The New York Times is going to use a paywall approach which charges people who exceed a certain number of articles a fee. The number hasn't been fixed yet, but many think that it will be in the range of 15-20 per month. Essentially, the fee will target regular readers, not casual browsers. The fee will most likely be $7.95 a month. This brings up a few questions, posed on this blog: http://e-marketingforsensiblefolk.blogspot.com/2010/05/will-only-rich-get-high-quality-news.html
1) Will moving to a subscription or pay-per-read method generate enough revenue to make up for the millions of readers who may just find other "free" news elsewhere?
Felix Salmon, from Reuters, explains the complicated profit maximization factors the NYT will have to look at. http://blogs.reuters.com/felix-salmon/2010/01/20/the-economics-of-the-nyt-paywall/ However, regarding how the revenue model will work, he concludes "I have no idea." Reading his blog, I realized that this model will simply stress a lot of people out. "Am I reading too much?" "Should I just subscribe this month and read everything I can?" From a psychological perspective, it makes me think that they should charge a subscription for any access, as long as it's affordable.
From empirical evidence, we know that Times Select was a disaster, attracting 227,000 subscribers, from a monthly unique user base then measured at 13 million. Prominent writers such as Thomas Friedman lost many readers, particularly in Asia, where the $7.95 a month is a more substantial amount.
The WSJ's model seems to be working, but perhaps for reasons other than profits through subscriptions. Charging customers allows the WSJ to charge considerably higher rates for ads than free sites did. Advertisers are willing to pay more for an affluent audience. However, the NYT is not a business newspaper and I'm not sure if they want to have the same kind of attitude towards its readers. I think that the NYT should be read by everyone, and not target an elitist group.
I need to take a closer look at the revenues of the NYT, but it seems that they should be focusing more on their advertisement model, which it can only do by generating increased traffic, which paying for articles will not do. Currently the Huffington Post has more traffic than the NYT, a sign that the NYT should focus on generating more traffic through content. "The Times could have fought to become the preeminent news brand on earth, fighting it out with the BBC for that title. Instead, I fear, it will duck into its shell as the Washington Post has," said the columnist Jeff Jarvis.
The other promising model I see is with the iPad. It is rumored that Sulzberger, the NYT Chairman will strike a content partnership for the new device. If people are willing to pay $400 for the iPad, I don't see why they wouldn't pay a monthly fee to be able to use it with some of the best content available.
2)Will that supposedly "great equalizer of information access" -- the Internet -- now move into a new phase where only the more wealthy are able to access quality news?
I'd say "wealthy" is a bit of a stretch. Paying $7.95 a month is not much. People may much more for cable t.v. and their phone subscriptions. It's more a matter of culture. If people value quality news, they invest in it. If they value TV and cars, they invest in that and get their news from less in-depth sources. Newspapers have to spend a lot of money to deliver quality news. Already stretched budgets mean that papers can no longer follow every lead or cover stories in depth. I am hoping that reading will become fashionable through the iPad and other e-readers to bring back a culture that cares about getting valuable information.
3)Will NYT drop back to free access? How long will it take them? And what will be the lasting impact this move on readership and advertising revenue?
Two things could happen- most newspapers could start charging memberships, making that the norm, or the ubiquity of the news could force newspapers to rely on advertising rather than subscription charges. Perhaps there will be a mix of both, but I right now I really can't say.
Mark Potts says in his blog "Let's look at the numbers", and he keeps this very simple: Imagine that a good-sized metro daily can charge $20 a year for access to its Web site, and that it attracts 500,000 people to pay that much to read whatever the paper puts online (and this assumes that the content is so unique that those readers won't decide to take their business elsewhere when confronted with a pay wall). How much revenue is that? It's $10 million a year.
ReplyDeleteThat sounds like a lot of money–heck, it could pay the salaries for a good-sized newsroom. But it comes at a significant cost.
Any paper big enough to attract 500,000 online subscribers is probably already making at least two or three times that $10 million annually in advertising revenue–$20 or $30 million or more a year. (Its print revenue is probably 8-10 times that.) But that online advertising revenue is based on traffic to the site. A subscription wall is going to drastically reduce traffic, and hence ad revenue. Some estimates put the traffic hit from a subscription model as high as 90 percent. Even if you only lost half the existing online ad revenue for that hypothetical newspaper site, that $10 million in subscription revenue won't make up for the loss. Oops. That's a problem.
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ReplyDeleteI agree that we live in a culture that is indifferent to valuable information. Entertainment news is much more appealing to the masses and it's because of this fact that I believe most people would be unwilling to pay a fee to read news, even if that fee is only $7.95/month. As you stated, consumers are already paying subscription fees for cable TV and even satellite radio, so why would they want to pay for yet another source of media?
ReplyDeleteInstead, I think that if this did become the norm, consumers would shift from reading online news to watching it on TV or listening on the radio. Alternatively, new-comers into the content game would find new ways of generating revenue from free-content driven sites.
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