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.