Walter E. Hussman Jr., publisher of the Arkansas Democrat-Gazette, is pioneering a bold strategy to transition readers from print to digital by taking away their daily newspaper cold turkey and giving them a tablet with a daily online replica that mimics the print edition.
Hussman’s experiment is make-or-break for the Democrat-Gazette. If successful, it may finally offer an effective way for news organizations to lure longtime loyal readers away from print editions that are expensive to produce and deliver. But if the strategy doesn’t work, Hussman knows his newspaper is in trouble. He felt he had no choice.
“You know what’s going to happen if it doesn’t work? We’re going to eventually go out of business,” Hussman said. “Newspapers are not going to make it. In fact, you’re going to start seeing a lot of newspapers probably become weeklies and some of them just going out of business.”
Hussman, whose newspaper has distributed 27,000 iPads in the project, is delivering his dose of reality to people throughout the state.
“We can’t just lose money year after year, and that’s the way it’s going,” Hussman said. “And I tell them, look, we might still be able to deliver a print edition to you but it’s not the kind of paper you’re going to want to read, it’s not the kind of paper I’m going to want to publish. It’s going to have a whole lot less news in it. It’s going to have a whole lot fewer reporters and editors covering things. There’s no future in that. That’s what a lot of newspapers are doing, but in my opinion, there’s no future in that.”
Hussman is encouraged by the results of the Democrat-Gazette’s tablet project so far, with an over-all retention rate of 78 percent. It is nearly done converting the Little Rock area, delivering a print newspaper only once a week – on Sundays – while lending subscribers an iPad for free so they can read a daily replica edition. As Hussman loses a modest fraction of his subscribers, he is banking on the idea that the readers who remain will be fully engaged. He is determined to “smother these people with customer service,” to truly move from ad-revenue dependency to a focus on the readers.
The Democrat-Gazette has been converting subscribers in outer areas of the state for about two years, testing a variety of offers through a laborious process of trial and error. Now it’s working through Pulaski County, Arkansas’ most populous county and home to its biggest city, Little Rock. The Pulaski conversion should be done by the end of January. That will leave only the state’s prosperous and growing northwest area unconverted because of a difficult subscription-rate issue there, but Hussman has a plan for that, too.
A key to Hussman’s strategy is not forcing the readers to make two jumps at the same time – from print to digital, and from a traditional newspaper layout to a far different online format. This why the replica is so important. It looks like the print paper, except that readers click on the stories they want and see them displayed in an easier-to-read format. They get photos presented as they would be in a print edition, but if they click on them, they sometimes get access to an entire photo gallery or a video. But the key is: It looks like an old-fashioned newspaper.
I think the big mistake newspapers made … was trying to convert people to digital and then trying to change the format on them.Walter Hussman, Publisher, Arkansas Democrat-Gazette
“I think the big mistake newspapers made – and we made it too, you know – initially was trying to convert people to digital and then trying to change the format on them,” Hussman said. “… We said: Why do that? Let’s let them keep the format they’re familiar with, the format they love.”
Another attribute of the replica is that it’s a finite package of news. Last year, the Spiegel Research Center at Northwestern University’s Medill School of Journalism, Media, Integrated Marketing Communications unveiled a major analysis of subscribers’ behavior online and found, to its surprise, that people who read more stories were not more likely to keep their subscriptions. In some cases, they were less likely. Could the endless river of stories somehow be denying readers a sense of completion?
In contrast, a replica offers “a beginning and an end to the news,” Hussman said. “In other words, it’s always been that way with a printed newspaper. When you pick it up, even if you go from page to page, front to back, there’s an end. Often it seems like a website is endless. You get to the end of today’s news and then you’ve got yesterday’s news, and the day-before-that’s news.”
Jim Friedlich, Executive Director and CEO at the Philadelphia-based Lenfest Institute for Journalism, called the Democrat-Gazette’s tablet project “a hopeful sign that a major local publisher has been able to convert subscribers to digital at scale.”
