Among the 98 U.S. newspapers with circulations over 50,000, the American Press Institute found that 77 of them use a digital subscription model (79%).[ref Data was collected during the summer of 2015.] This figure is similar to the Newspaper Association of America’s recent analysis, which surveyed publishers and estimated that 75% of newspapers use a digital subscription model.

Publishers are converging around models commonly referred to as “metered” — in which a number of articles can be read before subscription is required — and to a lesser degree “freemium” — in which most content is free, but “premium” articles or sections require a subscription. The so-called “hard” paywalls, where subscriptions are required to access the vast majority of the website, are extremely rare and declining.

As the chart below shows, meters (used by 62 of the 98 papers studied) are by far the most common digital subscription model; so-called freemium sites (12) are more common than hard models (3). Among those papers studied, only The Wall Street Journal, the Honolulu Star-Advertiser, and Newsday employed a hard model. And 21 of the 98 newspapers do not require digital subscriptions to access unlimited digital content online.

[chart slug=”subscriptions-1″]

Notably, neither Cox Media Group nor Hearst Corp. are currently using metered models. Instead, each of these companies uses a freemium model with sister websites. That is, readers are allowed to access the traditional newspaper’s website. However, that website mainly contains wire stories, brief local stories, weather, classifieds, and other non-proprietary content. Proprietary content is hosted at a sister website, which only digital subscribers are allowed to access. Cox Media Group has announced plans to switch all of its newspapers to a metered model.

At least one newspaper company is not requiring users to purchase digital subscriptions – Advance Publications Inc., which owns The Cleveland Plain Dealer, The Star-Ledger in Newark, N.J., and The Republican in Springfield, Massachusetts. Instead, Advance has focused on a “digital first” strategy designed to maximize its digital audience by making all content free, while at the same time reducing its print production to lower costs.

Are certain types of newspapers more or less likely to use digital subscriptions? Anecdotally, it has been noted that local newspapers may be best positioned to require digital subscriptions. Our data supports this, as 86% of newspapers with circulations between 50,000 to 100,000 have launched digital subscriptions, the highest percentage. These papers likely feel that they produce local, proprietary content that cannot be found at national news outlets. At the other end of the spectrum, newspapers with a circulation size over 250,000 are least likely to use a subscription model, with 64% doing so.

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Does the circulation size of a newspaper influence its digital subscription strategy? Our data suggests that it does. Among newspapers with a circulation over 250,000, meters are the most popular strategy, followed by not requiring a digital subscription at all. This largest category of newspapers is also the only one where hard paywalls exist at all.

Among newspapers with a circulation between 100,000 and 250,000, the most popular strategy is also a meter model. But in this group, 20% of newspapers used a freemium model, which is the highest percentage of any circulation size.

Newspapers with circulations between 50,000 and 100,000 were most likely to use a meter strategy (74%).

Notably, newspapers with circulations between 50,000 and 100,000 were 50% more likely to use a meter model than newspapers with circulations over 250,000.

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The belief that local newspapers are well suited to succeed in the digital environment is part of what Warren Buffet said motivated his BH Media Group to purchase 70 newspapers. In 2013, Buffett explained why he believes digital subscriptions are necessary and his interest in purchasing local papers:

[Publishers] have offered their paper free on the Internet while charging meaningful sums for the physical specimen. How could this lead to anything other than a sharp and steady drop in sales of the printed product? … Charlie [Munger] and I believe that papers delivering comprehensive and reliable information to tightly-bound communities and having a sensible Internet strategy will remain viable for a long time.

According to Terry Kroeger, president and CEO of BH Media Group, the eventual goal for all of the newspapers owned by BH Media Group is to utilize metered digital subscription models.

In addition to being more likely to have a digital subscription, smaller newspapers in the study typically allow fewer articles to be accessed for free in their meter. Overall, the median number of free articles in a metered model was 10; for newspapers with circulations between 50,000 to 100,000, however, the median was 6.5. Below we chart the median number of free articles by circulation size.

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How much do digital subscription plans usually cost today? Here, it is important to recognize that, at many newspapers, the price of a subscription varies depending on the subscriber’s address. According to a recent analysis by the Newspaper Association of America, 51% of newspapers “charge different rates for different demographic or geographic characteristics.” For this study, if a ZIP code was required to receive a price quote, the ZIP code of the newspaper’s headquarters was used. To standardize the data, the American Press Institute focused on the standard weekly price of a digital subscription (excluding any introductory specials).

