Newport Paper Succeeds in Charging for Content

Spooky things began to happen this summer in the yachting mecca of Newport, R.I., shortly after the Newport Daily News hurled caution to the wind and began charging a $345 subscription fee for its online news—$200 more than for the print edition.

First, the phones stopped ringing in the paper's circulation department. Fewer subscribers were canceling home delivery of the paper, something they had been doing in droves when they knew they could get the same product for free at "Those calls have stopped," William F. Lucey III, assistant publisher and general manager, told NEWSWEEK.

But something even stranger happened: after the Web site put up a pay wall for nearly all its content, readers would brave driving rainstorms to go out and buy the newspaper. Since then, newsstand sales of the Newport Daily News have jumped by 200 copies a day. For a paper with a daily circulation of 13,000, that's a significant gain, especially since, in an era in which most papers are seeing steep declines in readership, even holding steady is a success; an increase is a triumph. "The fact that weather hasn't been fantastic makes me believe that the pay wall has had an effect," Lucey says. "We think that more people are buying the paper now that they can't get it for free online."

Long after the summer resort season is over, newspaper publishers nationwide will be watching the Newport Daily News. Having largely failed to lure a critical mass of online advertisers to free online editions—even when they have massive Web audiences—other beleaguered newspaper publishers are poised to begin charging visitors for online news. Many of those publishers are hoping to generate a new stream of revenue from paying Web customers. The goal for the Newport paper, however, was to drive readers away from the Web, and back to print. So far, circulation is up. "The main goal was to strengthen the traditional newspaper within the market," Lucey says.

The Newport Daily News isn't the kind of place where you'd expect to find cutting-edge media strategies. Like many of the nation's local newspapers, the 163-year-old flagship of the Edward A. Sherman Publishing Co. is family owned. From Monday through Friday, it publishes an afternoon edition, in addition to a Saturday-morning edition. The New England Newspaper Association has named the Newport daily "Newspaper of the Year" three times, most recently in 2004.

By erecting such a towering pay wall, however, the Newport Daily News sailed into deeply controversial waters. More than a few fellow publishers and analysts thought the Rhode Island crew would sink. A "wrong-headed" and "punitive" strategy—"worse than a Hail Mary pass," wrote a columnist for "Lots of people thought we were crazy," Lucey recalls. "Quite a few had us in the obituary column. We haven't gone away, and that's always good."

Now Lucey and his team are trying to maximize profits at the Among other things, the Web site is targeting about 200 subscribers who get the paper by mail—a costly and inefficient delivery system for the publisher and often a frustrating one for customers. To coax them into paid Web subscriptions, the paper offered them a free trial during August, with a discounted rate if they subsequently sign on. "We're expecting a good percentage to convert from mailed copies," Lucy says. A special e-mailed offer went out last week to another 2,500 visitors to who live in Rhode Island beyond the publisher's home-delivery area. They identified themselves by registering to use the site when it first went live. Among them are seasonal residents, or "snowbirds," who return to Florida for the winter.

Sherman Publishing isn't jettisoning the concept of free online news altogether, however. Readers just won't be getting what's in the print edition for free. "The idea wasn't just to throw up the pay wall," Lucy says, "but to preserve the brand and level commitment to journalism." To try to recapture the Web audience that's fled, Sherman Publishing now is planning to launch a hyperlocal, or community site, under a different URL. Though it's still being developed, Lucey says the it will include hometown information, including listings, maps, blogs, and even some news. "We will brand it differently," he says.

Beyond Rhode Island, some publishers have begun to view the Newport Daily News differently. The death watch has been replaced by speaking invitations to Lucey and his colleagues. Understanding that newspaper markets can vary dramatically, what general advice could he offer that might benefit all? He counsels that publishers must stop thinking that all that matters is Web traffic amassed by "putting up all the news for free." Yes, he says, "it's hard to pay for the newsroom. But be comfortable with who you are and have confidence that there's a place in this society for a good solid local newspaper in its current form."

Lucey doesn't believe they've come up with all the answers in Newport. "We're all a little tentative," he declares. "We'd like to see our strategy take off and be incredibly successful so we look like a brain trust."

And yet, in a town that's home to the Museum of Yachting, it's at least encouraging to find a newspaper that for the moment is sailing what seems to a promising course through publishing's troubled waters.