Dregs in the paywall teacup


I have been reading the tea leaves in the bottom of the online subscription cup.

My fortune-telling has been assisted by some very interesting international statistics.

The pattern in the bottom of the cup is telling me that the winner-takes-most paywall phenomenon that has characterised the US market may not be repeated in the New Zealand market in the longer term.

If we follow the American example of great success by the New York Times and Washington Post,  the New Zealand Herald (which is the subscription leader here with more than 110,000 online premium subscribers) will soak up the majority of those willing to pay for their news.

In the United States, where 21 per cent have paid for online news in the past 12 months, more than half subscribe to either the New York Times or Washington Post and less than a quarter to local or regional sites.

In Britain, the heavyweight nationals – Telegraph, Times, and Guardian –  command 55 per cent of the paid online market and the very small percentage of Brits who are prepared to pay (only 8 per cent) won’t look at paying for papers further down the food chain.

However, the latest Reuters Institute Digital News Report contains statistics that suggest winner-takes-most may not be a foregone conclusion. We could follow the Scandinavian experience.

In Norway, where close to half the population pay for online news, the three biggest national titles do command a significant subscriber audience between them but so, too, do regional and local news sites. Almost half of the subscribers take either VG, Aftenposten or Dagbladet but almost 60 per cent subscribe closer to home.

In Norway, according to the Reuters survey, local newspapers are seen as the ‘go-to’ source for politics (71%), crime (73%), Coronavirus news (53%), and things to do (46%).

“Our research this year also shows a link between how attached people are to their local community and levels of local news consumption,” the report states. “Respondents in both Austria and Switzerland are amongst those countries that feel most strongly attached and – like Norway – these are also countries where local news consumption tends to be higher and the value of local newspapers is more keenly felt… None of this is to suggest that publishers in countries with more attachment are not also suffering from the impact of digital disruption. We see blind spots and decline in most markets, but the fact that local newspapers in Norway are still valued for a local newspaper bundle of different information services gives them a stronger chance of persuading people to pay for online news.”

New Zealand is a country that traditionally has had a regional and local focus in paid-for news. There are historical reasons for that. Transport in the newspaper industry’s formative period was difficult and the country’s topography means it remains expensive. Newspapers developed around regional and local population centres. Even if they don’t buy it each day, most people will be able to tell you the name of their local newspaper. It is a different story with free-to-air broadcasting. After short private enterprise experiments, broadcasting became government-owned and news management centralised. Network technology solidified the national focus of television in particular.

We have never had a national daily general newspaper. The closest we came was National Business Review’s five-year stint as a daily from the late 1980s. Efforts a decade later to fly the New Zealand Herald into Wellington and the South Island (the Dominion was briefly flown into Auckland) were expensive exercises that could not be sustained as revenue declined and Internet use grew. And, in any event, the Herald was an additional purchase for the majority of buyers in those centres, not an alternative.

Like most countries, New Zealand is still feeling its way through the conundrum of payment for news in. the digital age. There are various forms of subscription in the online news market but the most obvious (and numerically superior) is the paywall.

The New Zealand Herald had first mover advantage on paywalls in the daily general news market (National Business Review had long ago introduced an expensive and impenetrable paywall on anything worth reading on its site). It also has far and away the largest regional population base. So, although it has done remarkably well with its premium subscriptions, it is premature to put the title up there with the winner-take-most titles The New York Times, Washington Post and Britain’s Daily Telegraph.

Stuff has yet to take the subscription plunge but it will come in one shape or another. The donation strategy it currently pursues is drawing support but it is too haphazard in terms of contributions to cashflow. It relies on goodwill and there is no real downside to not donating. How it characterises its subscription strategy will be the key to success or failure.

If it sells itself as a national news source serving all of the country it may come second. NZME is already pursuing that strategy with the Herald brand. It is banking on New Zealand following the US/UK model and last November unveiled plans to make the Herald “New Zealand’s Herald” by, among other things, rebranding its regional titles – Bay of Plenty Herald, Rotorua Herald, Hawkes Bay Herald  and so on.

If the US/UK model is working here, NZME has a clear first-mover advantage. If, however, the New Zealand market does not perform to that model, Stuff may capture the same sentiment that is manifesting itself in Norway. If it capitalises on the legacy value of its regional titles as subscriber brands, that could be more successful than the perception of a bunch of JAFAs playing fast and loose with a local masthead that has been around for more than a century.

This does not necessarily mean a host of separate news sites that could be a nightmare to administer. Technology is now clever enough to construct individual and group offerings that are tailored to need. What appears to be a separate site may, in fact, be a subset of Stuff determined by algorithms.

