'NY Times' Will Erect Online Pay Wall In 2011

by Erik Sass , January 20, 2010

NYT

After months of speculation that major newspaper publishers will begin charging for online content, The New York Times revealed Wednesday that it will introduce limited content fees on its Web site -- but not until early 2011.

The new system, when it debuts, will employ a "metered" model that allows users to view a certain number of articles per month for free, then begin charging them when they exceed that number.

The company did not provide details about the number of free articles or the content fees for the metered model, which is still in development. It did emphasize that the ratio of free articles to paid articles will be optimized to maintain online ad revenues and keep the site accessible to traffic from search engines. Print subscribers will continue to have free access to all online content.

In a statement, NYT Publisher Arthur Sulzberger, Jr. expressed confidence that the metered system will not alienate online readers, as some skeptics have warned: "Our audiences are very loyal, and we believe that our readers will pay for our award-winning digital content and services."

NYTCO President and CEO Janet Robinson explained that the additional online revenue stream will make us "less susceptible to the inevitable economic cycles."

Still, newspaper publishers like NYTCO face a number of hurdles in their push to boost online revenues by charging for content. First, readers have become accustomed to getting online news for free over the last decade, and some may balk at paying additional fees on top of various other paid subscriptions and service plans (so-called "fee fatigue").

Second is the problem of tracking. To prevent users from circumventing the free article limit, the Web site will have to require that they create an account with a credit card and sign in every time they visit, install cookies to track Web usage on their computers, or both.

Both measures are likely to deter some proportion of readers, and it's unclear how they will account for scenarios where multiple good-faith users log in from the same computer, or individual bad-faith users maintain multiple email accounts on the same or different computers with different credit cards.

Furthermore, a plausible fee-based system must find the right balance between price and traffic.

Currently, The New York Times Web site attracts about 20 million unique visitors per month who view an average three pages per day, for about 90 page views per month. And while the publishers haven't yet decided on a fee per article, it would presumably have to be significantly lower than the current $1.50 daily newsstand price.

It should probably be lower than, for example, the $0.69 fee charged by iTunes for a DRM-protected song, since most users download songs for repeated consumption, unlike daily news. Supposing a fee of $0.25 per article, if The New York Times Web site managed to monetize 1% of its total 21.6 billion page views per year, it would gain revenues of $54 million, and at the much more optimistic rate of 5%, $270 million. Put another way, if 5% of its monthly unique visitors paid double that fee ($0.50) for 10 articles per month, it would generate about $60 million per year in additional revenues.

While neither figure is negligible, they both look fairly small compared to the estimated $575 million of revenues the company is projected to have lost in 2009 alone, which compounded a revenue decline of about $250 million in 2008.

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2 comments about "'NY Times' Will Erect Online Pay Wall In 2011".

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Jonathan Mirow from BroadbandVideo, Inc., January 21, 2010 at 12:27 p.m.
"To prevent users from circumventing the free article limit, the Web site will have to require that they create an account with a credit card and sign in every time they visit, install cookies to track Web usage on their computers, or both." A show of hands from the other serial commentators out there - how many of you are clamoring to enter your credit card into on yet another site? Yo, NYT - sorry to tell you this, but you can delay this until the end of the world (or 2012, whichever comes first) and you will MIGHT get a small, loyal audience that will do this. The key word here is SMALL as in (I predict) less than 10% of your current site traffic. Here's how it will actually play out: when audiences hit the "you must sign up" page, 50% of your traffic will leave, when the remainder hit the "you must enter your credit card number, even to view free stuff, because at some point we're going to start charging you" another 30% will simply click away, leaving you with 20% of your core traffic. Now, 10% of those will want to talk to a customer service rep, or won't be able to find their card, or try to enter a Sears card number or some other nonsense and will eventually wander away before the process is completed -leaving you with MAYBE 10% (probably less) of your previous traffic. Your advertisers will s**t a hamster and jump ship faster than you can say "attrition" and suddenly you'll be left with a revenue hole the size of Wyoming. Upper management will spend months pointing fingers as the once-venerable NYT sinks deeper into the waves of impending digital doom. Finally, a scapegoat will emerge, media crucifixion will ensue and they'll open the thing back up again. Go ahead, print this out and post it on the office fridge - as half of the staff is packing up their offices after being laid off you can sign your name to the statement below: "Damn, He Was Right!"
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Jerry Foster from Energraphics, January 22, 2010 at 2:33 a.m.

NYTimes has been one of the most shamelessly anti-male periodicals in history and I encourage it to make these mistakes sooner rather than later...except, by putting off their own coup de grace, they provide the opportunity for those who agree with them to pour their money into the fire. Theoretically, they could survive as a liberal non-profit.