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New York Times Looks to Charge Online Readers, Again

January 20, 2010 at 12:00 AM EST
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The New York Times has decided to charge online readers a fee for accessing the newspaper's Web site, starting in 2011. Jeffrey Brown considers whether readers will actually pay for the service.
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JEFFREY BROWN: Now: Will consumers pay for news online?

With the Internet exploding with free content, the entire media world is struggling to find ways to support itself financially in the future. Nowhere is that issue more urgent than for newspapers, which have seen huge drops in circulation and advertising revenues.

Today, The New York Times, with by far the most popular newspaper Web site, announced that, beginning in 2011, it will charge frequent readers for access to the site. The paper would use a metered system, allowing visitors to read a given number of articles each month for free, and then requiring a fee for unrestricted access. Subscribers to the paper’s print edition would continue to have full access to the Web site.

An earlier attempt by The Times to get readers to pay for some online content was called off in 2007. And the new move is, by all accounts, a risky one that will be much watched throughout the media world.

We take our own look now with Bill Mitchell of the Poynter Institute, a school for journalists in Florida, where he focuses on new economic models for news, and Bill Grueskin, dean of academic affairs at the Columbia University Graduate School of Journalism and former managing editor of The Wall Street Journal Online, the largest subscription news sites on the Web.

Bill Mitchell, first, before we get to whether it’s a good idea, fill in the picture here a bit on the mechanics of how this would work. What’s the key piece to this?

BILL MITCHELL, The Poynter Institute: The key piece, Jeff, is that, as you pointed out, it’s really a metered system. Readers will still be able to, if they come to The Times’ site from Google or elsewhere, be able to read a certain number of articles for month. The Times has not indicated what that number will be yet. But, at some point, a wall will go up, and the reader will be informed, to read additional articles, you’re going to have to pay a fee.

JEFFREY BROWN: And, Bill Grueskin, to fill in the context a bit more here, how — how big a problem is this for The Times and other papers to solve? How — how — what’s the role now of the Internet for newspapers in terms of their finances?

BILL GRUESKIN, former managing editor, The Wall Street Journal: Well, this is really the problem facing media right now. They have seen their online readership and online audiences growing dramatically, but they haven’t seen the kind of revenue from online growing at the same rate.

A few years ago, during the heyday of online advertising, media executives would say, well, online ads are going to grow, in terms of revenue, 25 percent or 30 percent a year just on ad infinitum, but that didn’t happen.

Due to the economic collapse and a lot of other problems facing the media industry, online advertising is in deep trouble right now. It’s not providing anywhere near the kind of support for big news organizations like The New York Times.

JEFFREY BROWN: All right.

BILL GRUESKIN: If you’re a newspaper, there’s not that many other ways that you can raise money, other than advertising or circulation.

JEFFREY BROWN: So, Bill Mitchell, there was reportedly, very clearly, a lively debate within The Times, as there has been at other places, about whether to do something like this. What’s the argument for it? What’s the hope that they can get out of this?

BILL MITCHELL: I don’t think you will find anyone at The Times who would argue that they have got this really figured out yet. But I think it’s an experiment that has to be taken.

And I think the idea of seeing what people will pay for, if sufficient value can be added to the content online, is really something that’s got to be tried.

JEFFREY BROWN: What does that mean? I’m sorry, but what does that mean, sufficient value being added?

BILL MITCHELL: Well, I don’t think that people are simply going to pay tomorrow for news that is available today free, just as I don’t pay for the newspaper that shows up in my driveway. I’m not really paying so much for the news itself as I am paying for the convenience of that delivery, the experience of holding the news and the newsprint.

I think The Times really faces a significant challenge in figuring out what the digital equivalent to those kind of conveniences and user experiences are in the online edition.

JEFFREY BROWN: And, Bill Grueskin, what are — what’s the risks? You — you were involved in this at The Wall Street Journal. Is it different here, or what do you see?

BILL GRUESKIN: Well, one of the clearest risks, and the one that has really been keeping The New York Times from doing this earlier is that they may diminish their huge online audience by a fair number of readers because people, when they hit a wall, they will just go somewhere else for their news.

And The New York Times has a tough argument to make here. What do you tell your customers? This product we have been giving you for 15 years for free, now we’re going to start charging you for.

And there’s a moral argument for it, but moral arguments work better in churches and synagogues than they do in — in commercial enterprises.

JEFFREY BROWN: Well, what’s the moral argument?

