In a decision with major implications for online news, the New York Times announced today that it has decided to take the plunge on a move it has long been contemplating: charging customers for access to its site. According to a bulletin posted on their website:
Beginning March 28, visitors to NYTimes.com will be able to read 20 articles a month without paying, a limit that company executives said was intended to draw in subscription revenue from the most loyal readers while not driving away the casual visitors who make up the vast majority of the site’s traffic.
Once readers click on their 21st article, they will have the option of buying one of three digital news packages — $15 every four weeks for access to the Web site and a mobile phone app (or $195 for a full year), $20 for Web access and an iPad app ($260 a year) or $35 for an all-access plan ($455 a year).
The company also published a page laying out the various subscription options for readers. It's worth noting that existing subscriptions to the print version of the paper will have "free and unlimited access" to all of these options. Canadians users, incidentally, are already subject to the "usage caps," which kick in later this month for Americans and all other users. Canadians who use up their 20 free stories are being greeted with this:
As someone who is not a print subscriber but who frequently visits the NYT website, I'm of two minds about this decision. On one hand, I respect the right of the news industry to charge for their content and support themselves financially, especially at a time when newspapers are close to going extinct. And while its easy to come up with legitimate gripes about their track record, the New York Times overall is a great paper - one that actually IS "fair and balanced," to borrow the phrase. As a bulwark against the rise of Fox News and similar biased, trashy journalism, paying a monthly subscription fee to keep them in business and support their efforts seems almost noble.
On the other hand, I question the wisdom of the price points they have chosen. $15 might compare favorably to the couple dollars a day you'd pay to buy the print edition from newsstands, but it's significantly more than the $1.99 per week the company's closest competitor, the Wall Street Journal, charges for access to content behind its paywall. And at $35, the all-access plan is almost as much as one might pay for an entire set of cable news channels, including CNN, MSNBC, and others. Can the NYT website legitimately price itself that high for what is, after all, just a really good news site?
Now, it may be that the NYT simply needs an infusion of cash to survive, and if so the move makes a certain kind of sense. Crunching the numbers based on the paper's previous experiment with a paywall for columnist content, the digital content site PaidContent.org concludes:
We believe at least 500,000 people (or more than 10 percent of those heavy users) may be willing to pay up—and here’s how we get to that number. TimesSelect, the 2007 initiative that charged online-only readers $7.95 a month to access NYTimes’ columnists and some original content attracted 227,000 paid subscribers, or about 1.17 percent of the 13 million people who were reading NYTimes.com at the time.
If that same percentage agrees to pay for the new digital subscriptions, that would amount to about 527,000 subscribers in the U.S. alone. The minimum price of $15 for NYTimes.com plus smartphone access would generate about $100 million in additional annual revenue for the newspaper. A blend of subscriptions would push sales higher. And, the number of subscribers could be significantly greater, as well, considering that a higher percentage of people might be willing to pay for all of the Times’ digital content than for just a piece of it—even though the price is higher too.
At the same time, the Baltimore Sun's tech writer argues that that projection may be overly optimistic. Now obviously there are people at the NYT who have worked on this far longer than I have, but my initial reaction is that even that if this is true, the price points are too high to maximum revenues and the size of their readership. My instinct would have been to charge (at most) $9.99 for unlimited access to the site across ALL devices, and give away the iPhone and iPad apps FOR FREE as an incentive to purchase a subscription (after all, it's not like any of this imposes additional costs on the company).
Barring that, I'd like to know what additional content the NYT plans to offer with the (potential) $100 million in revenues. The web isn't print, and especially with the rapid pace of advancement in terms of web technology (i.e., the advent of streaming video and coming advances in user experience thanks to HTML5), there's no reason a news company's website needs to resemble a newspaper. It would be interesting to see the New York Times brand branch out into greater video news coverage, becoming a rival not just to the Wall Street Journal but to the likes of Fox News itself. What about, for instance, much longer opinion video segments, and an entire news channel's worth of content instead of the current collection of mostly shorter clips?
Love it or hate it, this is a bold move for the news industry and online content in general, and no doubt every newspaper in the world will be watching to see how it plays out. Can you get (enough) people to pay for something they are accused to getting for free? My suspicion is that yes, the NYT and other companies can make this model work, but only if users are offered better content than they get now.