As Gannett announces a paywall foronline content, MLive moves in

In Mickey Hirten’s second-floor office overlooking the downtown CATA bus station, the Lansing State Journal editor explains how his career has spanned seven centuries.

As a young reporter in college, he remembers the typing, gluing, lead slugs, lead pages and other Linotype components for putting a newspaper together. Now he’s overseeing the LSJ’s transition to a more digital-savvy, online-connected newsroom where access to that information is about to undergo a major transition.

“When I started, it was not radically different than when printing evolved in the Gutenberg era,” Hirten said Friday. “I’m overseeing the transition to a highly digitized world, and I’m going to help shepherd that transition from a 14th century technology to 21st century technology in the span of my modest career. This is an important thing for the community.”

On May 1, the LSJ will unroll a new business model that charges readers after a limited number of free stories on the paper’s website. It’s called a paywall and is used by publications like The New York Times and the Wall Street Journal. The Journal’s owner, Gannett Co., announced in February that it would migrate to paywalls for all of its 82 news publications, excluding USA Today.

“Establishing value for the content is really, really important, and people should pay for it,” Hirten said. “We have to understand where we have particular strengths. The appetite for news and information is growing every year.” He cites the music recording industry as a comparison: “It’s about adapting to the disruption of digital models.”

It’s uncertain what new subscription rates will cost. It’s also uncertain how many free articles readers will get before running into the paywall, though media reports say it will be between five and 15, depending on the market. 

It’s a bold move that some say could spell disaster for Lansing’s oldest newspaper. Others say it’s at least worth a shot, including Hirten, because the current model is “unsustainable.” And the paywall comes as another print newspaper staple — Booth Newspapers — is restructuring and positioning itself as the Journal’s biggest competitor in Lansing (albeit without a print publication) in MLive Media Group.

About 10 blocks northwest of the Journal is 217 N. Sycamore St. This old house — which property records say was built in 1872 — was a bustling place as the former headquarters of Booth Newspapers’ Lansing bureau. Today it’s the headquarters of MLive’s Lansing bureau, which launched in August. The broader MLive Media Group plan was announced in February.

The Lansing bureau includes about a half-dozen reporters covering Lansing and statewide issues. Stories are published online on an ongoing basis and also feed the print editions of Booth mainstays like the Grand Rapids Press, Kalamazoo Gazette and Jackson Citizen Patriot.

MLive officials declined City Pulse requests to comment for this story.

While giving a keynote address at a Society of Professional Journalists’ conference in East Lansing last month, MLive’s vice president for content, John Hiner, laid out the company’s mantra.

“If you’re working in journalism … you are an innovator. You don’t have a choice,” Hiner said. If you don’t accept the new territory and adapt, you’re “writing the prescription for the end of your business.”

For MLive, that means building “hubs” across the state, including in Detroit and Lansing; encouraging reporters to engage with readers; publishing stories in realtime and adding to them as they unfold; and writing for a “mobile” audience. “The most important content — locally relevant journalism — that doesn’t change. Pushing unique content out into the market: That hasn’t changed. The basic tenants of journalism are not changed. What has changed is the ability to know instantly what your audience is interested in.”

Hiner added that MLive’s strategy is about “pushing all your resources into your content. Which means investing in journalists.” He was brought to tears in East Lansing when describing MLive employees’ “amazing” response to the change: “I’m really proud of my people.”

Trim first then innovate

Hiner and Hirten’s descriptions of their respective employers’ business moves indicate there is no clear sense of how to figure out the daily print journalism model. The Journal’s owner,  Gannett  Co., is the nation’s largest newspaper chain. Booth is part of Advanced Publications Inc., with newspapers in more than 25 cities, magazines such as The New Yorker and Vanity Fair as well the newspaper insert Parade carried by the State Journal. Both organizations have seen their share of struggles in the past few years and both are playing offense to right the ship. They have different game plans. 

The two companies shared the need to downsize operations before going forward.

Booth Newspapers and MLive.com issued about 550 layoff notices in November as part of the restructuring process, but more than 200 new jobs were posted with MLive Media Group to bring some of those or new employees back, Dan Gaydou, president of MLive Media Group, told the Kalamazoo Gazette at the time.

“For me, this was a matter of getting people matched up to the needs of the new company,” Gaydou told WMUK-FM in January, a Kalamazoo-based radio station.

Also, Booth Newspapers ceased printing the Ann Arbor News in 2009, moving it to the online-only AnnArbor.com, and all seven of its print publications are now on three- or four-day home delivery schedules to cut costs.

As for the Journal, at least 15 employees were laid off as recently as June. At the time, Gannett cut its U.S. publishing division by 700 employees, or about 2 percent. Between August 2008 and July 2009, the LSJ cut 46 positions.

At the same time, circulation numbers continue to decline. The latest figures from the Audit Bureau of Circulations show that as of Sept. 30, 42,610 copies of the Lansing State Journal are circulated during the week and 66,583 on Sundays. In 2008, the daily circulation was about 59,000 and Sunday’s was about 77,000, representing a 28 percent decline for its daily circulation and 14 percent on Sundays. Comparatively, the Kalamazoo Gazette saw a 22 percent decline in Sunday circulation and a 28 percent decline in its daily circulation between 2007 and now.

Despite layoffs over the past several years, both organizations are hiring. The LSJ hired Steven R. Reed in January as its investigative reporter. Hirten says another “four, five, six” hires are planned, which will include reporters and digital producers. The LSJ newsroom has a new computer system and is “completely renovated” and Hirten said 21 iPhones were purchased for the staff. Hirten also said the LSJ will focus on “four key areas” of reporting: Michigan State University sports; “Lansing and transforming Lansing”; “Michigander-type issues”; and state government.

“It’s increasingly difficult to think about traditional roles,” Hirten said. “This will reflect what readers and the audience want.”

The New York Times reported in February that Gannett hopes to bring in $100 million through the nationwide paywall effort. Where the competition in Lansing will play out is the web. Hirten said the LSJ sees “800,000-plus” unique visitors a month. He added in a live web-chat Monday with LSJ readers that the paper’s audience for local news tops 7 million page views. Hiner, during his speech in East Lansing last month, said MLive had 6.1 million unique visits to its sites statewide in December. By February, it climbed to 6.9 million unique visits, he said.

So how will this competition play out in Lansing? The LSJ claims to have built-in support with its print product, but online readers will soon have to pay. MLive aims to be more mobile — and free — but has fewer reporters covering the city of Lansing. As the battleground migrates from paper to the Internet, the lingering question is: Can MLive go head-to-head with the LSJ in Lansing? Hirten doesn’t think so. And Gaydou, in a radio interview in January, said paywalls are a bad idea.

“We give readers the complete package — we’ve got a newspaper here,” Hirten said in his office Friday, holding up a copy of the LSJ. “We provide expertise and we have a larger staff.”

In other markets, though, MLive/Booth newspapers are reaping the benefits of content coming from its “hubs” throughout the state. On Saturday, page one of the Kalamazoo Gazette featured four stories, all with MLive staff bylines (including one by former Journal business reporter Melissa Anders). On that same day, the Journal had two feature stories — one by LSJ staffer Scott Davis on strikes at the Red Cross and a Detroit Free Press story on proposed funding cuts for MSU and the University of Michigan. MLive also runs content from Bridge Magazine, a product of the Center for Michigan that’s creating respected long-form, investigative journalism.

While some have speculated whether the Journal’s move signifies the end of a daily print paper and a migration to online-only (as was the case for Booth in Ann Arbor), Hirten said he’s “not aware of” that happening. “Some companies want to be able to do both. We are. We’re in this for the long run. Not to say we won’t change, but now is now.”

Gaydou, in a January radio interview, said: “We’re not in favor of paywalls. We don’t think they work. In our new economy, we monetize traffic” online. “We need traffic coming through our website. If you put up a paywall, it will stop that traffic. People are not going to pay online for news very easily. In general, information is free on the Internet.”

Will they work? Ex-journos weigh in

Clearly, the traditional notion of daily print newspapers is history. The LSJ and MLive can agree on that much. The question is whether their new models will work. Former LSJ and MLive employees, as well as professors and former journalists, have mixed opinions on how Lansing’s daily news environment will play out. Each organization has strengths and weaknesses, they say.

Indeed, some suggest that creating paywalls only fuels the market for competition and opens opportunities for publications (online or otherwise) that are free for consumers. In other words, more publications may try to provide for free what the Journal plans to charge for. Others say Gannett missed the boat by about 10 years by going to a paywall now, in that free news is so ingrained in our culture, we’ll seek it elsewhere if one publication doesn’t provide it. Yet still others believe the new environment of increased competition among publications benefits the readers most.

