Medill Study Identifies ‘Paradigm Shift’ in How Local News Serves Readers

Building Habit—Not Page Views—Matters Most For Keeping Subscribers, Data Analysis Finds

As online advertising lags, many local news organizations are shifting their strategy to focus on reader-based revenue models, especially digital subscriptions, as a path to financial sustainability and greater community service.

That pivot is redefining the goals for many news outlets. Rather than chasing viral “clicks” to boost ad revenue, they are trying to establish their value to subscribers.

New strategies require new insights into local digital audiences. That’s why a major new Northwestern University analysis of reader and subscriber data from three big-city news websites asks a more nuanced and essential question: What behaviors make readers willing to pay?

The researchers’ answer: News organizations must get their readers into a regular habit to keep them as digital subscribers. The study showed that frequency of consuming local news is the single biggest predictor of retaining subscribers—more than the number of stories read or the time spent reading them.

“This research illustrates a sea change in the relationship between local news organizations and their readers,” said Tim Franklin, a senior associate dean at Northwestern’s Medill School of Journalism, Media, Integrated Marketing Communications. “As the industry moves to a business model more focused on digital subscriptions, local news organizations need to create a value proposition for readers that leads them to become frequent, daily consumers of their news and information.

Spiegel Research Center just completed analysis of audience behavior and subscriber data from The SF Chronicle, Chicago Trib, and IndyStar, This talk frames insights, and explains what subscribers value.

“Our data analysis shows that in this new era for local news, metrics like page views and time spent on articles – two commonly cited benchmarks – are not nearly as important as the number of readers who are frequent users. With that knowledge, the question then becomes: What are the tools and types of news and information that local outlets can generate to grow a daily reader habit?” said Franklin, former president of The Poynter Institute and a former top editor at the Indianapolis Star, Orlando Sentinel and Baltimore Sun.

Franklin heads the Medill Local News Initiative, a project that includes this new study and other research to help local journalism overcome the industry’s current crisis. Medill partnered with three news organizations—the Chicago Tribune, Indianapolis Star and San Francisco Chronicle—that provided 13 terabytes of anonymous reader and subscriber data. Medill’s Spiegel Research Center conducted the analysis, which was presented to the three “learning lab” news organizations at a Northwestern conference in December. The news outlets will continue to work with Northwestern this year, and Medill’s Knight Lab will use the research findings to help create new digital tools and products to bolster local news.

What you’re talking about here in this research is really a paradigm shift. … ‘My customer is the consumer, and that’s where I get my revenue,’ as opposed to ‘my customer is the advertiser and I’m leveraging my readers to these advertisers.’ It’s a big shift, a huge kind of shift in mission.

Tom Rosenstiel, Executive Director of the American Press Institute

In the new Medill study, researchers measured what they call “stickiness” (how likely a subscriber is to remain a paying customer) and “churn” (subscribers opting out). While the study’s main finding was that a regular reader habit is essential for stickiness, it also identified consumption of unique local content as a key factor in retaining subscribers. Establishing expertise on subjects of deep interest to readers is a clear roadmap to generating reader revenue, according to the research.

Jenna Braunstein
Ed Malthouse, Research Director of Medill's Spiegel Research Center, presents his findings to representatives of the Chicago Tribune, San Francisco Chronicle and Indianapolis Star during a December meeting at Northwestern University.

Spiegel’s data analysis also contains a puzzling surprise: Subscribers who read many stories per visit and read them thoroughly were no more likely to keep their subscriptions than those who skimmed. In some cases, high rates of story reading and time spent per story were associated with greater churn – people dropping their subscriptions. The reasons for this possible paradox are not clear, and more research is required.

Subscribers who read many stories per visit and read them thoroughly were no more likely to keep their subscriptions than those who skimmed.

Along with Northwestern’s specific findings, the very nature of the research approach is significant. By concentrating on subscriptions instead of page views, the study reflects a major strategic transformation, said Tom Rosenstiel, Executive Director of the American Press Institute.

“What you’re talking about here in this research is really a paradigm shift,” Rosenstiel said. “… ‘My customer is the consumer, and that’s where I get my revenue,’ as opposed to ‘my customer is the advertiser and I’m leveraging my readers to these advertisers.’ It’s a big shift, a huge kind of shift in mission.”

Franklin is optimistic that such a shift will not only be the smartest path to financial stability but will also encourage quality, service-oriented journalism.

“I actually think this is a healthier business model for local news organizations than the current reliance on what is a declining share of advertising revenue,” Franklin said. “There will be less focus on viral, one-and-done, click-bait-type stories and headlines, and more attention on building a long-term relationship with a core cohort of paying subscribers. It’s a different way of thinking about building readership. And, local news organizations will need to cultivate a large enough contingent of paying customers to sustain their essential news gathering operations in their communities.”