“The question is: How replicable is this?” Friedlich said. “Is the Arkansas experience a unicorn or is it a repeatable experiment? My hunch is that it’s a bit of both, that with the right set of circumstances, this could be done elsewhere. In Arkansas the circumstances include a news product that has been well nurtured and well maintained over the years and not bled dry as we’ve seen in other markets, a newspaper that’s still highly regarded and has a loyal statewide readership, and a publisher who has himself deeply committed to this task and has put very significant personal energy and reputation behind it.”
Friedlich added: “I think he’s onto something and we should be watching pretty closely.”
Tablets Have Been Tried Before
The Democrat-Gazette is at the forefront of this tablet experiment, but it’s not a new idea to package tablets and subscriptions.
In 2011, the Philadelphia Media Network, owner of the Philadelphia Inquirer and Philadelphia Daily News, offered a deeply discounted tablet with a two-year digital subscription. The news organization predicted that the first 5,000 would sell in a week, but six weeks in, just half of that number had been sold. In addition, the effort was battered with criticism over customer service and other issues. That same year, there were media reports that Tribune Co., which owned the Los Angeles Times, Chicago Tribune and other papers, planned to offer subscribers a free tablet if they agreed to a two-year subscription. But Tribune never launched the offer.
Now, most of the industry seems willing to wait and see how Hussman does.
Asked about other U.S. news organizations trying the experiment, Hussman cited only the Post and Courier in Charleston, South Carolina, which is conducting limited tests.
Hussman said the Post and Courier’s publisher, P.J. Browning, called him to ask about his tablet project, and he invited her to hear him talk about it at a Rotary Club meeting at a Western Sizzlin restaurant in Malvern, southwest of Little Rock. She went back to Charleston and started testing, with the replica “e-edition” supplemented by print delivery only on Wednesdays and Sundays.
We, like Walter, have tried a couple of variations so we can see what works best – renting, giving the tablet away.P.J. Browning, Publisher, the Post and Courier (Charleston, S.C.)
“We are really early,” Browning said. “We completed one small route of 158 people and we are in the field right now with the next conversion of a similar amount to go live February 1. We, like Walter, have tried a couple of variations so we can see what works best – renting, giving the tablet away.”
Hussman knows of one other effort:
“I became aware just recently that the Straits Times in Singapore – our former editor was in Singapore, and he brought back a copy of the paper. And on Page 8 there was an article that said they were going to offer a tablet to their subscribers who would sign a two-year contract. And it would be a digital replica of the newspaper.”
Hussman’s History as a Maverick
While some might be tempted to dismiss the Democrat-Gazette’s effort because it is part of a relatively small, family-owned chain outside of major media markets, a look at Hussman’s history might change their minds. Hussman has long bucked conventional wisdom in the newspaper industry, and has often been right.
When his family’s business acquired the Arkansas Democrat in 1974, it was the down-market afternoon rival to the morning Arkansas Gazette, the oldest paper west of the Mississippi River and winner of two Pulitzer Prizes for its coverage of the 1957 school integration crisis. Hussman took the Democrat to mornings and refused to accept second-class status, dramatically raising subscription prices to match the Gazette’s against the advice of some of his own staff. He offered free classified ads and gave the paper a feisty opinion section featuring commentary by a managing editor who once posed for a photo crouched on a newspaper box with a knife between his teeth.
The Gazette was purchased by Gannett and the Democrat kept improving its market position, ultimately defeating Gannett, which sold the Gazette to the Democrat in a 1991 merger. It’s been called the Democrat-Gazette since then.
Hussman put up his paywall in 2001, when hardly any daily newspapers were doing that.
Before the wall went up, Hussman said, “people would come up to me at a civic club meeting and someone [would say], “I love that website of yours. You know, I used to subscribe to your newspaper.” I started thinking, good grief, we do all this hard work to get every subscriber and we’re just giving them away now.”
Hussman said he quickly recognized that online advertising would fall far short of the industry’s ambitions.
If you’re in a town like Little Rock, there may be three or four places you can run a print ad. But there are thousands of places you can run online ads. It gets back to supply and demand.Walter Hussman, Publisher, Arkansas Democrat-Gazette
“If you’re in a town like Little Rock, there may be three or four places you can run a print ad,” he said. “But there are thousands of places you can run online ads. It gets back to supply and demand. There’s a certain amount of demand for advertising and now the supply of people wanting to sell you advertising is exponentially higher so the price goes down.”
