Our-Hometown, IncDesigning, building and deploying Online Business

Models for the newspaper industry since 1997

Contact: Carl Leonardicdl@our-hometown.com

(315)294-591211/04/2010

Paywall Business Model

• Myth vs. Fact• A look at

implementation• Analysis of

outcome• Pricing Model• Conclusions

Why Implement A Paywall

• Create an immediate stream of new revenue.

• Increase number of paid subscribers.

• Return On Investment.

• Protect your content, it has value.

• Create new revenue generating opportunities.

Case Study: The Derrick, Oil City, PA - Overview

• TheDerrick.com includes News-

Herald edition

• Total print circulation 28,000

• Market 75 miles north of Pittsburgh

• Minimal market area competition

• Before paywall they cut/paste about

50% of content to their HTML website

• Little effort put into web ad sales

TheDerrick.com - Timeline

• September 2009 – The Derrick chooses

Our-Hometown Business Model, new

website designed and up within 21 days.

•October 2009 – Site goes live with no

paywall, but readers could subscribe.

•November 2009 – Our-Hometown

implements paywall model, over $100,000

in paywall revenue since.

Our-Hometown: The Process

• The Derrick sends a pdf of the paper to Our-Hometown Daily.

• Our-Hometown posts 100% of the news online in html format.

• Breaking news and updates are added by Derrick staff in between issues.

• Our-Hometown is responsible for hosting, maintaining, and upgrading the website.

Paywall Subscription Costs

3 Months

6 Months

1 Year

1 Year online upgrade

• $29.00

• $39.00

• $69.00

• $12.00

TheDerrick.com order analysis

TheDerrick.com order analysis

Order Length

6 Months20%

1 year45%

Manual Order10%

3 Months25%

TheDerrick.com order analysis

Order Flow

Pricing Model for online-only subscriptions at dailies

The Data

Newspaper LocationPrint C irc

Date paywall started

Price per month

for online-only

Online-only subscribers

Revenues **

Subscribers ***

thederrick.com Oil City, P A 28,000 Oct-09 $10.00 1,185 $5.08 4.23%

bendbulletin.com Bend, Oregon 32,946 2005 $8.00 1,200 $3.50 3.64%

dnews.com Moscow, Idaho 6,615 1999 $7.00 255 $3.24 3.85%

winchesterstar.com Winchester, VA 20,218 Sep-09 $3.08 * 1,628 $2.98 8.05%

gazettenet.com Northampton, MA 19,000 2004 $7.75 580 $2.84 3.05%

abqjournal.com Albuquerque, NM 95,469 2001 $12.75 1,750 $2.80 1.83%

dailygazette.com Schenectady, NY 44,000 2009 $11.80 855 $2.75 1.94%

messenger-inquirer.com Owensboro, KY 25,014 2006 $6.95 800 $2.67 3.20%

arkansasonline.com Little Rock, AR 185,792 2002 $9.99 3,500 $2.26 1.88%

themercury.com Manhattan, KS 10,500 2009 $12.89 150 $2.21 1.43%

limaohio.com Lima, Ohio 29,981 2009 $4.95 1,010 $2.00 3.37%

lmtribune.com Lewiston, Idaho 23,421 1999 $8.00 460 $1.89 1.96%

daily-journal.com Kankakee, Illinois 29,000 2009 $14.70 100 $0.61 0.34%

* - Website has two online-only offerings, weighted average price shown

** - Revenues measured as annual dollars per unit of print circulation

*** - Subscribers measured as the number of online-only subscribers as a percentage of print circulation

Demand

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

$0.00 $4.00 $8.00 $12.00 $16.00

Price of online-only subscription

Study of demand for online-only subscriptions at dailies

Myth: You’ll never get enough subscribers to be meaningful

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

0%

1%

2%

3%

4%

5%

6%

7%

$0.00 $4.00 $8.00 $12.00 $16.00

Rev

enu

e p

er u

nit o

f prin

t cir

c

Su

bsc

rib

ers

as %

of p

rint c

irc

Price of online-only subscription

Revenues

Max rev enue at $7.80 per

month

3.54% circ increase

$3.32/unit of print circ

Myth: Print subscribers will go online-only

If I charge the $7.80/month you recommend, that is less than the price of the print edition. I’ll cannibalize print and lose insert revenue and maybe more.

Myth: Print subscribers will go online-only

Oil City Derrick (28,000 circ daily)

1,185 online-only

Only 5 cancelled the print edition

Only 1 was in their delivery area

$69/year - ½ the price of the print

45% of online-only subscribers live inside their delivery area

Conclusions

At $7.80 per month for online-only access, dailies will add about 3.5% to total subscriber base with a paywall

Only minimal loss of print subscribers to online-only.

Initially expect a drop in website traffic

This is with HTML websites only; not PDF or Replica editions.