I actually think this is a healthier business model. … There will be less focus on viral, one-and-done, click-bait-type stories and headlines, and more attention on building a long-term relationship with a core cohort of paying subscribers.

Tim Franklin, Medill School senior associate dean and head of Medill Local News Initiative

Spiegel spent months analyzing the three news organizations’ data, looking for behaviors that correlated with subscriber retention.

“For the markets that we’ve studied, having a daily habit is paramount, with a couple of extra twists to this,” said Ed Malthouse, Spiegel’s Research Director. “Local content—differentiated content is the term that I used—is another really important factor that we see across the markets. … The exact meaning of local can vary between the markets, but what’s important is, you own that and others don’t. You do it better than anyone else.”

While Rosenstiel found the data noteworthy, he cautioned against drawing conclusions too broadly. He pointed out that the study involved just three publications and that some metrics of web visitors are complicated to interpret.

Encouraged by the findings of this initial research, Medill has launched a follow-up study on small- and medium-sized markets in the Midwest to see whether the findings can be applied more widely.

For now, Audrey Cooper, the San Francisco Chronicle’s Editor in Chief, said Northwestern’s findings will have practical benefits.

“The amount of work that went into crunching 13 terabytes of data is truly astonishing, and it’s given us some insights that we could have never otherwise obtained,” Cooper said. “Some of it, thankfully, confirms some of our hunches about how to continue to evolve the business; other data has prompted us to ask new questions about how to report and distribute essential news to our readers—current and future.”

How to Build Habit

One of the biggest challenges in digital news is replicating a print-newspaper level of customer loyalty by getting more visitors to adopt a daily digital habit.

“The traffic to most sites is coming from a core group,” Rosenstiel said. “So the key is to expand that core group – not to get people who come twice a month to come four times a month.”

The traffic to most sites is coming from a core group. So the key is to expand that core group – not to get people who come twice a month to come four times a month.

API’s Tom Rosenstiel

But how do you build a core group with a daily habit when readers have so many choices?

At the December conference, Spiegel’s Malthouse suggested that emailed newsletters offered an effective way to get more readers into a daily habit—a view that Rosenstiel endorses.

“We’ve seen data from Google that shows that email newsletters are the single most effective way to get people to decide to subscribe,” said Rosenstiel.

He emphasized that an engaging tone is important for newsletters. “You don’t just throw a bunch of links in some automated, set-it-and-forget-it thing. Then it’s a machine talking to people and not a newsletter,” Rosenstiel said.

Medill's analysis of 13 terabytes of data from the Chicago Tribune, San Francisco Chronicle and Indianapolis Star showed a clear correlation between regular habit and subscriber retention. This graph shows the analysis of the Star's data: The more days a subscriber visited, the less likely the customer was to cancel.

Malthouse talked about “customization”—in which newsletter recipients can pick topics to follow, such as NFL football or fine dining—and “personalization”—in which stories are recommended for the reader based on past behavior.

Customization is fairly common at big news outlets, allowing readers to opt in to a variety of daily email alerts and newsletters. Personalization, on the other hand, is an idea with vast unrealized potential.

News outlets now have the opportunity to track when a subscriber has read five of the last seven stories on the City Council. When the eighth story is published, why not email the story or a link to the subscriber? The answer is that hardly any local news operations have the technological wherewithal to do this type of personalization. But this is just the kind of tactic that would serve customers most effectively.

Without personalization, Malthouse said, emailed newsletters run the risk of causing overload, making readers think they’re being spammed. Malthouse theorized that personalization could have major benefits for what he and other researchers call the CTR—the click-through rate. He even wondered aloud whether news organizations might ultimately be able to charge extra for the newsletter or charge newsletter-only fees.

Malthouse is conducting a Northwestern class this term on machine learning, and the students’ work will include designing “recommendation systems” such as newsletters.

While news websites’ over-all quality is important, certain types of content seem especially effective at keeping readers coming back, and news outlets are trying to produce more of it.

For example, in past years, the Chicago Tribune would give its professional sports teams – and those teams’ beat reporters – an offseason, with minimal coverage. But now the most popular teams – the Bears and Cubs – are likely to be covered virtually every day year-round.

At the Chronicle, a recurring feature called “Our San Francisco” by Peter Hartlaub gives readers “a time machine look at the city’s history.” According to Malthouse, the new research shows that “Our San Francisco” is one of the Chronicle’s offerings that “drives retention.”

It’s Vital to Be Different – and Best

The Medill data analysis backs up a mantra that has spread through newsrooms in recent years: Don’t spend a lot of time producing commodity news.

