MONTREAL - Montreal La Presse believes it has found the winning formula to offset declining revenues that are crippling North American newspapers.
After three years of development and $40 million of expenses, the French-language daily is launching a free-subscription digital edition of the paper Thursday. For now, it will be available exclusively on iPad.
La Presse+ offers readers of its print edition a more extensive and interactive reading experience that the paper's publisher says will attract readers and advertisers alike.
"I'm convinced, convinced, convinced that in a model like this there will be a growth in subscriptions and a growth in revenue for the coming years," Guy Crevier said in an interview with The Canadian Press.
Crevier said he believes it's the first such effort of its kind in the world and that it could be a model for others to follow.
The edition is sent to subscribers by 5:30 a.m., while up-to-date stories can be accessed through a link to the La Presse website.
La Presse is part of the Gesca chain, which is a subsdiary of Power Corp. (TSX:POW), a conglomerate with media interests that include a stake in The Canadian Press news agency.
Newspapers can't simply cut costs to survive and erecting pay walls only delays the decline, Crevier said.
Several publications have begun to charge readers to view articles, to varying degrees of success. The North American industry lost $25 billion of advertising revenues between 2006 and 2011, yet only $600 million has been added from pay walls, Crevier said.
La Presse expects a "massive" number of its subscribers, who pay on average $220 per year, will migrate to the free service, which can be accessed with an iPad or iPad mini that costs about $330.
It says lost subscription revenues will be more than offset by advertising.
The paper expects to have 400,000 viewers per week by year-end. A total of about 1.7 million people currently consult the print edition, La Presse's website and its mobile platform. Some 600,000 of that number have iPads, while 43 per cent of the rest expect to buy one within 12 months.
The company spends about $90 million annually on printing the paper. Crevier wouldn't say if the printed edition's days are numbered.
"How many readers (of the print edition) will be left at the end of the year, the end of next year and in three years? It's the consumers who will decide."
Crevier said the industry's challenge is to attract young adults between 25 and 35 by offering them a product that leverages technology. La Presse+ gives readers more articles, graphics, videos, exclusive content and links allowing for products to be ordered online.
Readers will also have access to interactive advertising that could allow them to change colours of a product, listen to music or make changes to suit their tastes.
La Presse said about 30 advertising agencies are currently able to provide content.
The newspaper says it has tested the new edition through focus groups and even used retina scanners that showed readers were engaged with the content and the advertising.
It has hired more than 220 employees, including 120 journalists to work on the project.
Drew McReynolds of RBC Capital Markets said a rich, interactive experience that doesn't just replicate print versions of newspapers could be a winning formula.
"To me it makes sense but is probably experimental at this point and I would say the jury's still out as to what extent it can all be monetized," he said when told of the new offering.
The analyst said relying more on advertising can be risky in the event of an economic slowdown.
"It's a more volatile revenue stream than a subscription base but doing nothing is risky at this point in terms of the revenue model so it will be interesting to watch."
Pierre-Elliott Levasseur, who has overseen La Presse+'s development, said the arrival of the Apple product made the digital newspaper possible.
"I don't know if it's saving the newspaper industry but it's definitely given newspapers and media companies an opportunity to grow going forward," the executive vice-president said.
La Presse+ will likely be eventually rolled out to Android tablets.
"We've made a bet on a new medium, a new way to tell stories," he said. "We've taken so much time over the last two and a half years to test so many dimensions of the storytelling...that it would be a surprise to us if this doesn't succeed."
