Source : Marketing Magazine

CanWest is moving to the forefront in the industry-wide push to replace once free Web newspaper content with an array of subscription and paid online models. But will readers go along?

Admirers call it a "Harry Potter newspaper," comparing it to the Daily Prophet-the moving newspaper the young wizard reads in the popular books and movies. In Canada's muggle version, click on an ad for a car and it could take you through a multimedia presentation. Click on a weather map and get a TV weather forecast for a specific area. Click and a picture could become a video.

It's CanWest's new multimedia online newspaper and it will be up and running in 2004 as part of the company's enhanced online news and information site.

CanWest's online product is only one of an array of subscription and paid online models that in less than two years have replaced once free Web newspaper content, both in Canada and worldwide. The challenge for marketers and advertisers is keeping abreast of these evolving models and deciding which one best suits their needs. Only one thing seems certain: The free ride is coming to an end and the only questions remaining are what readers will pay for, and how.

Less than 18 months ago, the independently owned Winnipeg Free Press became the first major daily to restrict access to its Web content. And in October, CanWest became the latest convert to restricted access, introducing a combined subscription/pay model for its 10 city dailies and the National Post.

The CanWest model has four tiers. The first level of access offers breaking news content from CanWest newspapers, TV and radio free to everyone. Level two, available at no charge to CanWest newspaper subscribers, includes all the newspaper's content and access to archives. The third level offers a paid PDF format electronic edition of the newspaper delivered to subscribers via e-mail by 5:00 a.m. Rick Camilleri, chief operating officer corporate for CanWest, says Tier 3 is targeted at travelling Canadians, including business professionals and snowbirds, who want to stay in touch, and at a younger demographic that prefers to receive news online.

The Ottawa Citizen was the first CanWest paper to adopt the tiered system Nov. 3. All of the chain's newspapers will make the change by mid-2004.

Camilleri says the Tier 3 PDF format, which reproduces the newspaper page complete with ads, also offers benefits to advertisers not available from current banner and pop-up advertising. "Advertisers can take that unique and expensive ad and replicate it in totality online. Ads that are indicative of their brand appear exactly the same online, providing continuity of messaging."

But it's Tier 4 that's creating most of the buzz in media and advertising circles. It's also the one Camilleri believes offers the most potential for growth in terms of both subscription and advertising revenues. A multimedia product that includes streaming video and audio, CanWest already has a working model, and Camilleri expects the system to be up and running by the end of 2004.

Dismissing the conventional wisdom that says when you make readers pay, they go away, Camilleri says, "If you ask anyone who's getting something for free if they want to pay for it, logically they'll say no. If you give people added value, something that's different than they got before for free, I believe they'll be willing to pay." For Tier 4 subscribers, that added value could ultimately include audio files, live newscasts and even TV shows.

Paige Thomlinson, retail manager at Chinook Centre, Calgary's largest shopping mall and a heavy user of newspaper advertising-primarily CanWest's Calgary Herald, says that while CanWest hasn't contacted her about opportunities through its Tier 3 online model, she's intrigued. She says it may give a print ad more legs, but a lot would depend on the cost and the package offers. Thomlinson is much more skeptical about Tier 4: "I would require a lot more information about costs and most particularly about the demographics of the subscribers. I would also like to know how the Herald was going to promote this news model to its readers and advertisers."

She points out that Tier 4's video aspects aren't that attractive to a print advertiser like Chinook. "The value added Tier 4 that CanWest is talking about could be a time consuming read if you click on a car ad and a whole video starts running. And from the point of view of a print advertiser, clicking on a print ad and getting a video would be very costly for us to create."

Still, the key to attracting paying online subscribers, CanWest's Camilleri believes, is augmenting the print product and giving them something new.

John Wishart, editor of Canadaeast Interactive, also supports the idea that offering unique services online will attract both viewers and advertisers. Canadaeast.com, the online division of Brunswick News, was formed in February 2002 to put four provincial dailies online. Less than two years later, Wishart says the division is completely self-supporting, thanks primarily to advertising revenues. A survey last spring showed site traffic was up 25% over the first year. Most of the content on Canadaeast's site is available only to subscribers to the group's New Brunswick Telegraph and its dailies in Moncton, Fredericton and Saint John. To protect its print circulation, Canadaeast requires subscription to the newspaper, which may then be donated to charity.

However, there is also a free and available to all online site that offers an automotive vertical called Wheels, a career vertical and detailed community events listings. It also includes Photo Galleries that have included a Santa Claus parade and school plays. "Where the newspapers can only run one picture, we can run dozens online," explains Wishart. "Our advertisers are very receptive to local events like these." Even more successful was a November 2003 career fair on the free site that attracted 125 businesses and resulted in 250,000 site visits the week it ran. The online Wheels section started with eight auto dealers in September 2002 and had grown to 80 by October 2003.