According to our data, newspapers charged an average of $3.11 a week for a digital-only subscription and $3.29 for a digital subscription + Sunday print delivery. At the extreme ends of the pricing spectrum, the most expensive plans belong to the Omaha World Herald ($6.25 digital & $8.74 to include Sunday print) while the least expensive plans belong to the Daily Gazette in Schenectady, N.Y. ($1.25 digital & $1.50 to include Sunday print).

Our data shows that the type of model may influence the cost of a digital subscription. The average weekly price of a digital subscription for newspapers using a meter model is $2.97. For freemium models, the price increases to $3.52. And for newspapers using a hard model, the average price jumps to $4.43.

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These pricing strategies may in part reflect how much each model impacts a newspaper’s digital audience size. A hard model is most likely to reduce the amount of online readers, pageviews, and digital advertising revenue, so the paper needs more revenue from each remaining reader. Papers using a meter model may feel that their digital advertising revenue is not impacted as steeply, which allows them to charge a lower subscription price. 

Another factor is that the few papers with hard paywall models are all in the largest circulation group, and the data shows that larger papers tend to charge more for any kind of subscription. Comparing the average weekly price of a digital-only subscription, newspapers with circulations between 50-100k had an average price of $2.95, those in the 100-250k group had an average price of $3.20, and those in the 250k+ group had an average of $3.41.

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Are papers in certain geographic areas more likely to use certain types of digital subscription models or prices? To explore these questions, this study divided newspapers into five major geographic regions.

According to our data, digital subscriptions are most prevalent in the Southeast (92%) and Midwest (86%). At the other end of the spectrum, papers in the Northeast (62%) and West (75%) are less likely to use digital subscriptions. Combined with our previous findings on circulation size, these findings likely reflect that large newspapers on the West coast and East Coast are less likely to use digital subscriptions.

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The type of digital subscription is also correlated with geographic region. Hard models were only found in the West and Northeast regions. In the Southwest, 36% of newspapers with circulations over 50,000 utilized a freemium model — a rate nearly 3 times greater than any other region. Meters were the most common model in every region — but especially predominant in the Southeast (83%) and Midwest (76%). In contrast, only 46% of newspapers in the Northeast and 45% of newspapers in the Southwest use a meter model.

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While the five regions were useful in showing geographic trends, we analyzed pricing differences at a more granular level. We calculated the average weekly digital subscription price for each of the 9 divisions used by the United States Census Bureau. We found that the two most expensive regions were both in the Northeast: New England ($4.56) and the Middle Atlantic ($3.71). The third and fourth most expensive regions were in the central United States: West South Central ($3.62) and West North Central ($3.50).



We were also interested in exploring how newspapers choose to bundle digital subscriptions with the Sunday print newspaper.[ref The Wall Street Journal and Investor’s Business Daily are excluded from this portion of the analysis.] Here we found a distinct divide in pricing strategies: 37 of the 77 papers studied charged more to add Sunday print to a digital subscription; 25 papers charged less; 13 charged the same price.[ref The Arkansas Democrat-Gazette offers not only Sunday but all 7-days home delivery at the same price as a digital subscription.]

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Bundling digital access with a Sunday print edition at no extra cost (or even at a discount) allows newspapers to increase Sunday print penetration levels and capitalize on advertiser insert revenue.

But clearly some newspapers believe that bundling digital and Sunday print should cost extra because of the value of their newspaper. To these newspapers, bundling for free does not reflect the value or cost of producing their work.

The strategies about how to price Sunday print delivery when bundling with digital access varies significantly for papers of different sizes and regions.

As the chart below shows, it costs extra to add a Sunday print to a digital subscription at the majority of newspapers with circulations between 50,000 to 100,000 (51% do so) and 100,000 to 250,000 (62%).

In contrast, among newspapers with circulations over 250,000, only 27% charge more for Sunday delivery. While there are only modest differences, the larger the circulation group, the more likely newspapers are to make a digital-plus-Sunday bundle cheaper than digital alone.

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The region of a newspaper also seems to influence how a paper bundles Sunday print to a digital subscription. Majorities of newspapers charge more to add Sunday print to a digital subscription in the Midwest (65%), Southeast (62%), and Southwest (56%).

Newspapers in the Northeast use differing strategies. Newspapers in the West are the most likely to reduce the price of a digital subscription if Sunday print is added. Only 18% of papers in the West charge more to add Sunday print.

Compared to newspapers in the West, papers in the Midwest, Southeast, and Southwest are over 3 times as likely to charge extra to add Sunday print.

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These findings illustrate that 78% of newspapers with circulations over 50,000 use some kind of digital subscription model. The most common digital subscription strategy is the meter model.

However, our data also shows that papers in different regions or circulation sizes are using different subscription models, price points, free article limits, and bundling price strategies.

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