With New York Times’ New Paywall, Will Readers Still Flock to Site?

BY Murrey Jacobson  March 17, 2011 at 8:18 PM EDT


Given the New York Times’ size, reputation and blemished record on previous efforts to charge for online content, it only made sense that the newspaper’s Thursday announcement of a new paywall system would be the subject of close scrutiny throughout the media world.

“It’s an important step that we hope you will see as an investment in The Times, one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform,” Publisher Arthur Sulzberger Jr. wrote in a letter to readers.

Readers and users will not begin paying for the Times’ online content until later in the month (other than in Canada, where it takes effect immediately). But in the hours after the announcement was made, media watchers and analysts weighed in quickly with decidedly mixed assessments on a plan that will force heavy users to pay but also has a number of ways that readers could access Times content without paying.

“The New York Times new metered paywall corrects the mistake it made in its first foray into charging for online content — blocking search,” wrote Rick Edmonds of the Poynter Institute, a journalism training school in Florida.

Former newspaper publisher Martin Langeveld, now of Circ Labs, countered:

This is a very porous paywall. It is as if the Red Sox sold season tickets for top dollar, but let in hordes of spectators for free — not only through a few loose planks on the outfield wall, but through many advertised, clearly marked free admission entrances.

The Times’ website is the most-read newspaper site in the world with more than 30 million users or readers monthly.

In a nutshell, subscribers to the print edition will have full access to the Times’ website and its digital content without paying anything additional. But for millions who access the site without subscribing to the traditional paper, they could have to pay $15 or $20 a month depending on which mobile devices they want to use to connect. In some cases, it could even be $35 a month.

But many users may simply opt to access the Times in a more limited way.

Digital readers would be able to browse and access the front page and most sections — to a point. The company will let users view about 20 articles a month without paying. Moreover, if users access a Times story through a search engine such as Google or social media such as Facebook or Twitter, they likely could view it even beyond the 20 free articles. The company provided a full explanation through a question-and-answer piece here.

Ad revenue for the Times Media Group, which includes the International Herald Tribune, fell last year by 2 percent to $780 million.

The Times, of course, is not the first or only major news outlet to pursue a paywall or pay fence.

The Wall Street Journal has been the largest paper to do it successfully and has been doing so for years. The Financial Times, which is even more of a specialized business news operation, has found success, too. More recently, the Dallas Morning News announced its own pay system.

But the Times is of keen interest as a general-interest newspaper read around the country and globally. So the success of the pay fence — or lack thereof — is being watched by other papers that have offered online content free to see if general media can create a successful pay model.

It also comes just days after a joint survey found that a small percentage of people would be willing to pay significant money for digital content for their newspapers. The survey was released by the Pew Research Center, the Knight Foundation and the Project for Excellence in Journalism.

In the survey, nearly half of all readers said they now view some newspaper content on a smartphone or tablet.

But just 23 percent of respondents said they would be willing to pay $5 a month for full online access to their local newspaper’s content. When asked if they would be willing to pay $10 a month, that number dropped to 18 percent. That’s still substantially higher than the 5 percent who pay for local online content currently.

Analysts and media observers said Thursday that there are big questions about whether the new pay model will work.

Jason Fry, who writes Reinventing the Newsroom, thought the decision to have different prices for mobile devices made little sense as a business decision.

“Having a different cost scale based on device strikes me as a short-term approach that flies in the face of where our changing digital habits will lead us,” he wrote in a forum posted at the Nieman Journalism Lab. “The idea that people will pay extra for different experiences as delivered by different devices is worth exploring, but asking them to pay extra for the same information displayed in a different form factor won’t work in the long run.”

Reuters finance blogger Felix Salmon wrote that other business considerations didn’t make sense, including limiting readers to 20 articles a month.

“These are readers who would normally link to the NYT from their blogs, who would tweet NYT articles, who would post those articles on Facebook, and so on,” he wrote. “As a result, not only will traffic from these readers decline, but so will all their referral traffic, too. The NYT makes more than $300 million a year in digital ad revenue, so even a modest decline in pageviews, relative to what the site could have generated sans paywall, can mean many millions of dollars foregone.”

When it comes to calculating just what the company could earn or lose with the paywall program, numbers varied considerably.

Writers tried to determine just what small percentage of people would pay, whether they overlapped with regular subscribers to the paper, whether some readers could get a cheaper monthly deal by subscribing to the weekend edition of the Times and still get full access, what readers would be lost and so on.

Ken Doctor, a longtime observer of the digital news business, applied seven tests to the question of whether the Times’ new model would work. If the Times could do better than drawing more than 2 percent of its unique visitors to start paying, it could add to its bottom line. He wrote:

Let’s take the $20 price point as an average sales price, figuring both that tablets will drive sales and that smartphone-only and all-access digital subs will balance themselves out. At $20 per month, that’s about $78 million a year in digital circulation revenue — a new line item. Double it and you have $156 million a year.

In the end, while there’s plenty of criticism about the plan, many are still rooting for it to work.

Count Geneva Overholser — who is a frequent guest on the NewsHour, a former ombudsman and now dean of the USC Annenberg School of Journalism — among them.

“The paper’s own story pretty much says it all,” she wrote in the Nieman forum. “Many say it won’t work; they may well be right. But surely journalism needs financial support. This seems an informed attempt. May the Times thrive, and may we all learn from it.”

Photo courtesy Flickr creative commons user niallkennedy.