The Democrat-Gazette, while stubbornly remaining behind a paywall, saw its circulation hold steady from 2001 to 2011.
“If you look at Dallas and Atlanta and those towns, they lost a third to a half of their circulation [during that time],” Hussman said. “Then, in 2012, we said we’ve got to raise subscription rates because we’ve lost so much advertising. … Our list price went from $16 to $28 a month. Now, no one went immediately to $28, very few people did, but we moved that way. And I said thank goodness we’re going to try to raise subscription rates on 100 percent of the subscribers we had in 2001, whereas Dallas or Atlanta, they’re going to try to raise subscription rates on half or two-thirds of the subscribers they had 10 years ago.”
‘I Even Like Getting the Ink on My Fingers’
Newspaper reading is a lifelong habit, and many people have been wary of the Democrat-Gazette’s change.
Hussman recalled a man standing up at the Stuttgart Rotary Club and saying that when he heard about the print-to-tablet conversion, “I was so depressed. I’ve been reading this newspaper for decades. I love it. I love having it. I love the tactile feel of the paper. I love holding it up right by my coffee. I love my dog going out to get the paper in the morning. I even like getting the ink on my fingers.”
That last point amused Hussman. “I thought to myself, boy, that’s the first time I’ve ever heard that.”
He said the man continued: “So I really hated this idea. But my wife said let’s go down and look at this iPad.” That was about three weeks ago, the man said, and “I’ve been using it every day. I cannot believe that I’m saying this: I actually like it better.”
Hussman said while there have been exceptions, most of his feedback suggests that the iPad experience has been a pleasant surprise. To get more independent views, the Medill Local News Initiative asked a couple Democrat-Gazette subscribers to describe their conversion process.
I think we’re just resigned to it. They’ve given us a lot of lead time to know that this was going to happen.Karen Delavan, Arkansas Democrat-Gazette subscriber
Karen Delavan, a semi-retired registered nurse in Little Rock, said she wasn’t exactly thrilled when she heard daily print was being phased out. “I think we’re just resigned to it,” she said. “They’ve given us a lot of lead time to know that this was going to happen. I don’t run the paper, so there’s not much I can do but go with how it’s going.”
Hussman’s messaging seems to have worked with Delavan.
“I think it’s inevitable,” she said. “I realize that printing … the paper is expensive, the ink is expensive, delivery is expensive.”
Delavan already had a tablet, so she didn’t want an iPad from the Democrat-Gazette. For a time, Delavan was reading both the replica and the printed version. “If I was home and the paper was on my doorstep, I was going to read the paper copy. If for some reason it wasn’t delivered that day or I was traveling so that I wasn’t home to get the paper and I felt like I needed to read it, then I would read it on the tablet.”
She said the replica was “pretty user-friendly,” and she noted an advantage: You don’t have to hunt for the jumps off Page 1.
Toni Boyer Stewart, who works in communications for the University of Arkansas at Little Rock, said the switch from print to tablet “was OK with me because I was sick of papers piling up.” She got the tablet a couple months ago and was surprised how much “I love it.”
“I feel like I’m reading more of the newspaper than I ever did before,” she said, adding that “some of my younger co-workers think it’s really dorky, but I like it.”
I feel like I’m reading more of the newspaper than I ever did before.Toni Boyer Stewart, Arkansas Democrat-Gazette subscriber
Those co-workers just go to the Democrat-Gazette’s regular website, arkansasonline.com, or get news through Facebook or Google, she said.
“I’ve used the regular website for years and years and years, and [the replica] to me is better,” Stewart said. “The regular website is a little more sensational.” It also has more ads, she pointed out.
About three years ago, Stewart left a job as a marketing specialist for WEHCO Media, the Democrat-Gazette’s parent company, but she said her past employment had no effect on her view about the tablet. “I love it, and I’m not trying to plug anything for Walter Hussman,” she said.
Hussman said about a quarter of subscribers have decided not to get an iPad.
