sunday 270,000).

But print subscribers get free access to the website. Do you want the website? Subscribe to the paper. In other words, the Democrat-Gazette uses its website to help keep its printed paper - the real moneymaker - going strong.

The paid website "has really helped us maintain our print circulation," Hussman says. "I really think a lot of papers have lost their print circulation because their former subscribers can get everything in the paper for free online."

Conan Gallaty, director of the paper's website, said at first he and others at the paper thought the paywall wouldn't work.

But Gallaty says by giving print subscribers full access to the website, the Democrat-Gazette has bucked recent trends and kept its circulation strong.

"For the last 10 years we've remained steady in both daily and Sunday circulation, whereas other markets have seen 10-30 percent drops," Gallaty says. The website's paywall "has been very effective in maintaining our print circulation."

Hussman adds this: "The economics are still with the printed newspaper."

It's an approach that's also being employed by The New York Times, which launched its paywall early in 2011. Print subscribers get full access to the website. Digital readers get 20 articles a month for free and must pay after that. The results so far are encouraging. Traffic on the paper's website increased even after the paywall was erected.

So let's sum up: Instead of scrapping newsprint and giving away content online, the formula for profitability seems to the reverse: Keep printing the newspaper and charge for the website.

Why that's the exact opposite of what the digital media pundits have been telling us. Could it be that these would-be prophets were (gulp) wrong?