“This could be the business model that saves community newspapers,” Hussman told News & Tech in a recent phone interview.
Hussman has or is converting his daily newspaper group from mainly print to mostly digital and is so pleased with the results that he recently bought another Arkansas daily newspaper.
In a widely watched effort, Hussman’s Arkansas Democrat-Gazette in Little Rock bought some $13 million worth of iPads and gave them to readers who agreed to pay $34 a month to subscribe to an electronically delivered replica e-edition six days a week. Since February, only the Sunday paper has been printed and delivered.
Hussman says the acceptance rate of the iPad for digital subscription has been about 85 percent in the 63 counties in which it circulates, with highest acceptance in Little Rock. (Hussman’s Northwest Arkansas Democrat-Gazette serves the state’s 12 other counties.)
He said the digital model returned the Democrat-Gazette to profitability in March and April — but COVID-19 issues have blunted profits since then.
“We lost a $100,000 advertising account because of COVID,” Hussman said.
Equally damaging financially, the Democrat-Gazette lost most of its lucrative legal foreclosure advertising because government regulations blocked foreclosures during the pandemic, Hussman said.
He believes those losses can be replaced once the pandemic ends. Had he still been print-centric, his pandemic-caused losses likely would have been higher.
He added that the Democrat-Gazette has had to spend more money than expected delivering the Sunday print product because carriers who deliver only one day a week need to be paid more than when they were paid for seven days of delivery.
Since February, Hussman has replicated the iPad giveaway model at his newspapers in Northwest Arkansas and in El Dorado. About 85 percent of the readers of the Northwest Arkansas Democrat-Gazette have agreed to pay $34 a month for a subscription paired with an iPad. In the less affluent El Dorado, about 65 percent of the readers have accepted the new arrangement.
He had worried about reader acceptance of the $34 per month rate in Northwest Arkansas because rates had been artificially low because of a newspaper war.
Because of the success of the Democrat-Gazette, Hussman said, he is beginning to implement the same program at his Texarkana Gazette and at his newspapers in Chattanooga, Tennessee, and Jefferson City, Missouri.
“In all those markets, our estimates show that we can have long-term profitability with the replica edition model,” Hussman said.
The alternative would have been to continually cut staff and other expenses, which Hussman says is “a vicious cycle of failure. The digital replica model can spiral up,” he said.
Hussman’s purchase of the Pine Bluff Commercial (Arkansas) from Gannett was announced Sept. 1.
He said the Commercial’s circulation had fallen in recent years from some 5,000 subscribers to 1,300.
“I was afraid they (Gannett) were going to shut down the newspaper, which would have been terrible for the community,” Hussman said.
Hussman plans major changes for the Pine Bluff paper.
The Commercial had been printing 217 miles away in Jackson, Mississippi.
“Their deadline was 1 p.m., and they delivered in the mail, so subscribers would get a newspaper that was more than 24 hours old,” Hussman said.
Hussman will continue printing the Commercial until mid-October, but the paper will be printed 45 miles away in Little Rock and will be delivered each morning by carriers.
In mid-October, the Commercial will be available in digital replica format only six days a week and will be delivered as a section of the Democrat-Gazette each Sunday. The digital product will be available at 5 a.m. each day, with much shorter deadlines.
Hussman said he inherited a staff of four in Pine Bluff, and he would like to increase the staff if subscriptions increase. Readers in Pine Bluff with receive a free iPad if they pay $34 a month for a combo of the Democrat-Gazette and the Commercial.
Hussman said the elimination or reduction of printing and distribution costs should return his properties to long-term profitability once the COVID-19 pandemic ends.
He said he doesn’t think the iPad giveaway in exchange for a subscription will work in his smallest markets, Fulton, Missouri, and Hot Springs, Arkansas.
“We’ve offered to lease iPads for $9.95 a month in Fulton but got only a few takers,” he said. “There’s something special about free.”