By Jerry Hirsch
Los Angeles Times
12:27 PM PST, February 24, 2012
The Los Angeles Times will begin charging readers for access to its online news, joining a growing roster of major news organizations looking for a way to offset declines in revenue.
Starting March 5, online readers will be asked to buy a digital subscription at an initial rate of 99 cents for four weeks. Readers who do not subscribe will be able to read 15 stories in a 30-day period for free. There will be no digital access charge for subscribers of the printed newspaper.
Separately, The Times announced plans to launch a new weekly lifestyle section called Saturday for its print subscribers.
Other news outlets that have begun charging for online journalism include the New York Times, the Wall Street Journal and the Dallas Morning News. Gannett, the nation's largest newspaper company, this week announced plans to launch a similar program at 80 publications, saying it could boost earnings by $100 million in 2013.
Digital subscription programs are intended to increase revenue and reverse a long slide in paid subscriptions for printed newspapers as more people go to the Internet for news.
"We want to be able to serve customers when they want the news and where they want it," said Kathy Thomson, president and chief operating officer of Los Angeles Times Media Group.
After the 99 cents for the first four weeks, the rate will rise to $1.99 a week in a package that also includes the Sunday newspaper. Digital-only access will cost $3.99 a week.
The Times priced the digital subscription with the Sunday newspaper at a lower rate because they are complementary products, Thomson said. The Sunday edition of The Times has the most advertising and readership, making that the company's most profitable publication day.
"Every newspaper that has launched a digital product has been pleased with the results," said Edward Atorino, media analyst at Benchmark Co. in New York. "No one has said it is a bummer."
Although more people read Times content than ever before because of the Internet, it has seen print circulation drop, as have many other newspapers. Paid daily circulation for the newspaper averaged about 575,000 for the six months ended in September 2011, down about 200,000 from the same period five years earlier. Sunday circulation has fallen by about 265,000 to just over 900,000 during the same time span.
Although digital payment plans are commonly known as "paywalls," The Times is billing its plan as a "membership program" that will include retail discounts, deals and giveaways, as well as access to digital news.
Times readers who access online news through a mobile phone, iPad or other tablet app won't have to pay for now, although the company plans to charge in the future, Thomson said.
Newspapers are taking this so-called porous approach to establishing paywalls because they don't want to erode the Web traffic they generate. The Times was the third-most-viewed U.S. newspaper website in 2011, averaging nearly 17 million unique visitors a month, according to ComScore Inc., a web analytics company. The New York Times and the Washington Post rank first and second, respectively.
The New York Times has signed up 390,000 digital-only subscribers without damaging its traffic.
"There were lots of predictions made that we would have serious traffic loss on our website, but that has not actually taken place. It was a minimal loss after the launch of the pay model," said Eileen Murphy, a spokeswoman for the newspaper.
It charges $14.99 to $35 a month, depending on the digital subscription program.
Freed from the costs of buying newsprint, physically printing and then delivering the publication, newspaper companies will eventually benefit from the higher profit margins of digital news, analyst Atorino said.
But it is likely to be a difficult transition taking many years. Atorino said the New York Times has not sold digital subscriptions at the rate he expected. He said most of the subscriptions it sells are highly discounted, diminishing the revenue gain. The company does not break out its revenue for digital subscriptions. Publishers believe that readers will pay for good journalism.
"If readers value the quality of news they get from a newspaper site, they should be willing to pay for it," said Elizabeth Brenner, publisher of the Milwaukee Journal Sentinel, which in January started charging people who do not subscribe to its print edition 99 cents a week for access to its Web pages. Papers that have launched paywalls have found that they are attracting audiences that reach beyond the region where they focus their news efforts.
Brenner said that the Milwaukee Journal Sentinel has sold 8,800 digital subscriptions in just eight weeks and that 75% of the customers live outside of the publication's primary market.
"The reason is three words -- Green Bay Packers. That's what they want to read about," Brenner said.
Thomson said The Times may benefit from a similar phenomenon as people turn to the organization for its coverage of the Los Angeles Lakers, the USC Trojans, Hollywood and the entertainment industry.
The Times won two Pulitzer Prizes last year, including the gold medal for public service for its coverage of corruption in the city of Bell.
"People are going to want to read our award-winning journalism," Thomson said.
The new Saturday section, which will debut on March 10, will combine what was previously offered in the Health, Food and Home sections. Those sections will phase out as stand-alone portions of the paper by March 3 but will remain available online.
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