“Somehow, somebody is going to figure out how to run a midsize daily newspaper at a very handsome profit and still be answerable to the public it services,” said Mark Nixon, a former LSJ reporter  and editorial page editor who recently retired as communications director of the Lansing Board of Water & Light. “But I don’t think they’ve figured out the model.” Speaking on the upcoming paywall, Nixon said: “They said we’re going to put it online and it’s going to be free. Now it’s not going to be free anymore. I just don’t know if you can rewrite that script. I hope for the sake of the community and public knowledge they can succeed. I have a lot of great respect for the Journal, but I am really nervous.”

Nixon and another former LSJ employee, who asked not to be identified, said there’s no doubt the Journal is a shadow of its former self. Both also agree that these are the results of directives from McLean, Va., where Gannett is based.

“The problem they’ve got right now is that you just gave the CEO of Gannett a retirement package and bonuses beyond that that could have paid for all those laid-off workers,” the former employee said. Indeed, former Gannett CEO Craig Dubow took home a $1.75 million cash bonus in 2010, the year after his total earnings doubled to $9.4 million. Hirten called that a “straw man” issue. “I deal with things I can control. My world is greater Lansing. Corporate salaries are a different world altogether.”

Those corporate decisions result in “the Mickey Hirtens of the world” having to make decisions about where to cut from the staff, the former employee said. And it’s showing. “There are things, granted, the State Journal could do better. The fact that the State Journal doesn’t own the state Capitol is ridiculous. They should dominate it.

“I still think the State Journal is a viable thing. I think the State Journal exists in a market place where it is the dominant media provider if it wants to be.”

The former employee credits MLive “for giving it a try” in Lansing, hiring talented reporters and partnering with Bridge Magazine. “The thing is, the State Journal has such a structural advantage. Even if Gannett sits there and penny pinches them, you have to work harder if you’re MLive. A tie is a loss for them. You have to win. It’s just the way it is for online.”

Rob South worked for MLive for five weeks after spending most of his career at WKAR before being laid off due to budget cuts in August. “All I can say is it was a bad fit,” he said of his five-week stint at MLive, citing a severance agreement he signed.

“I think MLive has an uphill climb to really be on top of the local market,” South said. “MLive’s challenge is going to be having more people with more time to actually do the work. They’re understaffed — I don’t mean that as a criticism, I mean that as reality,” he said, referring to covering the city of Lansing. However, while this may be true for covering the city of Lansing, MLive “does a good job covering the state,” he said.

But Bonnie Bucqueroux, publisher of Lansing Online News and a journalism faculty member at MSU, sees it differently: “I think Gannett is committing corporate suicide. … I think the Journal is going to have real trouble with this: There are too many free alternatives out there. They may think they have a lock on it now, but it’s kind of a sad commentary when they’re suggesting that what they’re going to rely on is eyeballs for sports.”

While some might say it’s a worth a shot, Bucqueroux said it’s too late: “When they had the money to innovate, they didn’t. If this is such a great model, why doesn’t MLive use it?”

As for MLive, Bucqueroux believes they’re “really coming along strong, quickly. They seem to have an energy, excitement about them.” However, “We’ve seen publications come and go,” citing the Michigan Messenger. “It’s very difficult. There’s gonna be a huge big shakeout here. We’ll see who survives in this sort of head-to-head matchup. I don’t think (MLive’s) website is easily navigable and the new design is kind of awful. There’s no perfect publication out there.”

Ari Adler, spokesman for House Speaker Jase Bolger, R-Marshall, also spent a great deal of his career working for small and mid-size dailies throughout the state. Adler is an adjunct journalism professor at MSU. He’s also skeptical about the Journal’s paywall and is impressed with MLive’s efforts.

“MLive certainly laid down the gauntlet as far as coverage of the Capitol and what is happening in state government,” Adler said. “The Lansing State Journal for a number of years now has reduced coverage at the Capitol.”

Adler says it’s the quality of journalism that’s produced by any outlet, not the delivery method. “Whoever is doing a better job of producing that news is going to be ahead.

“My hope would be they both survive. I’m a firm believer in competition,” Adler said. “If you don’t have competition, you end up becoming a bit complacent in what you’re doing. I think we saw that happening with the Lansing State Journal.”

Back in Hirten’s office on Friday, he’s excited about his paper’s venture. He’s a believer that people will pay for the Journal’s online content because it has the resources — the largest staff in the area — and the largest audience. People turn to the Journal for, say, MSU and high school sports, he said. And there’s the slight sense that, like all journalism models being tested, it’s part of a greater experiment: “And if it doesn’t work, we’ll have to try something else. The current model is not sustainable in the long run.”