Dow Jones Local Media Group sells online access to 50% of subscribers

Note: Part of this case study (language indented) is republished from  SubscriptionSiteInsider.com, with edits and an additional interview.  

Summary:  After a redesign of its registration process, Dow Jones Local Media Group launched paywalls in all eight of its local newspaper sites in early 2011. After several months, registrations now exceed print circulation and 50% of subscribers are buying online subscriptions as an upsell, or online-only basis. Not only does this latest venture shed light on the paid content model for local media, the registration process is one that most free local media could use to capture user data.

Keys to success at DJLMG so far include the metered model, and the new registration process that relies heavily on overlays. According to SubscriptionSiteInsider,  99% of highly profitable online dating sites use overlays in the registration process, while most traditional local  media sites do not. Clearly, local media is behind the curve in this area (Valpak, featured here, is a free site that uses overlays,  click on the second image for an example). Resources for building overlays are included at the bottom of this report. 

Challenge: In 2010, Dow Jones Local Media Group decided to test paywalls in two of its eight small newspaper properties, as an additional way to monetize site traffic.  

Senior Vice President, Kurt Lozier explains the reasoning: “We  could never get beyond 54% sell-through (for online display ads) on our locally sold impressions. That's typical. That means the other 50% impressions are going to remnant, which doesn't generate a lot of money.

"Even if we took a 50% page view hit and built a digital  subscription business we'de be better off - and we would be buiding franchise value rather than giving it to the remnant networks.”

In early 2010, the group tested a paywall on two if its eight local newspaper sites,RecordNet.com (Stockton, CA) and SouthCoastToday.com (New Bedford, MA).   The paywall system used an metered, or "nth story" model, pioneered by Ft.com (case study here). That is, users can access a few stories before being required to register,  and pay for access based on usage. This method  allows traffic from search-driven "passersby" – typically 50 to 70% of visitors who visit once a month - to continue to have access so that traffic does not plummet. 

(The easiest way to find and analyze your site’s “addicts” (30 visits or more per month), “regulars” (more than one visit per month but less than 30) and “passersbys”  (once a month) quickly, free,  is go to Quantcast.com).

Visitor were able to see three local articles free, then required to register. At ten articles they were required to pay. It appeared that most regular users would register, and addicts would quickly reach their limit – ie set at one third their typical monthly usage, virtually guaranteeing a percentage of paid subscriptions. (The New York Times, in comparison, allows 20 articles a month before requiring a credit card). 

However, post-launch conversions and registrations were lower than expected;  and Lozier diagnosed the interface as overly long, both too confusing and too blunt: 

After three anonymous clicks, the user received a page with a sentence-long preview of the story that was clicked on followed by a large button that said “Subscribe” (instead of "register free"). The next page prompted the user to enter a zip code (so that the appropriate subscription price could be offered) which then took the user to another page offering payment options or the chance to register for free to read 10 stories per month.

After three months, however, SouthCoastToday had just 4,100 free registrations while RecordNet.com had just 5,500, according to SubscriptionSiteInsider. Paid conversions were also low with 436 online-only subscriptions, 223 print-plus-online combos and 233 print-only orders. This even though more than 65% of 203,000 visitors were either addicts or regulars. 

So while there was a free registration option, Lozier realized it was buried and unclear. A redesign was needed.

The New Interface Strategy:

There are two key upgrades in the design of the new opt-in to paid interface:

A. Explain the process, focus on registrations

“The initial approach was to get people sign up for a subscription instead of creating registrants,” says Lozier.

The new strategy  focused on building free registered users, who, still using the original model, 

could see just a little more of the content than other visitors, but not everything. Those leads might then be schmoozed along with a marketing campaign to convert them over time into payers.

B. Use of highly visual overlays 

Lozier also decided to present the registration process to users on overlays, also a key recommendation from SubscriptionSiteInsider. Overlays are

 graphics that appear over the body of a website after a certain action is taken but not as obtrusive or detectable by blockers as pop-ups.

“The philosophy here is that when someone comes to the site for the first time, we want it to be polite and explain the rules of the road. So that the user won't be surprised later on when asked to register” Lozier explains.

Between September and November of 2010, the team installed the following overlay sequence on eight Dow Jones daily newspaper websites (www.SeacoastOnline.com, www.CapeCodOnline.com, www.SouthCoastToday.com, 
www.RecordOnline.com, www.PoconoRecord.com, 
www.RecordNet.com, www.MailTribune.com and www.DailyTidings.com).