In order to get subscribers to pay up, local news outlets must deliver something that readers can’t get elsewhere. While commodity news may get page views, it’s also available through wire services serving hundreds of other websites. In an era of shrinking staffs, duplicating the wires is a particularly costly waste of resources.

The good news is that there is great reward in setting yourself apart.

You see these whopper effects for all things that we call differentiated or local. … If you want to drive the habit, you’ve got to get them interested in local.

Ed Malthouse, Spiegel’s Research Director

“You see these whopper effects for all things that we call differentiated or local,” said Malthouse. “What you see is that commoditized stuff, it’s not bad, but it just doesn’t have the same leverage as the local. If you want to drive the habit, you’ve got to get them interested in local.”

That varies by market, and Malthouse sized up the differences for the three “learning labs”:

  • “With San Francisco, what’s driving habit is local sports and local news, to some extent local entertainment, local food, opinion, and local life.”
  • “What does it for Indy? Well, sports and then news.”
  • “For the Trib, what’s driving habit, well, it’s the hyperlocal stuff, suburban coverage … some to-do entertainment stuff, sports, city news.”

He noted that national coverage did better for the Tribune than for the other two, perhaps because it is the biggest newspaper in the Midwest, with a history of strong nation/world coverage, and draws traffic from surrounding states.

So what’s next?

At the December meeting, the Tribune, Chronicle and Star were briefed on Spiegel’s overall findings and also received work-ups of their individual data to take back to their newsrooms for further discussion. They will keep working with Medill on further analysis of their metrics.

Jenna Braunstein
Audrey Cooper, the San Francisco Chronicle's Editor in Chief, examines qualitative research on local news audiences, developed by Medill's Knight Lab with the help of the innovation consultancy Insitum.

In addition to Malthouse, contributors to the Spiegel project included Tom Collinger, Spiegel’s executive director; post-doctoral fellow Yasaman Kamyab Hessary; Yayu Zhou, a doctoral student at Northwestern’s McCormick School of Engineering; and scholar Morana Fuduric.

Malthouse said there’s much more to learn on this topic. For example, one possible area of inquiry is whether acquiring digital subscribers at a deep discount might lead to an unacceptably high rate of churn.

The churn question was also raised by Rosenstiel: “Another thing we’ve noticed in retention: people will work deals. … They may stop subscribing and wait for the next deal.”

Spiegel plans to publish detailed results of its “learning labs” data analysis in an academic journal at a later date.

Meanwhile, Medill’s Knight Lab is working with students to design new digital tools and products for local news, using Spiegel’s data analysis to fortify its work. Northwestern’s innovations will be developed in conjunction with another Northwestern entity, the Segal Design Institute at the McCormick School of Engineering.

Last year, Knight Lab conducted its own qualitative research on local news audiences, with help from the Chicago office of the innovation consultancy Insitum. Fifty people across the country participated in an online diary study, and 18 others took part in hour-long, in-home interviews in the markets of the three “learning labs.”

The research subjects included people at various levels of news consumption as well as some who say they don’t follow the news at all. The study found that people feel overwhelmed by media, and that results in a lack of engagement. They also learned that consumers think local news lacks convenience, and that they feel they have a “deteriorating relationship” with local news outlets.

As part of the analysis, the study broke down local news consumers into four key “media mentalities”: learners, connectors, achievers, and sharers. Learners stay informed in order to become more knowledgeable people. Connectors consume news to better equip them to contribute to their community. Achievers stay informed to help them make decisions for their success. And sharers want to stay engaged with others in order to make decisions about their social life.

Each of these archetypes consumes media differently. For example, achievers—always in a hurry to get things done—might be more likely to scan headlines and move on. Of course, people may fall into different categories at different points in time.

The Knight Lab work was represented by Knight Lab Executive Director Joe Germuska and Medill Associate Professor Zach Wise at the December meeting.

The research and development work of the Medill Local News Initiative is supported by approximately $1 million in grants and gifts. Three foundations are backing the project: the Lilly Endowment, the McCormick Foundation and The Indianapolis Foundation. Several individuals have provided significant gifts. They include John Mutz, a Medill alumnus, the former Lieutenant Governor of Indiana and President of PSI Energy, the state’s largest utility company; Myrta Pulliam, a Pulitzer Prize-winning journalist and philanthropist; and Mark Ferguson, a Medill alumnus and Partner at the Chicago law firm of Bartlit Beck Herman Palenchar & Scott.

About the author

Mark Jacob

Editor

A former Metro Editor at the Chicago Tribune and Sunday Editor at the Chicago Sun-Times, Jacob is chronicling the Local News Initiative’s progress for the project’s website. He is the co-author of six books on history and photography.

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