• by Steve Smith , Staff Writer, March 9, 2012

R.R. Donnelley’s Press+ platform for generating direct-from-consumer revenues for content providers is picking a bit of a data fight with the Pew Center Project for Excellence in Journalism over the revenue health of newspapers. Pew famously found earlier this week that the digital transition was costing the news industry dearly. For every $7 the shrinking medium was losing from diminished print ad sales, it was picking up only $1 in new online ad sales.

In the Pew research of 38 newspapers from eight companies, mileage varied, of course. There were some papers that had more highly evolved digital sales teams and diverse models and others still lagging. Publishers were exploring not only advanced ad technologies but new models like localized daily deals in order to create a more varied menu of digital revenue sources.

But what about online subscriptions? Press+ counters -- not surprisingly. That company came onto the scene several years ago trying to revive the paid content model when skepticism about fee-based content was at its height. Led by Steve Brill and Gordon Crovitz, Press+ argued that a metered approach, ultimately adopted by no less a paper than The New York Times, was far preferable to a pay wall.

Press+ uses reader behaviors -- frequency in accessing a publisher’s content -- to locate precisely the small percentage of brand loyalists most likely to pay. Instead of a deadly pay wall cutting all visitors off from “premium” content, the metered approach is designed to maintain much of the scale of a free site while still generating direct revenues from heavy users. After a certain number of articles are read each month, the reader is cut off from further access and offered a subscription for unlimited access.

Arguably, the metered approach works in part because it alerts consumers to their own behaviors regarding reliance on media sources. Wow, have I really read 20 NYTimes.com stories already this month? Hmmm, is the local newspaper site so valuable to me that I hit it for news this often?

In its statement this morning responding to the Pew research, Press+ presses its own case, as one would expect. But it also claims that its work with hundreds of publishers to enforce metered models reveals that people’s expectations of free content may be shifting. The company says it now has 285 sites using its metered system and can report on how readers are responding to metering.

Press+ says it is finding that publishers can incrementally lower their metered threshold without significantly affecting reach and inventory scale. The average number of free story views across Press+ partners is 14, less than the 20 the Times allows. Typically about 10% of users are hitting that wall, and so publishers are able to lower the threshold and net more subscribers. Confirming my suggestion above that metering helps signal to a user her own reliance on a publication, Press+ says that readers often will opt to subscribe before the system actually cuts them off from more access and forces them to buy-in or abandon. Some papers are seeing more people elect to subscribe off of Subscribe Now house ads on the site than wait until they hit the article limit.

Of course, it's still unclear whether the metered approach is realizing the kinds of revenues news publishers need to sustain journalism as we have known it. The average monthly charge among Press+ affiliates is $6.50 a month, which is not chump change. But the typical print+digital bundle is adding only $2 a month from digital. The raw number of people actually opting into payment models is less clear, however.  According to Press+ there is room for growth since there doesn’t seem to be extreme price sensitivity here. Once a user self-identifies, to the publisher and herself, as a core constituent, the publisher may be able to extract more revenue. Almost all (90%) of its partners are charging a premium for digital access to print subscribers -- and papers that add 10% to the print price for full digital access are seeing 90% adoption rates.

What the metered model does do is use consumer behavior to show to the consumer herself how much she uses and values that content we like to think has become “commoditized.” Whether this works on a large enough scale for online paid models to make a serious difference in saving newspaper business models from extinction is still an open question.