Diversity in Latin American markets drives paid content strategies

By Estefanía Colmenares Hernández

The following is a summarized version of an article that appeared in KnowledgeBridge on April 29, 2013. Click here to read the full version of the text.

Defying the print media crisis in many parts of the world, Latin American newspapers and magazines continue to enjoy rising circulation and advertising revenue due to growing middle classes and economies left largely unscathed by the financial crisis.

However, internet use is growing rapidly in Latin America, and traditional media groups are exploring digital paid content strategies to try to protect and consolidate their dominant position, especially in the face of competition from new digital-only news organisations.

For instance, the Brazilian newspaper Folha continues to enjoy sustained growth in print circulation while also developing a dominant market position online, and it has become the poster child for paywalls in Latin America with the launch of a metered paywall strategy in January 2012.

While metered paywalls, in which users are able to access a certain number of articles before having to pay, are one of the most popular strategies globally, it is just one approach in use in Latin America, a reflection of the diversity in media markets across the region.

Latin America media experiment with different tools

Until 2011, digital paid content strategies were the exception not the rule for news websites around the world. In the US and in Western Europe, paid content strategies have been driven by a drop in print advertising and the inability of news organisations to make up for that fall with digital advertising. News groups had to diversify their sources of revenue. The major shift in the industry came after the New York Times rolled out its metered paid content strategy in 2011, signing up 668,000 digital subscribers, according to its most recent quarterly report. Since then, more than 300 newspapers in the US and newspaper groups in the UK and Germany have implemented paid content strategies, and many have followed the lead of the New York Times and rolled out metered paywalls.

This success has given important legitimacy to paid content strategies globally. But for Latin American news groups, the economic imperative to develop paid content strategies is less, as performance in their print business remains strong. As in other regions, digital media market conditions vary widely in Central and South America, and there is no one-size-fits-all paid content model.

In our last look at paid content strategies, we highlighted the wide range of models in use as news organisations move beyond the binary debate of paid versus free and experiment with a wide mix of models.

Of these strategies, all-access bundles (in which subscribers pay a single price for access in print and digital platforms), metered paywalls (in which a certain number of pieces of content are free but payment is required above the limit) or a combination of both are proving to be the most popular and the most successful, and often, all-access bundling is part of a metered paywall strategy.

Market conditions help guide the choice of the most appropriate paid content strategy, and with the diversity of markets across Latin America, media companies have implemented a number of different approaches.

All access bundle and metered paywall – Folha (Sao Paulo, Brazil) – Folha was the first newspaper to implement a metered paywall in Brazil in January, 2012. They initially charged only for their tablet and mobile phone apps, but in in June of that same year they included their website.

Folha gained 45,000 new digital subscribers during their first year. Since then, many other newspapers have either followed suit or are studying how to implement a similar strategy.

When Folha launched their paywall, the rules were that each visitor would have 20 free articles per month while the homepage, cultural schedule and a site for children remained free. After reaching the 20 article limit, readers would have to register some information, then they would have an additional 20 articles before they had to pay. In March 2013, the limit was lowered by half to 10 free and an additional 10 after registering.

According to Roberto Dias, Digital Content Director, Folha’s website has 21 million unique visitors per month, with over 270 million pageviews. “Today, every article by Folha is read by a lot more people than 30 years ago. What we really need to do is to look for sustainable models for the journalistic production process, which is expensive.  I think every newspaper is going to find their own; we are looking for ours as well.”

Hard paywall – Reforma (Mexico) – Since 2002, the Grupo Reforma have had a paywall on their websites and charged online subscribers 20% less than a paper subscription.

This was a means of protecting the print business, according to Jorge Meléndez, vice president of new media in an interview with the Knight Center.

After nine years, Reforma has 50,000 online subscribers and its daily circulation reaches 300,000. Currently, they have 5,555 new users per year. However, when they started the paywall, traffic shrunk by 30% and it took one whole year for it to return to its original level.

They currently offer a digital-only subscription that is good for up to four devices and a paper subscription that includes access for up to six devices. Offering bundles that encourage readers to continue to receive the newspaper is common, especially because print advertising still commands a dramatic premium over digital ads.

Platform specific strategies in Colombian media –  Semana, a political magazine, is the only Colombian media outlet ever to charge for the content they offer to tablet users.  Initially, the magazine launched a free app that reached over 110,000 users. They then introduced a fee charging for the digital subscription.

El Tiempo and El Colombiano, two of the leading dailies, are also working on paywall projects that they hope to implement in 2014.  Currently, these newspapers have free access to their digital editions and rely on online advertising for revenue.  However, they also offer a product called e-paper (an electronic version of the newspaper) for a discounted price.

In March 2012, El Colombiano, located in Medellin, implemented in its tablet edition a ‘freemium’ model which, after registering, allows the user to download the newspaper in its PDF version and have access to other publications such as smaller neighborhood newspapers and magazines. During the first month they attracted 7,000 users.

*Estefanía Colmenares Hernández is a journalist with several years of experience with major newspapers in Colombia. Click here to read the complete version of this article.



Note from the editor: This story was originally published by the Knight Center’s blog Journalism in the Americas, the predecessor of LatAm Journalism Review.