Nick Barbuto, interactive media specialist with Cossette Media in Toronto, agrees that value-added content attracts more eyeballs, but adds that what's needed at online newspaper sites is a way to identify who those eyeballs belong to. That's why he's a fan of sites like the New York Times that require registration that includes information including age, sex and special interests. "With online registration, you add that extra bit of targeting opportunity for advertisers," says Barbuto.

Registration also tells advertisers whether they're getting a unique audience online or simply the same people subscribing to the newspaper. Although some experts believe online readers may be unwilling to give up their anonymity, Barbuto believes people will accept registration as the price of free content.

Peter Krasilovsky, vice-president and partner with Burrell Associates of San Diego, says several U.S. newspapers have used registration as the engine for successful direct e-mail marketing campaigns. "The Tribune Group, for example, sent e-mails to female subscribers 18 to 44 promoting the ABBA musical," says Krasilovsky, whose strategic research firm advises clients on using Internet media. "The New York Times sells targeted online advertising to political candidates."

Although most newspapers appear reluctant to put all of their content behind a pay-for-view firewall, many use a two-tier system where some or all of the news stories are free, but premium services such as archives, sports and financial news and even crosswords in the case of the New York Times, goes behind a subscription or pay firewall. A minority of newspapers, for example the Wall Street Journal, are available only through paid subscription.

Some newspapers have switched to pay or subscription models to prevent their online newspapers from cannibalizing their print product. When the Free Press locked down its site to subscribers only in 2002, advertising manager Laurie Findley says the intent was to drive online viewers back to the print product, something Findley says has been successful. Initially, traffic on the site dropped dramatically, says Findley, "but now our traffic is back up again. Over 39,000 of our subscribers have received PIN numbers for the Web site and we have just over two million page views a month." The Free Press is now putting unique content on its Web site-online stock quotes and additional content not in the newspaper-and next year plans on a PDF version. Eventually, says Findley, as the newspaper increases its value-added component, it may move to a fee tier.

The Torstar-owned The Record in Kitchener-Waterloo, Ont. also went behind a subscription firewall in February 2003 after publisher J. Fred Kuntz became tired of hearing "educated people telling me they loved reading the paper but didn't subscribe." The Record, and as of next April its sister paper The Guelph Mercury, have an Insider section available only to newspaper subscribers. The paper offers limited online content to non-subscribers including real estate and automotive sections, movie times and classified advertising.

Kuntz says the paper was never successful in getting local advertisers to switch over to the Web. The Record has sold the online change to advertisers as a way of "guaranteeing their audience in an increasingly fragmented market," says Kuntz, and so far "the decision hasn't impacted our advertising revenues in any discernible way, either positively or negatively."

In the first 10 months, visits to The Record's Web site have fallen by 40%, something Kuntz says isn't necessarily a bad thing because high traffic translates to big costs for larger servers and increased bandwidth.

Krasilovsky feels smaller local newspapers like The Record will be more successful erecting toll booths and firewalls than their larger counterparts because they offer unique local content. "They know people who want local news must come to them, but that's a short-sighted approach." He urges papers to use the Internet to extend their geographic reach, citing the example of a San Diego newspaper that offers online real estate advertising not only for the city but for surrounding counties.

"Newspapers shouldn't be happy with just getting a percentage of classified ads upsold to the Internet."

CanWest's Camilleri agrees, saying, "You can't just reproduce the newspaper page online. This is a new medium. It requires a new product."

But The Record's Kuntz doesn't think there are any quick solutions to creating the perfect online newspaper vehicle for both readers and advertisers.

"Whose model is the right one isn't going to become clear until we try a lot more different models. It's going to take a decade or more to clarify who the winners will be."

A guide to the evolving online newspaper content model

There are numerous online newspaper models around the world. Among the most popular: The free content model: Absolutely everything on site is accessible and free to everyone. The registration model: Either all or a majority of the content is available once a viewer registers, paying for the service with a wide range of personal information that allows the newspaper to build databases and better tailor readers to advertisers. The subscription model: Some content may be available-usually news stories-but total access is restricted to those who subscribe to the newspapers print version. This is the most used by publishers such as Canadaeast.com and The Record in Kitchener-Waterloo, Ont. The tier model: The site can have several tiers with varying levels of access. The first tier may be available to everyone, while other tiers are accessible only to print subscribers, and higher tiers may require additional payment. This is the model being introduced by CanWest. The premium content model: The newspaper doesn't charge for the main news content, but does charge for value-added and premium content. One example is the fee the New York Times charges for its crosswords. The Los Angeles Times charged for an augmented entertainment section and The Guardian in the U.K. charges for special news alerts sent via e-mail. The subscriber only model: Everything on site goes behind a firewall and is accessible only to print subscribers. This is the model used by the Winnipeg Free Press. The pay only model: If you want the product you have to pay. Currently, this model is used primarily by specialty newspapers. The Wall Street Journal is paid subscription only.

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