1.      When visitor first visits site:  An overlay appears when you first visit site explaining that user gets three anonymous clicks before registering, then gets 10 free clicks per month before being required to pay for digital subscription.

This is a nice touch letting visitors quickly understand the model, without being "surprised" by the paywall. Click here to see picture of overlay, also imaged below:

2.      When three anonymous clicks are used up:  An Overlaywith registration box inside it prompts user to register for free for 10 stories a month and also opt into a daily email of news headlines. Click here to see picture of overlay, also below. 

3.      When 10 clicks per month are used up, an overlay prompts users to purchase a subscription to continue their access. Click here to see picture of overlay, or view below:

C. Renewal notices include an opt-out for print-only

The renewal notices included a price increase of 10% to 20% - roughly $20 to $40 added to a $200 annual subscription - depending on the market, with an explanation that this included an digital subscription. Subscribers were given the option to pay less for print-only. 

D. A/B testing of pricing between markets

DJLMG is currently testing different pricing scenarios in different markets to find the "sweet spot" that maximizes subscription revenues overall. 

Results:

Registrations now exceed circulation companywide, a key metric that bodes well for overlays as a tactic to increase site registrations in general. 

1. Between the fall of 2010 and the end of August, 2011, the eight daily news sites that have registration overlays gained a combined 279,000 registered users. That's more than the combined paid, daily circulation (print and online) of the eight newspapers.

2. There are now 3,200 online-only subscribers, 1,800 print online subscribers that or-ginated from online sales. This represents an uptake of 1% to 9% per market, based on sales as a percentage of circulation, and roughly $150,000 in new revenues.

3. 25,000 print subscribers have upgraded to a print and online combination package during the renewal process. 

4.  50% of the subscription base receive the combined print and online combination package and pay more for it than just a print subscription.

5. In the apples-to-apples test, in the two original markets, use of overlays in the registration process increased subscriptions by about 10 to 20% immediately and by several times the original number. Eventually this group will remarketed for subscriptions and other promotions.

More lessons from LMI's interview 

 1.    10% loss of site audience, no affect on display advertising

“We 've lost 33% of the pageviews and 10% of the audience. But the more important thing is that we took the majority of  the hit in our photo gallery. People gave up the "low calorie content”  to keep reading the news stories.” The additional registrations provide more opportunities for deals – which the sites do not currently have – rather than contacting them.

2.  Display revenues actually increased

Counterintuitively, when traffic fell, overall online advertising revenues actually increased.

“We've been able to increase prices because as we get sell-out an interesting thing happened. The sales people got very aggressive in hitting their quota. We haven't done that yet in all markets, but in the market where whe are 70 to 80% sold out we were able to push prices up."

The best markets are New Bedford, Mass, SouthCoast.com and Medford, Oregon, primarily because the sales teams there are focused on going to sell-out. So this phenomenon is partly related to creation of scarcity and partly sales organization.

3.  Online subscriptions are a step towards a future with lower revenues/higher margins

Lozier believes online subscriptions are part of a future business model in which newspaper company margins can be maintained. "There’s not a dollar-for-dollar replacement (of revenues)  but you may be able to keep similar margins.   Today there might be a $200 million print centric media company producing in the 15 to 20% range, pulling out $25 to $30 million.  There is no reason why you could not expect the same (margins) out of a company that is …purely digital. Once you take away printing, there can be a diffent cost scalling.  but it may not be a newspaper company.

Our take: Dow Jones Local Media Group’s early success in implementing paywalls bodes well for smaller news organizations. Note  that paywalls overlays are behind local, not wire service stories. Registrations also serve to drive general e-mail lists that convert well to daily deals - although DJLMG has not launched deals as yet. We predict Facebook will be another place to begin the subscription process in the future.

Resources

Marketing Consultant - Bill Baird, Baird Direct Marketing
www.bairddirect.com
Baird worked with Dow Jones on optimizing the overlays. 

Aweber.com

Dow Jones uses Exacttarget.com, however you may also look at Aweber.com  a similarily priced e-mail services  that already includes overlays that are integrated saving a number of steps. One subscription site member also recommends PopUpDomination.net as a provider for individual usages.

Many thanks to Kurt Lozier, SVP Dow Jones Local Media Group, for sharing his experience with our members and to SubscriptionSiteInsider.com, a recommended site for local media with subscription and membership models. 

Kurt Lozier, SVP Dow Jones Local Media