After over a year of preparation, The New York Times will finally launch a digital subscription plan for its Web site March 28. It will ask heavy users -- those who read more than 20 articles online per month -- to pay for online content.
If it succeeds at the nation's leading newspaper, this hybrid or "freemium" could soon be adopted by other newspaper publishers struggling to shore up their business amid continuing print ad revenue declines. But it's not clear just how much revenue the NYT (let alone smaller publications) actually stand to gain from the new online pay walls.
Under its new digital subscription plan, visitors will be able to view up to 20 articles per month for free on The New York Times Web site. After reaching this limit, they will be required to choose one of three monthly subscription plans for further access: the basic $15 monthly plan will get them access to the Web site and the NYT smartphone app; a $20 monthly plan combines Web access and the NYT iPad app; and a $35 monthly plan gives them access across all these platforms.
Readers who already subscribe to the print edition will continue to get free, unlimited access to NYT content online and via smartphone and iPad apps. The NYT is betting that the new plan will allow it to monetize heavy users without driving away too much of its online audience. That's a somewhat risky proposition, as readers have become accustomed to free online access to newspaper content over the last decade.
In unveiling the new digital sub plan, NYT's publisher Arthur Ochs Sulzberger, Jr. tried to set these concerns to rest, while linking the subscription plan to the newspaper's basic purpose of news-gathering: "It will allow us to develop new sources of revenue to support the continuation of our journalistic mission and digital innovation, while maintaining our large and growing audience to support our robust advertising business."
To keep the door open for new readers, Sulzberger added: "Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit. For some search engines, users will have a daily limit of free links to Times articles."
It's anyone's guess just how many of the NYT's online readers will decide to pay a minimum $15 per month for access to articles on the Web site. The newspaper currently attracts a monthly audience of about 30 million readers, according to comScore, of whom about 15% or 4.5 million qualify as "heavy users," according to Sulzberger.
Supposing that 15% of these convert to the minimum subscription plan; that works out to 675,000 subscriptions for revenues of about $10 million per month, or $120 million per year.
This figure is close to a forecast from former Wall Street Journal publisher Gordon Crovitz, who predicted in December of last year that the new NYT's pay wall could take in about $100 million per year. What's more, this would have a higher profit margin than comparable print revenues, which carry greater costs associated with production and distribution.
Still, the NYT has a long way to go before it makes up revenues lost over the last few years. Total revenues in 2010 came to $2.39 billion, down 27.4% from $3.29 billion in 2006.