Capital New York, one year into paywall: ‘We’re breaking through.’

“We’re breaking through and selling a lot of subscriptions to major operations,” said Andrew Sollinger, who runs Capital’s business side.

It’s hard to substantiate those claims, as 4-year-old Capital is privately owned by Politico parent Allbritton Communications and wouldn’t release numbers of users or pricing. But at a time when other publishers are going for maximum scale to support an advertising-based model, Capital is worth watching as it’s doing just the opposite: going after a narrowly defined audience with high-priced subscriptions. (It is also seeking revenue from events and digital ads.) And while there’s no shortage of news out there already, Capital believes its aggregation, timely news coverage and mode of distribution (email newsletter) set it apart.

“A lot of what we do is the antidote to people’s FOMO issue,” Sollinger said. “We solve the problem of the stream by giving you one more thing to read.”

Capital’s first email, a collection of news from around the Web and its own site, lands in subscribers’ in-boxes at 5:45 a.m. each day, hours ahead of other news outlets. That’s followed throughout the day by potentially dozens more containing breaking-news bulletins (called Whiteboards) and complete Capital articles, so users don’t have to click through to the site. A user could get as many as 100 such emails a day, depending on how they’ve customized their subscription. Capital points to a 50 percent open rate of its paid newsletters as evidence of their value.

“I had questions going in, but I don’t know how many email newsletters people are working on at 4:30 to put finishing touches on,” said Tom McGeveran, Capital’s co-founder and editor.

Capital had the benefit of learning from Politico, the influential D.C. startup that charges $5,000 a year for access to its political news and information. There was no guarantee that the Politico model would work on a smaller scale, though. Media would be the hardest sell; the target market isn’t as easily identifiable as it is for politics; there are a lot of other outlets covering media; and the news is less actionable. Capital started out charging $6,000 for access to all three verticals for five users, but quickly followed with a media-only channel for a lower $4,000 and has offered to cut the price to as low as $2,500.

Over time, Capital realized flexibility had to be a key part of the approach, since there was so much overlap in the users of the three verticals, for media, City Hall and Albany. Labor news is just as relevant to New York media executives as it is to political junkies, and everyone seems to be obsessed with media. Now, subscriptions, which are sold as a license to companies, can be tailored by number of users and verticals they can access. Email newsletters, the core of the offering, can be tailored to the user’s areas of interest.

“What we discovered was, there was plenty of interest across the board,” Sollinger said. “There are people who aren’t just interested in media.”

Gathering feedback is another key part of the approach. News organizations that go after scale can look at their traffic stats to see what their audience is reading, but Capital’s model depends on a high level of service. Sollinger and his team regularly email and call users to walk them through the service and get their feedback on coverage, which gets funneled straight to the editorial side. Capital’s increased coverage of technology and education were the direct result of such feedback, for example.

Like Politico and other paywalled media outlets, Capital has a two-pronged content strategy. The content behind the paywall — about 70 percent of its output — is granular news about things like company personnel moves and legislative movements that industry operatives and gossip junkies crave, while Capital puts out more commoditized or broader-interest content for free on its site to grow awareness and ultimately drive people to subscribe. “The free stuff is critical to sampling the value of the content we have out there,” Sollinger said.

In Albany, Blair Horner, legislative director of the New York Public Interest Research Group, said the price tag, which he recalled at around $6,000, was too steep for his organization, but that he knows others are subscribing. The site has covered stories on Sheldon Silver and health care that he hasn’t seen elsewhere. “I know that people are subscribing,” he said. “They’ve had a real impact in Albany. They’re offering content no one else has and delivers.”

Capital, as expected, has been a tougher sell on the media side. To be sure, many media executives praised the newsletters and industry coverage as comprehensive. “It has a very inside sensibility, and they’re very often the first in-depth coverage of many trade stories,” said New York magazine publisher Larry Burstein, who has been subscribing for a few weeks.

But others balked at the cost, even after Capital came down in price. “It’s well-executed, but it didn’t seem worth the price,” one publishing exec said. “I just felt like I could get the information elsewhere. If they took the price down to $200, I would probably pay for it.”

To be sure, Capital doesn’t need a ton of subscribers to break even — at the high price point it’s set, it just needs a certain number of paying customers. It’s an enviable model if it works, but by its nature is one that would work across a mass audience.

Capital’s leaders say that as they start to ask users to renew, they’re optimistic because once people get over the initial doubt that they need yet another newsletter, they get attached to it. “We see a tremendous opportunity, because our content is habit-forming,” Sollinger said.