A Price Tag on Content

Executives at the New York Times Co. flinch at the term readers and journalists have given to the paper’s digital subscription plan, which launched globally on March 28. The new “paywall” limits readers to a maximum of 20 articles a month, although this number is not as finite as it appears to be in its boxed corner in the recommendations column of the paper’s website.

Inbound links to the website are not included in the monthly count. These include links from social media services such as Twitter and Facebook and links from external websites and blogs. Readers can add another five articles per day to their count by accessing the site through search engines like Google and Bing.

These exceptions easily allow casual readers to exceed their 20-article limit without having to shell out cash for a home delivery subscription or “digital subscription”—the paper’s preferred vocabulary for a definitive change in its business model.

While home delivery subscribers will have free access to all online content, those who choose to become digital subscribers will have one of three choices. The three-tiered plan allows readers to choose a package that fits their consumption habits. Multi-tasking digital pros might opt for the All Digital Access plan, which costs $35 a month and allows users to access content from any device.

According to Martin Nisenholtz, SVP of Digital Operations at the Times, the new plan is meant to convert heavy users into subscribers. In an interview with Peter Kafka of All Things Digital, Nisenholtz remarked that he did not expect a “vast majority” of readers to encounter the paywall. His comment explains the company’s reluctance to refer to the plan as a “paywall,” which sounds like a deliberate restriction of content from casual readers who might not want to pay the full price for only a few articles a month.

But such nuances in terminology are likely irrelevant to a substantial constituent of readers who balk at another advancement in the market driven movement to monetize online content. Once traditional assumptions about the marketplace have been derailed, attempts to reinstate a market economy are likely to meet resistance. The public need only look at the music industry, which has radically shrunk with the advent of free file-sharing services, to predict the trajectory for a publishing industry pressured by the same demands of this digital “freebie” culture.

Nisenholtz’s dissection of the paper’s new business model reflects a great deal of trust in the ethical compass of the paper’s readership, and news readers in general. Research bolstered the company’s faith in readers it described as willing to pay “because [they] know [they’re] supporting a valuable institution.” Calculating revenue from such expressions of civic-mindedness might be a misstep for a publisher that has already failed once in its attempt to monetize digital content.

TimeSelect was the publisher’s first digital subscription service that charged readers to access opinion columns and archived content. It lasted from September 2005 to September 2007, when the service was suspended to increase traffic, which would generate more ad revenue. Online advertising is the primary revenue stream for publishers that provide free content. A subscription service that diminishes website traffic can potentially dampen previously lucrative gains.

If the primary goal of the New York Times Co. is to generate revenue to make up for losses in its print business, it must weigh the benefits of the additional revenue against the cost of potentially slowing traffic and operational costs of managing the subscription service.

But if the publisher’s ultimate goal is to make a sound business of its digital operations in a period of declining ad revenue, the outcome is much less certain. The plan, it its current form, does not possess the strength of a resounding success or the cracks of an unequivocal failure. Its strengths and weaknesses have other publishers on the edge of their seats as the action unfolds for this publishing giant.

Its greatest obstacle will be to compel consumers to participate in a market that has offered its goods for free for so many years. The publisher must not rely on the good faith of individuals willing to pay for valuable content, but must create the market conditions that will make this entity a business once again.

Comments
One Response to “A Price Tag on Content”
  1. Aaron Goone says:

    I find this article very interesting, especially since the paywall has been “erected” I’m pretty sure it has done much better at generating revenue than the New York Times ever publicly expected, which is rare for a hard hit company pushing a new product in a rather saturated digital market. It seems to me that the Times is benefiting from a “prestige” premium that it is reaping from its position as the news industry leader, which essentially means that people are willing to pay for what they view as superior quality. While many in the industry and even more consumers will debate whether that extra quality is real or imagined, what is indisputable is the massive goodwill the Times wields just through its brand “The New York Times” itself, and it seems that it is now paying off for the firm in probably its most trying financial times yet.

    On another note, its interesting how the Times basically adopted the paywall model from its Newscorp rival, The Wall Street Journal. It would be pretty ironic if the idea that saved the Times from certain financial destruction came from its biggest rival. However, the Wall Street Journal is a much more niche publication, aimed at finance industry professionals who are assumed to be more likely to pay for content than a broader reader base, so time will tell how the paywall truly works out.

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