Readers have come through with financial support, but newspapers must still confront big consumer revenue questions around COVID-19


By Matt DeRienzoLMA Consultant

In the span of about 10 weeks, local newspapers that were leaning hard into a push for digital subscriptions in 2020 instead dropped their paywalls amid a spike of traffic to coverage of the COVID-19 crisis, but then saw a surge in digital subscriptions and reader support anyway.

They’re hitting reader revenue goals ahead of schedule, but face deeper questions about sustainability amid the economic fallout of a global pandemic. It hasn’t been enough to offset deep losses in local advertising revenue. Will the growth in support from readers last beyond this crisis? Will and when will advertising revenue come back? If newsrooms shrink even further due to those conditions, will existing and potential subscribers see enough value in what they’re paying for? FTI Consulting reported digital subscription growth of one and a half to three times the normal rate in April, but an average drop of 44 percent in advertising revenue.

“Total revenue declines, which were forecasted at approximately 5 percent annually over the next two years, are expected to be between 10-15 percent annually over the same period,” FTI wrote. “In 2020 alone, we can expect a total revenue decline of 18-20 percent.”

In early March, local news organizations across the country dropped their paywalls at the start of the COVID-19 outbreak in the U.S.

According to the digital subscription platform Piano, publishers’ approaches have fallen into four categories:

  • A partially open paywall, ranging from the COVID-19 coverage deemed most essential to public health in front of the wall, to everything COVID-19-related in front of the wall.
  • An open paywall when it comes to COVID-19 coverage, but with strong marketing appeals for subscriptions and donations.
  • A registration wall, instead of the paywall, on COVID-19 coverage, so that emails are collected.
  • No change in approach to paywall, with access to COVID-19 coverage requiring a subscription.

Across the board, each approach seems to be generating support from readers.

“All public health stories are being provided free with no story count limits,” George Stanley, editor of Gannett’s Milwaukee Journal-Sentinel, wrote in a message to readers March 16 announcing the paper’s decision to drop its paywall on COVID-19 coverage. “We also offer a free newsletter to keep folks updated.”

Some publishers lined up an advertiser to sponsor dropping the paywall. For the month of April, Mary Brown’s Chicken and Taters, a Canadian fast-food chain, has in effect paid for free readers to have free access to coverage at Postmedia’s dailies in Calgary, Ottawa, Edmonton and other locations. The Southeast Missourian got two local health care providers to sponsor open access to its paywall.

And in an unprecedented way, editors started talking frankly with their audience about the economics of the local news business — how they were seeing some of the best digital audience and traffic numbers in their history, but not the digital advertising revenue to match it.

Readers have responded with proactive support. Even though, in theory, people are not hitting paywalls on vital local coverage about the pandemic, which in traditional scenarios would be the leading driver of conversions, they’re finding their way to the subscribe button anyway, as an expression of support for the way that local journalism has stepped up in a crisis.

The quickly learned lesson from that experience has led hundreds of publishers to go further, in a fight for survival, and ask their readers and communities for support beyond the price of a subscription. A program organized by the Local Media Foundation to support local COVID-19 coverage at newspapers across the country has raised $1.1 million from more than 12,000 individual donors.

“Publishers went from literally decades of reticence and skepticism about asking for support to success within a span of weeks,” said Jed Williams, chief strategy officer at Local Media Association. “Many donors are also subscribers, demonstrating the depth of brand loyalty that exists in so many communities. And donation and subscription efforts have thrived simultaneously, proving that this isn’t an either/or dilemma, but a multi-pronged reader revenue opportunity.”

A reader of The Day in New London, Connecticut, contributed $1,200, saying that he couldn’t think of a better use of the government stimulus check he received than to support local journalism. An anonymous reader of the Houston Defender in Texas put a $25,000 check in the mail.

The New York Times announced mind-boggling first-quarter digital subscription growth, with more new starts than any other period since launching its paywall a decade ago.

The Times’ numbers were so eye-popping that some are counterintuitively seeing bad news for local newspapers’ digital subscription efforts. Maybe the average person only has the will or capacity to pay for a single news subscription, the theory goes, and that will be the New York Times or another national outlet, not their local paper.

Coincidentally, the New York Times just made a grand gesture in support of local newspapers, building and promoting a database for its national following to look up their local news outlet, including nonprofit and online-only members of the Institute for Nonprofit News and LION Publishers, and subscribe or donate.

Google and Facebook have made even grander gestures in the past few months, establishing emergency relief grant funding for local news organizations in response to the COVID-19 crisis.

Facebook rushed $5,000 payments to 400 local news outlets in March, and followed it up with $16 million in larger grants to 200 publishers in early May.

That hasn’t stopped some critics from reopening the old argument that the big social and tech platforms’ disruption of digital advertising and content distribution is one of the chief problems facing traditional media.

With the prospect of advertising for local media being un-disrupted both uncertain and unlikely, Google and Facebook have leaned into the potential that reader revenue will save publishers. Google News Initiative has funded a Local Media Association digital subscription lab and other efforts. Facebook has funded reader revenue-focused accelerator programs, and in its most recent round of grant funding, favored outlets that were making a strong effort to build support directly from readers.

According to Chartbeat data, the surge in traffic to news sites from COVID-19 coverage appears to have peaked in mid-March.

Some of the questions publishers must confront in the coming months about how to engage and retain this expanded audience: