Tag freemium

The New York Times in high stakes plans to charge online. Draconian, desperate or inspired?

New York Times to charge for online access from 2011. Photo: Andy Soloman

Has the bullet been bitten? Or is the bullet winging its way to the heart of its mark?

The announcement by top US newspaper, The New York Times, that starting January 2011 it will charge frequent users of its website has either been heralded by underfire newspaper execs, or derided as a desperate measure that will hasten the venerable institution’s demise.

The NYT‘s David Carr, in the Times’ Media Decoder blog, said the move represented a hedge.

People who remain reflexively bullish on free [content] ignore the fact that the clock is ticking on many of the legacy businesses that produce that content. The new approach is an effort to replace that ticking clock with a meter, and its success is not assured but to sit still would be dumb.

It is not the job of The New York Times or any other mainstream media company to give away its content until it can no longer afford to do so.

The charging plans appear fairly draconian. From next January visitors will be able to view a few articles free each month, but step over the threshold and they will be required to pay a flat fee for unlimited access. Subscribers to the daily or Sunday print editions will continue to receive full access.

The NYT has yet to say how much it intends to charge, or how many articles will remain free each month.

Newspapers have been grappling with plummeting circulations and advertising revenues. Readers have increasingly turned away from being brand loyal to being increasingly varied in choosing how they access their general news. The Internet, RSS feeds or news aggregators are able to through up numerous sources to information on any particular news story.

Yes, gathering news is an expensive business, but increasingly readers have been opting for free services to keep up with developments. As circulations decline, so advertisers look elsewhere. It’s worth noting that the the New York Times Company, which also includes the International Herald Tribune and 15 other daily newspapers, saw advertising revenue plunge 30% in the first nine months of 2009.

No doubt, this is a brave move by the NYT, but with technology, reader behaviour and news sources exploding by the month (think Twitter and other social networks, think of the boom in citizen journalism, and think cost) it is hard to see whether come next January the NYT is part of a crowd rushing to harvest online dollars or whether it finds itself back tracking as the “loyal” online  readers it wants to monetise dessert it for somewhere else.

As Reuters media reporter Felix Salmon wrote (and which was reported in the NYT):

Successful media companies go after audience first, and then watch revenues follow; failing ones alienate their audience in an attempt to maximize short-term revenues.”

So, is the NYT going to charge into battle only to find its followers have quietly disappeared? Will its brazen war cry fade into a garbled mumble? Or has it struck gold? My take is that it is not enough for legacy newspaper businesses to think they can easily transfer the model into a successful online business. They need to find ways to serve up the exclusive essential information that people will be willing to pay for.

This isn’t the first time the NYT has charged for acces. Back in the 1990s it charged overseas readers and then again a few years ago it tried another scheme to charge poeple for reading the op-ed columns. Both failed to gain any significant traction and were dropped.

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Murdoch’s News Corp cooking up a storm over plans to ban Google

Paywallman flies to newspaper rescue
Paywallman flies to newspaper rescue

And the drum keeps playing. It’s almost as if Rupert Murdoch believes that if the News Corp digital tribe keeps chanting the mantra that Google will be blocked from indexing their sites, the future of publishing and the wealth of publishers will be preserved.

On Friday, the Telegraph reported that Jon Miller, former AOL head and now News Corp’s chief digital officer, told the Monaco Media Forum that the News Corp door would soon be slammed shut on Google and his company would lead the media industry in a new direction.

“There is real tension surrounding the free versus pay debate,” Miller was quoted as saying. “It will play out in the next two years. We believe that the value of high quality content is not recognised online (by giving its away for free) so something needs to happen.”

Now, like him or loathe him, Murdoch is one of the greatest media moguls the world has seen. Over the years he has proved the naysayers wrong time after time. And what about now as the news publishing industry lurches ever deeper into crisis? Can pay barriers be thrown up with the expectation readers will remain loyal to brands and hand over cash to secure the privilege of continuing to consume News Corp content?

Not on your Nellie!

As I’ve mentioned previously, the actions of News Corp and other news publishers ignore the plain simple fact that reader behaviour is radically changing. Brand loyalty is fading, and having got used to free content online people are simply not prepared to pay for news and general information. Beyond refusals to pay lie the new worlds of social networks, aggregator services, citizen journalists and ordinary people just using technology to communicate in ways that only a few years ago were purely in the realms of science fiction.

At the heart of the online world sits the link economy. Links are what drag eyeballs from place to place. People increasingly follow through on recommendations from trusted sources including search engines, people they know, aggregators, or Twitter (which is becoming hugly important in setting readership consumption agendas). What people are doing less and less, is deliberately seeking out the view espoused by the old media brand.

The days of “Dear boy, don’t you know it was in The Times?” as a means of communicated worth, trust and accuracy are gone. Today, readers will look across a number of sources depending on what is served up to them. Increasingly, the reader also doesn’t want just a single view but a panorama of views across different credible or even biased sources.

Murdoch accuses news aggregators of being parasites and search engines of stealing premium content beyond what would be governed by fair use. It’s not just that he is concerned with the revenue value of their content being diminished, but there is a parallel discussion centred on the cost of gathering top notch news. It is a very expensive business to have foreign correspondents scattered around the world. The days of the bottomless expense accounts and bespoke Savile Row safari suits are long gone. As an ex-foreign correspondent myself with a great love of news, the argument over who will pay is one I grapple with.

But, as with the newspapers, we have to let the past be the past. If we accept that traditional publishers face declining revenues for the legacy business the challenge becomes how to open new revenue streams while looking to prioritise expenditure on generating premium content.

Nick Gregg, CEO of StrategyEye, succinctly captures the key issues in his paper “The Next Two Years of Publishing — Where it Needs to Move”.

“Large editorial journalist bases are expensive and out of tune with [the] new world,” he says. “A shift to a blend of ‘investigative’ writers and ‘curator’ writers is needed to reduce costs and deliver wider information in the succinct manner modern users expect.”
Editorial models need to be reinvented and technology needs to be harnessed to exploit new content opportunities. He fires a loud warning shot over the bows of RMS (Rupert Murdoch Ship) News Corp.
“…knee-jerk reactions are not the way forward. The current vogue for some publishers to say ‘let’s shift to paid subscription walls’ is potentially highly damaging except in certain niche content areas. Imposing subscription walls may generate some revenue from a small percentage of loyal readers. But it could kill a brand in the long run if the next generation of target audience simply never engages with its content.”

Back over at News Corp, Miller reckoned newspapers in the UK could survive after Google cold turkey.

“The traffic which comes in from Google brings a consumer who more often than not read one article and then leaves the site. That is the least valuable of traffic to us… the economic impact [of not having content indexed by Google] is not as great as you might think. You can survive without it,” the Telegraph quoted him as saying.

I have a feeling I will be frequently coming back to this topic . It would be lovely (from a newspaper viewpoint) if news stand sales could simply be replaced with online subscriptions or even micro sales. But considering where we are in the freemium world, this is about as likely as Murdoch being asked to turn out for England on the wing.

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The Economics of Abundance – Where’s the money in a freemium world?

Short and pithy, but highly relevant video. Where’s the money in a freemium world? Useful introduction to the “Economics of Abundance” from Mike Masnick and the Techdirt team that promises to be the first in a series of three short films. Following on from my post yesterday about UK newspapers targeting aggregators such as NewsNow in bid to secure or protect traditional reader revenues, this is not only the future, it is now. Painful to some maybe, but ignore at your peril.

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