Herald brings in metered payment for digital content

Posted on June 7, 2013

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Fairfax Media is to introduce subscriptions for the digital versions of The Sydney Morning Herald and The Age next month, 18 years after the launch of the newspapers’ websites.

From July 2, visitors to the websites smh.com.au and theage.com.au and their mobile versions will have free access to the first 30 articles they click each month before being asked to pay under a metered subscription model.

The tablet apps will adopt a ‘‘freemium’’ model. Rather than tally each swipe of the screen, Fairfax will leave some sections free while others will be accessible only to those who pay.

The subscription plan applies to visitors in Australia, New Zealand and other Asia-Pacific nations. Other international visitors have been subscribing for two months. Big news organisations across the globe are pursuing similar strategies as they try to harness revenue from their growing digital readership to counter a steep drop in traditional print readership and advertising.

On Thursday, Fairfax hosted an investor day to update the market on business conditions and the progress of cost-cutting efforts.

While introducing a paid model, Fairfax has been keen to leave access free for most readers to maintain the company’s digital dominance among Australian news sites. Videos and photo galleries will remain free but blog access will be the same as for articles.

In May, the Herald website and its mobile site attracted almost 840,000 average daily unique browsers. The Age drew about 587,000.

The managing director of Australian Publishing Media, Allen Williams, said: “Visitors will be able to continue to enjoy our content just as they do now, with minimal disruption.’

Fairfax Media will reap another $60 million in annual cost savings by September in the face of unprecedented change in the global media landscape.

A wide-ranging review across its Australasian news platforms, including print, online, mobile and radio – as well as the removal of duplication within its administration and corporate arm – will help propel the publisher of The Age and Sydney Morning Herald to total savings of $311 million by 2015.

It comes as Fairfax informed the market that revenues were down between 9 per cent and 10 per cent in the second half, although radio and the online real estate site Domain had bucked the trend to post double-digit growth. Chief executive Greg Hywood unveiled the fresh cost savings target at an investor briefing on Thursday, with the extra $60 million coming on top of the $251 million in reduced costs already nominated last year as part of its ‘‘Fairfax of the Future’’ restructure.

The fresh attack on its cost base comes as Mr Hywood also hosed down speculation Fairfax would soon end its print publications of its flagship mastheads The Age and the Herald, saying the business remains committed to the print

editions, while a new metered paywall for the newspapers would help forge new digital revenue streams.

‘‘We are confronting reality,’’ Mr Hywood said at the briefing, ‘‘and we are taking the actions we need to take to get through a period of transition from a legacy print business to a media company that prospers in a competitive market.

The extra savings outlined on Thursday formed an integral part of the next stage of Fairfax’s transition, Mr Hywood said, in the face of continued choppy trading conditions which would see earnings fall through the second half.

The shake-up will include plans to reduce duplication across the company’s 431 publications, 337 websites and almost 100 apps and seven radio stations.

Mr Hywood said overall group revenue had slipped 9 per cent to 10 per cent in the current half with the company’s Metro Media and Regional divisions down 11 per cent. Radio remained a strong performer, up 10 per cent, while its digital real estate platform Domain lifted revenues by 16 per cent.

Fairfax earnings before interest and tax, depreciation and amortisation (EBITDA) for the second half of 2012-13 would be between $129 million and $135 million, Mr Hywood said, against first-half EBITDA of $205.3 million.

Fairfax also had a suite of highgrowth businesses, which Mr Hywood said would be further exploited to drive revenue, as revenue from its traditional print businesses waned.

Boosting digital revenue would be the introduction of a metered paywall for its key metro papers, The Age and the Herald, from July 2 ranging from $15 to $44 per month.

Fairfax shares closed 1¢ weaker at 59¢