“We have actually spent less on iPads that we thought,” he said. “We thought we’d be at about $12 million, we’re at about $11 million right now. We’ve actually started going out to sell new subscribers with the iPad. With an existing subscriber, if you look at these people by their original subscription date, almost all these people have subscribed five years, 10 years, 20 years, 30 years, some people 60 years. A guy in Blytheville has subscribed for 60 years. Those people are not credit risks. New subscribers, you know, we make them sign an agreement that if for any reason they don’t return the iPad, we can charge their credit card for the full price.”
The Democrat-Gazette wants its subscribers to become so attached to the iPad that it makes them more likely to stay as news consumers.
“We want people to love their iPads,” Hussman said. “We want them to not only read our paper. We want them to download books, create photo libraries on their iPad, watch movies. We want them to get really attached to this iPad. Because then somebody might say, ‘You know, I don’t read the paper as much as I used to. I think I’ll just drop it.’ And we’ll say, ‘Have you returned that iPad?’ Then they’ll say, ‘Return the iPad? I don’t want to return that iPad!’”
But Hussman is selling news, not iPads.
“We’ve got a newspaper with lineage going back 200 years,” he said. “If there’s any way to save it, we’ve got to try some way to save it. What they’re doing in Raleigh and Omaha and all these other towns is not going to save the newspaper.”
Tablet Trial and Error
The difficult process of forming and refining the tablet strategy says a lot about how Hussman approaches innovation. The Democrat-Gazette tried its first tablet experiment in early 2018 in Blytheville, a town in the northeast corner of the state that was an appropriate target because outlying circulation is often so costly.
“The reason it’s so unprofitable, like Blytheville, there’s 5,000 households and like there’s 200 subscribers, so the carrier really loses his shirt, but it’s our shirt because we subsidize him,” Hussman said. ”It took three tries in Blytheville. The first time we sent people up there and knocked on 200 doors with our best circulation salespeople trying to convince people to read the paper on the iPad. That went nowhere.”
The second attempt didn’t work much better.
“We went back and said we’ve got a special promotion for you with AT&T. If you’ll go ahead and get a new phone from AT&T, which eventually you’ve got to do anyway, they’ll give you a $350 iPad for $99. And after you have downloaded 50 issues of the Democrat-Gazette, we’re going to send you a check for $50. Then your iPad is going to end up costing you $49 for a $350 iPad. … We pushed that hard and promoted it and called people and we got four out of 200 people to do that. So that was a failure.”
The third time gained more traction.
“We were trying to figure out what to do and I said, ‘We’re going to give this one last try. We’re going back up there and we’re going to give people iPads.” They don’t have to turn in their phone. There’s nothing they have to do. Just give them the iPad. We’re going to give them the $800 iPad, not the $350 iPad. The $800 iPad Pro is the same width as the newspaper if you hold it sideways. And you just scroll down and see the rest of the page. This is an $800 iPad. We’re talking about 200 people. We’re talking about an experiment here. If it doesn’t work with an $800 iPad and it doesn’t work giving it to them, we can say this is never going to work.”
… We’re going to actually show these people how to use their iPads. We’re not going to show them in a big group lesson. We’re going to show them one-on-one so we can answer all their individual questions and try to get them comfortable with doing this.Walter Hussman, Publisher, Arkansas Democrat-Gazette
That third effort included a key component.
“We decided to do one other thing that’s probably the key to the whole deal that we didn’t realize at the time,” Hussman said. “And that is, we’re going to smother these people with customer service, like they’ve probably never seen, certainly haven’t seen in decades with the terrible state of customer service in America. Dial 1 for this, dial 2 for that, dial 3 for that. And we’re going to actually show these people how to use their iPads. We’re not going to show them in a big group lesson. We’re going to show them one-on-one so we can answer all their individual questions and try to get them comfortable with doing this. So we’re going to have them come down to the Holiday Inn in Blytheville and sit down. We’re going to make appointments and we’ll sit down with them one-on-one and try to show them how to do it. And that turned out to be really key, I think. Expensive. It’s costing probably, I think the last estimate was $90 per subscriber to do all that training.”
But it worked.
“We got 70 percent. We got 140 people in Blytheville. That was much better than four.”
Next the Democrat-Gazette calculated whether it could make money if 70 percent of its subscribers elsewhere in the state switched to iPads, allowing it to dramatically cut its distribution costs. The answer was yes.
