NYT.Com pay scheme can succeed, but…
After spending nearly 1½ years to retool its web publishing engine to accommodate what’s known as a metered pay scheme, the Times announced yesterday that it would begin charging for access to the online and mobile content it has given away for free since the paper abandoned its last digital pay initiative in 2007.
The prior pay plan, which was called Times Select and lasted for two years, charged $7.95 a month or $49.95 a year for access to such high-profile columnists as Thomas Friedman and Maureen Dowd.
The new plan, which debuted yesterday in Canada and goes into effect on March 28 in the United States, will allow visitors to read 20 articles for free before being required to pay for additional content on the web, on smart phones and on tablets.
After an initial 30-day introductory discount (pegged at 99 cents in Canada), readers will have to pay $15 a month to access content on the web plus a mobile phone or $20 a month to use the web plus a tablet. For those who can’t decide, the all-you-can-eat package is $35 a month. Home delivery subscribers will get digital access for free. Details are here.
A metered plan enables a publisher to have his cake (generating page views to create as much advertising inventory as necessary) and eat it, too (building a new revenue stream by charging for access to some or all of the site).
As reported here, it is possible for a paper like the Augusta Chronicle to give away so much content with a metered pay system that it can avoid sacrificing page views while tapping into what is likely to be a modest flow of ancillary subscription revenues.
Although the monthly 20-article limit at the Times will be more stringent than the implementation in Georgia, the new Times metering system will let the paper change the limit dynamically to produce as many page views as it needs to fill every advertising order.
An ad-revenue safety net can be put in place by any publisher who installs a decent pay wall system. So, that’s not the challenge to charging for content. The challenge is finding a sufficiently large number of willing buyers when less than 1% of the residents of a typical community are willing to pay for the news.
Unique among its fellow publishers, the Times is likely to be able to assemble a critical mass of paying customers because of the exceptional nature of its audience. Here’s why:
The world’s intelligentsia – including the elites of business, government, academia and the arts –read the Times because it contains information that is mission-critical to their activities. They are rewarded with rich and original international, national, political, cultural, science, fashion, lifestyle and economic coverage that is beyond the capability of any other publisher.
With sincere respect and affection for other publishers and their readers, no other American newspaper, save the Wall Street Journal, is in that position.
The Journal and the Financial Times, its counterpart in the United Kingdom, have proven that it is possible to get wealthy, powerful and busy people to pay for access to the digital media. Although some critics say the fees planned by NYT are high, they are trivial expenses – and just another cost of doing business – for the hard-core readers who rely on these publications.
While the WSJ does not disclose the performance of its online operations, the FT, which pioneered the metered model about two years ago, reported that it had 207,000 digital subscribers as of the end of 2010, representing fully a third of its readership base (the rest being print customers). The paper charges $25.99 a month for an all-platform digital subscription with some limitations and sells an unlimited digital package for $38.99.
Assuming equal distribution of both types of plans and that all subscribers pay for a full year, these disclosures suggest that digital revenues at the FT could be on the order of $65 million a year. Although the likely revenue opportunity at NYT is anyone’s guess (including the newspaper’s management), it seems comfortable to surmise that they can gross something in the low nine figures, given that the number of pre-meter unique visitors at NYTimes.Com is six times greater than the post-meter traffic at FT.Com.
While a revenue jolt like that is sure to grab the attention of any publisher, most newspapers in the rest of country lack the substantial body of compelling, exclusive content and the unparalleled concentration of wealthy readers that are enjoyed by the Times.
What the publishers do have, however, are any number of local broadcasters and other online competitors who will be only too happy to reprise, re-report or otherwise repurpose the stories for which the newspapers hope to charge.
Generally speaking, the bigger the market is, the more competition there will be. In Northern California, for example, no less than 244 local news and blog sites have been identified by my colleagues at the Graduate School of Journalism at the University of California at Berkeley.
This is not to say these sites are out to illegitimately poach anyone’s content. But once news enters the public domain, no one can own it.
This also is not to say that other newspaper publishers should dismiss the Times experiment as irrelevant. They just can’t assume that what happens in New York will play in Peoria, Poughkeepsie, Pomona or anywhere else.