Northwestern report honors Democrat-Gazette for sustainable news business model

Business model in digital age honored

FILE - The Arkansas Democrat-Gazette building at 121 E. Capitol Avenue in Little Rock is shown in this 2012 file photo. (Arkansas Democrat-Gazette/Staton Breidenthal)
FILE - The Arkansas Democrat-Gazette building at 121 E. Capitol Avenue in Little Rock is shown in this 2012 file photo. (Arkansas Democrat-Gazette/Staton Breidenthal)

The Northwestern University Medill Local News Initiative has named the Arkansas Democrat-Gazette one of 17 national "Bright Spots in the Local News Landscape" in its 2023 State of Local News Report, issued this month.

The Democrat-Gazette shares traits with the other identified publications that are successfully navigating contemporary economic challenges -- like private local ownership, not control by heavily indebted national chains, large reporting staffs relative to their markets and an emphasis on community engagement and customer service for readers and advertisers.

"The Arkansas Democrat-Gazette was featured in our annual report to showcase one way that news organizations are negotiating the transition to digital, and to highlight the hard work and, frankly, bravery that the Democrat-Gazette showed in the process," Sarah Stonbely, who directs the State of Local News Project, said via email. "We wanted to show through our Bright Spots map that while it is certainly an extremely challenging time for local journalism in this country, there are news organizations that are figuring it out, and there are many different paths to sustainability in the digital age."

The news industry has been in flux since its print advertising-based model failed amid the digital age. The Medill report found that the national rate of newspaper closures is increasing, up to 2½ per week, and that nearly 2,900 newspapers have closed since 2005.

Should the trend continue, American journalism will have lost a third of its newspapers between 2005 and 2024.

The report lauds the Democrat-Gazette for maintaining a paid-circulation and local customer service business model "more than any other regional metro newspaper" through the digital transition. The Wall Street Journal and certain other national publications like The New York Times have also employed a business model mostly sustained by subscriptions.

The Democrat-Gazette did this, too, through its offering of iPads with a digital replica e-edition to print subscribers and a transition away from newspaper delivery.

In a Q&A with lead report author Penelope Muse Abernathy, former WEHCO publisher Walter Hussman Jr., chairman of parent company WEHCO Media Inc., said the change came from the 2018 realization that the Democrat-Gazette was about to lose money for the first time in 25 years. This led to identifying iPads as a means of getting the publication to readers. Pilot testing in Blytheville and El Dorado showed the importance of on-boarding the iPad to subscribers and of maintaining Sunday print delivery to maintain subscriptions. The digital conversion concluded in early 2020.

The problem today is growth; the Democrat-Gazette raised digital replica subscription prices by $5 this year to account for the issue. Hussman said the transition "has not been as successful as we hoped financially" because of subscriber attrition and escalating costs.

Younger readers clearly want to read news on their phones, not iPads, Medill reported. The challenge remains to get them interested enough in local and regional news to pay for it, especially with the continuing problem of free news. The report notes a slowdown in digital subscription growth this year, which the authors ascribe to inflation and an examination of money spent on subscriptions.

Ken Doctor, who was an editor and executive with the former Knight Ridder company and founded the for-profit Lookout Santa Cruz online news organization in California, said the purely digital news business is efficient, given centralized technology costs. As it stands, however, the Democrat-Gazette has to continue publishing newsstand and Sunday print editions.

"The transition, I think, for all these papers -- but especially those that have stayed the course of maintaining a large-enough newsroom to serve their communities -- has been far longer than anybody thought it would be," Doctor said. "We do know that there is money in the digital business, there is significant money in advertising ... and there's money in reader revenue. But convincing people to pay for a digital news product is different than convincing them to take a daily newspaper."

WEHCO Newspapers Inc. Publisher Eliza H. Gaines said subscription growth remains the goal. Gaines emphasized the importance of understanding who a newspaper's readers are and not grouping subscribers by age alone. Still, she acknowledged that there are young people who don't know what the Democrat-Gazette is and pointed to super-local coverage as news that interests them. She said tying government and business actions to the effects they have on Arkansans also attracts readers.

Gaines suggested WEHCO's newspapers may attract new subscribers through targeted online ad buys. While the company surveyed readers this year, she said it also needs to hear from people who don't read newspapers.

Stonbely noted that getting young people to care about news is not a new challenge, as "people tend to care much more about local journalism" when they become taxpayers, parents of schoolchildren and small business owners.

"I can't force somebody to pay $39 a month for our product, even though I think that it's worth it, and many other people do as well," Gaines said. "I think that there are different options to consider. You can do tiered subscriptions; you can do 'less for less.' You can have maybe a customized app or newsletter that's only the news those people want. We're considering all of those.

"We're doing all that we can to learn from what other companies have done, what works for them, learn more about who we are trying to serve and who we need to serve and how we can continue serving our current readers who are really funding our organization," she said.

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