Outside The Wall (con’t)

[Read Part 1] Smurl says there is also a significant opportunity to add new digital subs among its sizeable international readership base. While 30% to 35% of the Times’ 30 million unique visitors a month comes from international IPs, only about 12% to 15% of its digital subscriber base comes from outside the U.S. “It […]

[Read Part 1]

Smurl says there is also a significant opportunity to add new digital subs among its sizeable international readership base. While 30% to 35% of the Times’ 30 million unique visitors a month comes from international IPs, only about 12% to 15% of its digital subscriber base comes from outside the U.S. “It represents a real opportunity and we’re digging into it in earnest,” says Smurl. “Even 50% of that audience is a lot of people.”

For Smurl, then, digital subscriptions represent a way forward for an industry battered by falling ad revenue and declining readership in the past decade. “I think if you’re not experimenting in this space you’re committing professional malpractice,” he says bluntly. “You ignore it at your peril. I think people that are not experimenting are not thinking this through.

“You just need to go out and talk to your audience, find out who’s willing to pay for what, and try to create a product at a price point that makes sense for those people,” says Smurl. “If you’re creating quality content and doing something that’s different, and every publisher can find those two things, you have a segment of your audience that values that and is willing to pay for it. It’s just a function of finding those people and packaging the content at a price that makes sense.

“There’s no silver bullet, but at the very least you need to try.”

ike “late edition,” “composing room” and “revenue growth,” the words “free content” have all but disappeared from the Canadian newspaper lexicon in 2014. Gesca, however, is one of only a handful of Canadian publishers that does not regard digital subscriptions as its potential salvation.

The media unit of Montreal’s Power Corporation raised eyebrows in April 2013 when it introduced a new free digital product called La Presse+, a digital edition of its flagship daily La Presse specifically designed for the iPad (an Android version is expected to arrive sometime this year).

The company spent three years and $40 million developing the product; Simon Jennings, president of Gesca Media Sales in Toronto, says the company fully expects to recoup the investment, but declined to provide a timetable.

At a time when the newspaper industry is contracting, Gesca hired more than 220 employees—including more than 100 journalists, videographers, etc.—to work on LaPresse+.
While the launch of a free editorial product might seem counterintuitive in an era when traditional revenue streams are drying up, La Presse reasoned that the availability of free information in the digital age is an “irreversible phenomenon,” particularly among the 18-49 audiences coveted by Gesca.

“It made perfect sense to us,” explains Jennings. “Younger consumers have figured out how to consume content for free, and we chose to create a business model that works with that.
“Global brands like The New York Times have a large enough global audience that they can sustain a subscription model, but I’ve yet to see [the paywall approach] be successful at any other non-global player.”

Speaking with Marketing last year, La Presse’s executive vice-president Pierre-Elliott Levasseur said that even attracting 100,000 subscribers at $250 a year, while generating $25 million in circulation revenue, wouldn’t make LaPresse+ viable for advertisers, who regard La Presse as a mass-reach vehicle.

Jennings says that Gesca views LaPresse+ not as an adjunct to its existing business, but as something that will ultimately become its flagship product. “We’re moving our business to the tablet, we’re not running it in parallel,” he says. “Any publisher that plans on publishing in 10 years needs to do that. When our audience migrates to the point where they’re telling us they would prefer [news and information] on a tablet, we’re prepared and ready to go.”

Nine months into its existence, La Presse+ appears to be validating Gesca’s faith in the business model. According to the company’s most recent figures, the free app has been installed on more than 400,000 iPads and boasts more than 300,000 users each week. It remains the most downloaded free app in the Newsstand category of the Canadian App Store.

In addition, the average user session lasts more than 30 minutes on weekdays and more than an hour on weekends. “It’s an almost unprecedented number in a world where we basically run in and grab information in 30-second snippets and move onto the next thing,” says Jennings.

La Presse+ is updated at 5:30 a.m., seven days a week in a format that includes text, interactive images, videos, photo galleries and scrolling screens. The content takes full advantage of the iPad’s capabilities: watching former NBA great Dennis Rodman awkwardly warble “Happy Birthday” to North Korean dictator Kim Jong-un is way more interesting than looking at a static picture in a print edition.

The company has continued to update the product since its launch, adding a crossword in September as well as new features, including “Les plus populaires” (“Most popular”), “Techno” (“Tech news”) and “Insolite” (“Strange but true”), to its breaking news space. The company also added an in-app dictionary and both web and Wikipedia access, enabling users to touch any word to look it up on any of the three sources.

The product also offers a suite of interactive ad units—more than two dozen in total—designed to utilize and maximize the iPad’s capabilities. One recent ad for the 2014 Dodge Dart, for example, enabled users to drag one of 12 different coloured darts into a bullseye contained in the ad to see the car displayed in that colour.

Another ad for sports retailer Sports Experts featured a block that could be manipulated by hand to display various offers, while other units feature embedded video and clickable tabs. Nearly every ad allows users to click through to the company’s website.

Gesca is counting on the ability of these features to attract advertisers, since they are being asked to underwrite the whole venture. While Gesca doesn’t publicly disclose revenue, Jennings says advertiser feedback has been universally positive.

“What we hoped would be true is true, which is the difference between tablet advertising and traditional digital advertising. The tablet offers a tactile experience—there’s something very intimate about it—and as a result the ads are being played with and remembered.

“They’re big, they’re bold and they’re beautiful. They spin, they play, they talk and transact,” he adds. “A lot of that has been available on the web, but for some reason it’s a totally different and more engaging experience on the tablet.”

While the company doesn’t have any ad recall or engagement numbers, internal studies have shown that almost 70% of LaPresse+’s audience like the advertising experience within the environment.
And according to a survey of 3,800 people conducted in June, La Presse+ is reaching the key younger demographic without cannibalizing the publication’s existing reader base.

The research found that 35% of La Presse+’s readership comes from adults 18-34, compared with 27% for its print product. At the same time, more than half (51%) of its users have an average household income of more than $100,000, compared with just 27% of its print readers. According to Gesca, just 5% of the audience for its print and digital product is duplicated.

The industry will be watching Gesca closely to see if it can maintain such numbers. If it can, “free content” just might make an unexpected return to the newspaper lexicon of the future.

This story originally appeared in the January/February issue of Marketing, available now to subscribers. Check us out on your iPad.

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