My editor Ren LaForme grew up near Buffalo and keeps up with hometown happenings by subscribing to the digital version of The Buffalo News. He received a surprising offer with his renewal notice a few weeks ago: For $10 a month more than the base price, ranging between $14.99 and $28.99, he could access the site stripped of advertising.
That sounded like an odd value proposition to both of us. Local newspaper websites suffer from the same staff shortages as their print counterparts. Shrinking reporting on key beats cuts into their appeal.
Turns out, though, that some digital news readers do prefer the ad-free option and will pay for it. A small but growing portion of the industry, like Buffalo News parent Lee Enterprises, with 70-plus newspapers, is either making the offer or exploring how they might.
(Screenshot/Denver Post)
I also learned that Alden Global Capital’s MediaNews Group has been the clear leader in introducing and refining the concept. That might not be what you would expect from an ownership better known for deep newsroom cost cuts rather than innovation.
MNG executives declined to be interviewed. But two audience and product specialists who have directed the ad-free offering have discussed it in speeches and posts. And two subscription consultants I spoke with explained why an idea that has been around for years but never gained traction is doing so now.
Pete Doucette of Mather Economics told me by email, “Our research and experience show that consumers find value in ad-free experiences and understand (what they are buying). … While the $10 monthly premium is a bit on the higher side — four or five is more the norm — I hope it is successful.”
Doucette added that in the newspaper industry, ad-free options “are still nascent. … I would guess about 10% offer it. But almost every publisher we talk to is looking for ways to grow subscribers and revenue, and this product expansion is at the top of the list.”
I also interviewed Michael Silberman of Piano, a customer experience platform, whose client base is split between the U.S. and Europe. He agreed that earlier ventures like Scroll and Blendle had ad-free offerings as a key feature but were not successful. Privacy concerns are a big reason prospects for such a product are better now.
“The landscape has changed quite a bit since the Scroll days,” Silberman said. “Ads, tracking and consent regulations have made the idea of paying to block ads more attractive.”
That’s particularly true in Europe, where “strict cookie consent rules” are being rolled out.
The same may come eventually to the U.S., but even with less stringent rules, many customers don’t want their reading choices tracked. Google continues to tinker with cookies, pulling back from a plan to eliminate them just last week.
I would guess that a third factor is making the offer timely. Streaming entertainment services, as a lengthy New York Times story in June reported, were originally ad-free. But Netflix and many others like Hulu have started taking ads and now offer a choice: Accept the annoyance of commercials or pay more.
The father of ad-free digital in newspapers is Ryan Nakashima, an Associated Press business and tech reporter turned digital subscriber executive. He began developing the offering in 2017 as a John S. Knight fellow at Stanford, working part-time for MNG’s Bay Area News Group for a real-world test. Then he joined MNG full-time.
He has made the case for the product in several places, including an article for Poynter in April 2020. Some takeaways from the Poynter story:
- The ad-free piece can be combined, mixed and matched, with other premium elements. MNG tested three: free access to special events, a geo-specific news summary and priority in displaying comments on news stories.
- There is a tech element. Stripping a site of ads requires an efficient method tailored to a company’s particular content management system. The geo-specific news summaries initially had significant kinks, in one instance treating the Grammys’ ceremony in Los Angeles as nearby news in the Bay Area.
- When MNG’s ad-free offer was ready for a soft launch in 2020, 20% of new subscribers took it.
- The ad-free cohort read more than those who chose the cheaper plain-vanilla version and renewed at about the same rate.
- Added audience revenue more than makes up for loss of advertising revenue.
Nakashima left MNG in March 2022 for a similar position at Hearst. It is a fair guess that a Hearst ad-free offering is under development.
(Hearst is among the many not now offering ad-free. That includes McClatchy and leading independents like The Boston Globe and The Star Tribune in Minneapolis. Gannett has an ad-free premium option at USA Today but not at its 200-plus regional papers.)
With Nakashima gone, oversight of the effort at MNG shifted to his boss. Louis Deering. Deering gave an update in a LinkedIn post late last year. The big finding was that ad-free has quickly grown to a meaningful share of the number of subscribers and an even larger share of digital audience revenue — around 40% as of June 2023.
(Louis Deering)
MNG also continues to test other premium elements, like access to digital news from all of its properties, which include a group south of Los Angeles, anchored by The Orange County Register; and the flagship Denver Post.
Nakashima ended his Poynter article with the hope that someday “product releases are as welcomed by our community as fresh, compelling news stories; and when we as product people and developers are working as hard to improve the experience for readers as the journalists are at bringing us the news.”
I’d take that a step further. There is plenty of lip service at newspaper companies to “thinking outside the box.” Successes in those bolder initiatives are hard to come by, though, because great ideas that are also practical don’t grow on trees. Busy ground-level reporters and editors have difficulty blocking out the needed time when they are under pressure to meet production demands and do their daily work in a hurry.
Conversely, Nakashima’s experience shows that an old idea whose time has finally come can count as an important product innovation. Plus, the protracted and worsening financial pressure in the newspaper industry underscores that many small improvements on a slow-changing business model have not been enough.