BILL GRUESKIN: The moral argument is, we provide a civic service. We provide the kind of accountability journalism in Washington, in Albany, in New York, City and around the world that is required to make this democracy function, and the current economic model isn’t supporting that civic service, so you, the readers, need to help support us.

JEFFREY BROWN: But you’re suggesting that’s a tough argument to make for people who have had free access online for many years?

BILL GRUESKIN: Exactly. Exactly.

And I think the other thing that is going on here is that, because of the way they have structured this deal, they aren’t really anticipating that much revenue from online subscriptions. What they’re really trying to do is protect the print product, because, at the end of the day, it’s the print newspaper that generates most of the revenue for The New York Times, as it does for almost every other newspaper in the United States and around the world.

JEFFREY BROWN: Bill Mitchell, what do you make of that, both the moral argument and really, more importantly probably, the expectations, the mind-set that so many of us have, that you can go online for free?

BILL MITCHELL: Well, I think Bill makes a very good point. They’re not going to be able to make an argument — a moral argument successfully online. This is not a matter of what readers and users should or shouldn’t pay for. They’re going to pay for news online only if they find it to be worth their — their money.

I think, when you look at what — what’s happening with The Times in print, they have got more than 800,000 users, readers, paying as much as $769 a year to get the paper delivered. So, I think the calculation has to be, what can they add to their online news that will encourage enough of that online audience to begin paying?

JEFFREY BROWN: And, just staying with you, Bill Mitchell, I mean, on the plus side would be The New York Times itself, right, the brand, the history, the quality that they have offered to people?

BILL MITCHELL: Of course. The — the — as Bill pointed out, online advertising simply is not going to sustain the quality of journalism that The Times — that readers have come to expect from The Times. They — they really need to find multiple revenue streams.

And I would expect that this form of online payment will be just one of many things that will emerge over the next year. I think The Times was smart, actually, to give themselves a year to work on this, because it’s going to be a very complicated problem.

JEFFREY BROWN: Well, Bill Grueskin, broaden it out a bit for us. I mean, what — what do we know so far about what consumers and will and — and will not pay for? What other things are papers doing?

BILL GRUESKIN: Well, what you see right now among a lot of publishers, both in the magazine and the newspaper industry, is a hope and expectation that other devices, whether it’s the Amazon Kindle, whether it’s the tablet that Apple is supposed to be coming out with later this month, whether it’s BlackBerrys and iPhones, that using other devices to access their content will provide ways of generating more subscription revenue.

I think most publishers have come to the conclusion that it’s very hard to generate a lot of subscription revenue with a Web site that’s basically on a P.C. People have been trained now since the early 1990s that, if it’s on the P.C., you really don’t have to pay for it.

JEFFREY BROWN: Bill Mitchell, what do you see in terms of other experiments or other attempts to — to lure in readers paying?

BILL MITCHELL: Well, one that’s coming soon is a — an option to enable readers simply to contribute to news organizations, not — it’s a voluntary payment system. I think we will see more of that, probably not at a paper like The New York Times, but at smaller news organizations around the country.

The Miami Herald now on the bottom of each story includes both an invitation to subscribe to the paper in print and an invitation to donate for good journalism at The Herald.

JEFFREY BROWN: And, Bill Mitchell, staying with you, do — what do we know — the other side of this, of course, is advertising. What do we know about how advertisers feel about these kinds of paid-for subscriptions?

BILL MITCHELL: It’s a very risky calculation. The critical challenge that The Times faces is not chasing away so many of its online readers that it really diminishes the number of eyeballs it can deliver to advertisers.

On the other hand, advertisers appreciate the intensity of readership that’s reflected by people who are paying to actually read the news and are staying committed to the newspaper.

JEFFREY BROWN: Bill Grueskin, you want to weigh in on that one, finally?

BILL GRUESKIN: Yes.

I mean, one of the things that we found at The Wall Street Journal online, which had had a subscription model indicating way back to 1996, I believe, is that advertisers, in many ways, valued the Journal’s — the online Journal’s audience more because it was a subscription site. They knew exactly the kinds of readers who were seeing their ads. They could target their ads better to the readers.

And, ultimately, that’s one of the great promises of the Internet, the ability to not just amass large audiences, but to target specific content and advertising for smaller niche audiences. So, insofar as a subscription wall can help The New York Times with that, it could be a benefit on the advertising side that would more than make up for the drop in traffic.

JEFFREY BROWN: All right. Thanks for helping us walk through this, two bills, Bill Grueskin and Bill Mitchell. Thank you both very much.

BILL MITCHELL: Thank you.

BILL GRUESKIN: Thank you.