“We just kept moving around the state from town to town, mainly out on the fringes of the state, and went down to East Arkansas, to Jonesboro, to Helena, to Lake Village, those areas,” Hussman said. “… We were running pretty consistently at 70 percent. … Some areas were below that if they were rural areas with very poor internet service.”
The Democrat-Gazette tried a new approach in the town of Newport, northeast of Little Rock, asking subscribers to rent an iPad for $9.95 a month in addition to the subscription fee. It got 43 percent acceptance, not enough to be profitable.
“So I said, OK, write these people a note, call them and tell them, ‘Forget about paying rent. Keep your iPads as long as you keep your subscription,’” he said. “So then we got down to El Dorado and Camden and Magnolia down in South Arkansas and we said, let’s try something new here. Let’s tell them the subscription now includes the Sunday print edition. So you get the iPad replica seven days a week but on Sunday you’ll also get the print edition. We got 80 percent down there in those three towns. So the acceptance was 10 percentage points better than it was without the Sunday print edition.”
Next they calculated whether that approach could turn a profit statewide.
“And the answer came back: Actually we can make a little more money even going into the costs of delivering the Sunday paper, because actually about half our ad revenues for the week were on Sunday. So from then on, the offer was to include the Sunday print edition. We may go back at some point and try to offer the Sunday print edition in those areas where we didn’t offer it initially. But the hope for us has been trying to move from town to town and get as many people converted as fast as we can.”
The results in Pulaski County have been especially closely watched.
“In southwest Little Rock … generally lower income, more Hispanic now … we got about 80 percent. But everywhere else in Pulaski County – we did it by zones around the county – we’re over 90 percent. In fact, in the Heights and Hillcrest area, we’re into 115 percent.”
That “115 percent” means that in those Little Rock neighborhoods, “virtually everyone who’s taking the paper has switched over to the iPad, and we’ve got some people who were Sunday-onlys, they decided they wanted to be seven days a week. Because if you’re Sunday-only, you don’t get an iPad, but if you’re seven days a week you do get the iPad. And I think some of it relates to Little Rock is the only place where we’ve really promoted this with advertising, with television and billboards.”
Northwest Arkansas Poses an Even Bigger Challenge
The last major area still to be tested is Northwest Arkansas, home of the University of Arkansas and the Walton family’s Walmart operations. The edition serving that area is called the Northwest Arkansas Democrat-Gazette, and it has its own set of subscription issues.
“In Little Rock our average subscription rate was about $29 per month for the Little Rock edition,” Hussman said. “A lot of people were at the full rate of $34. Out in the state we used to charge $36 because it just cost more money out there. In Northwest Arkansas, we had a big newspaper competition up there. It went on for years…. Our competition sometimes would sell a subscription for a year for $5.”
Eventually there was a merger that left the Democrat-Gazette as top dog, but it also left the rates “way, way too low.”
“We’ve been working on trying to get the rates up, and we finally got them up to about $19 a month. And this thing doesn’t work at $19 a month. It just doesn’t work economically. And there’s some people below $19 to get the average of $19. So how are we going to get these people to $34 so this thing will make economic sense? That’s why we put off Northwest Arkansas.”
So, we don’t know if it’s going to work in Northwest Arkansas. We didn’t know if it’s going to work in the rest of Arkansas when we started this.Walter Hussman, Publisher, Arkansas Democrat-Gazette
But there’s already a pilot program there.
“We tested the town of Harrison. We sent a letter out to the people of Harrison saying, ‘Look, this doesn’t make sense. We can’t make this work at $19 a month. People have got to pay $34 a month for us to have the journalism that we produce. We’ll work with you on this. If you’re willing to go to $34, we’ll give you an iPad. And furthermore, we will do that gradually. We’ll increase your rate $1 a month until you get to $34.’ So somebody paying half price of $17, it’s going to take almost a year and a half to get there. But we think that’s our best chance to try to get to the rates we need. So, we don’t know if it’s going to work in Northwest Arkansas. We didn’t know if it’s going to work in the rest of Arkansas when we started this. This is a lot of trial and error, trying to figure out what does work and what doesn’t work.”