Stuff might like to look to Canada’s Globe and Mail (whose publisher is one-time New Zealand Herald chief executive Phillip Crawley). It has developed artificial learning technology, which it calls Sophi, to automate and optimise a host of publishing decisions around its paywall. It can, for example, determine what Covid-19 information to put behind the paywall and what to provide free for everyone to access. It is a powerful engine that is now used by 11 different publishers across 50 outlets.

The leaves at the bottom of my cup tell me that regional and local brand identity will play a crucial role when the major paid-for news outlets go head-to-head in a subscription contest. Time will tell whether the dregs of my cup are better at foretelling the future than the cup of someone’s desk at NZME. If I have any advantage it may be that I make a very nice cup of Taylors of Harrogate Yorkshire Tea.

Reader bonanza

Three of the country’s five metropolitan dailies have enjoyed significant gains in readership since the end of last year. Nielsen reports that the New Zealand Herald’s print and digital edition has risen 6.9 per cent to an average issue readership of 654,000. The Waikato Times rose by an even greater percentage from 67,000 to 72,000 while the Dominion Post went up a more modest 1.2 per cent to 168,000. The Press and Otago Daily Times had slight rises. In the Sunday market the Herald on Sunday readership was up a whopping 11 per cent to 403,000 and the Sunday Star Times now sits at 242,000 (up 3 per cent).

NZME trumpeted its readership success with a four-page wrap-around of the New Zealand Herald on Monday but is far more circumspect when it comes to circulation. In fact, we do not know any of its figures for the year to March 31 – the traditional annual benchmark for Audit Bureau of Circulation audits – because it has chosen not to reveal them. The latest ABC figures register a blank for every NZME publication. The last published NZME figures were for September 2019.

The company says it has not published these numbers since the onset of the Covid-19 pandemic because of its aberrating effect. That would be a reasonable explanation but for the fact that the other major newspaper publishers (Stuff, Allied Press and the Gisborne Herald) have now chosen to resume submitting their audited numbers.

Those numbers are in stark contrast to readership. The Dominion Post and The Press are down around 6000 to 30,473 and 31,207 respectively The Otago Daily Times is down by a similar number to 28,262. The Waikato Times is down 2747 to 11,633. All of the audited regional newspapers also posted falls.

This, then, begs the question: Why, when Monday’s wrap-around told us the New Zealand Herald’s brand audience had been driven “to new heights”, did NZME decline to have its circulation figures published in the latest ABC audit?


The Broadcasting Standards Authority may need to fine-tune the Discrimination and Denigration standard that it amended in November 2020. The periodic testing of its decisions with the public through its ‘Litmus Test’ surveys revealed decisions made under the old standard were more acceptable than after the adjustment. Only 65 per cent of respondents agreed with the decision to uphold a complaint against 1News over use of the term ‘gypsy day’ (the annual relocation of sharemilkers). The BSA’s target is 75 per cent acceptability.


Complaints last year to the Advertising Standards Authority about misleading advertising increased 61 per cent on 2019, with a significant proportion of these generated from the General Election and contentious referenda on legalising marijuana and the End of Life choice. Advertisements in those three areas generated 101 complaints. A Drug Foundation advertisement supporting a ‘yes’ vote generated 60 complaints and was partially upheld because the identity of the advertiser appeared only briefly at the end. Thirty one complained about a Nope to Dope advertisement but it did not reach the required threshold to proceed. In total the authority dealt with 1151 complaints about almost 600 advertisements, which resulted in 147 being changed or removed. I think that shows self-regulation can work.

Bouquets & Brickbats

Bouquet: To John Gibb, who has retired after 33 years on the Otago Daily Times and 36 years on daily newspapers. In a three-page feature spread in Saturday’s ODT marking his career, he says: “Among the positive things about journalism are creative listening and humanity, and the voice the media can give to the overlooked and marginalised, and to raise ideas whose time has come.” I couldn’t agree more. And I do like ‘creative listening’, a phrase no doubt borne of Gibb’s other passion as a poet.

Brickbat: To the Overseas Investment Office for using the spurious excuse of ‘national security’ for redacting the ‘Risk Factors Identified’, ‘Information Gaps Identified’, ‘Analysis’, and ‘OIO Assessment’ sections in the public release of its assessment for associate Finance Minister David Parker who approved a no-strings-attached sale of TV3 to Discovery. It is a moot point whether the government could have extracted an assurance from the American media owner that the network’s newsgathering resources would remain intact. However, surely the New Zealand public has a right to know the risk the sale posed to journalism in New Zealand? But a bouquet to former TV3 political editor Stephen Parker for placing an Official Information Act request seeking details of the sale approval.


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