More walls, more money: New York Times announces change to pay paradigm in ’11

22 01 2010

How does a crew save a sinking ship? Do they stay the course, keeping the status quo and hoping that their decision will eventually be vindicated? Do they hope for some third party to swoop in and rescue their doomed vessel? Or do they thrash about and try to stay afloat by any means necessary?

There are few who would argue that the newspaper industry is enjoying prosperous, healthy times. The advent of the Internet, which bestowed upon the industry a gift that was immediately fumbled by all of the major players, has progressively, depending on your standpoint, leeched or fairly lured away.

The New York Times announced Wednesday that it would be charging users of its site for access after a pre-set number of articles had been viewed, joining with The Wall Street Journal and the Financial Times in the rallying cry for newspapers to monetize their digital content, as opposed to letting it all run free across the web.

The payment system, which will be instituted in January 2011, will mandate that users pay a flat rate after viewing an allotted number of articles. The home page will remain free, as will singular articles accessed through independent search engines, though if further articles are accessed they are counted toward the limit. Subscribers to the physical paper will retain unlimited privileges online.

The controversy over whether or not information should be free to access online notwithstanding, the Times’ decision is based on economics. In the first three quarters of 2008, the Times took in $2.2 billion. In the same span of time last year, revenues topped out at $1.64 billion. Online advertising revenues, which are driven by the number of visitors to the site, haven’t come close to meeting the levels the Times wants, and to make up for this deficiency they’re looking to encourage the most frequent consumers to fork over the dough for the rest of the readership.

David Carr, a media columnist for the Times, said the firm is looking to turn 10 percent of the 17 million readers of the site into paying consumers. With this targeting comes two of the biggest problems with erecting a pay wall: establishing a sustainable price and the persuasion of heavy users.

A Monday to Friday subscription with the Times costs $340.40, but it’s hard to imagine that by charging even slightly more than half of that for an unlimited online subscription that they could avoid a PR and traffic disaster. While no official price has been mentioned, chances are the cost will be similar to the $103.48 that the Wall Street Journal charges for a year of content.

But even if the price meets customer expectations, what is the incentive in joining a gated community when the rest of the neighborhood has houses of similar quality and equally fine schools? The Times is counting on its die-hard consumers to be perfectly fine with paying for information that’s readily free elsewhere, but as for the rest of the audience? There’s a strong chance that the small minority of users who will pay won’t be enough to make up for the number of readers lost.




Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: