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The New York Times Announces Plans for a Metered Model for NYTimes.com in 2011
by
Posted On January 28, 2010

On Jan. 20, 2010, after nearly a year of intensive study, The New York Times announced plans for a metered model for its website, NYTimes.com in 2011. The NYTimes is no stranger to some form of paid access for its content. Information users will remember the ill-fated attempt of TimesSelect that died in September 2007. Under this model subscribers paid $49.95 a year for access to columnists and archives (see Barbara Quint's NewsBreak for a good background summary on what happened to TimesSelect). The announcement of a new metered plan was not a surprise as many in the industry have been expecting the news. The New York Times, along with just about every major newspaper in the country, has been struggling with steep declines in advertising revenue. For the past year, Times executives have been reviewing the merits of a pay model. According to Russell Adams from The Wall Street Journal, Times executives analyzed more than 30 businesses that charged for some of their web content and finally selected the metered model, which is similar to that used by the Financial Times.

The big question is will the metered model work. Everyone is familiar with The Wall Street Journal and the Financial Times fee models. And while many argue that users are more willing to pay for financial news that is directly related to investing or personal financing, few industry pundits agree that a general news organization will be able to convert free users to a paid model. The NYTimes.com site is the No. 1 general news site. According to Compete.com's statistics, it has an average of 15 million unique visitors per month versus The Wall Street Journal's 11-plus million visitors. The NYTimes.com certainly has built free traffic that is second to none in the newspaper industry, which is a double-edged sword for the site. On one hand, this volume of traffic is good for its existing paid advertisers as the rates are based on eyeballs. But on the other hand, a significant drop in users will further devastate the revenues, send the share price down further, and erode its capitalization.

A number of industry critics and researchers are predicating that the implementation of a fee system for NYTimes.com could drastically erode the user traffic. According to James McQuivey, Forrester Research analyst, up to 80% of readers surveyed would not pay for content. Another newspaper analyst, Mike Simonton of Fitch Ratings, believes that The New York Times is such a unique paper with a long history of award-winning reporting; he also believes that the paper will be able to convert a substantial number of free readers over to the metered plan. According to industry sources, the NYTimes.com site currently brings in $100 million in web display ads. In the end, it is the online advertisers that will determine the outcome of the metered plan. If there is a sudden and dramatic shift in traffic of unique users, advertisers will most certainly panic, The Times will have to lower the advertising rates, and the precious revenue will be lost, which leads to further restructuring and more layoffs at The Times.

The newspaper industry as a whole is trying desperately to find an economic model that will work, and so far, there have been numerous attempts. But the ships are still taking on water. Any business that built its economic model on print advertising for 80% of its revenue is facing the same situation. At least the NYTimes.com is part of a leading media company with 2008 revenues of $2.9 billion. The New York Times owns other major newspapers and more than 50 websites. The company has a significant number of high-profile companies, and, if it can get the charging-for-content model right, it will be able to use this in other parts of the company.

Thankfully, the model is not going into operation until January 2011, which will give the company more time to get it right. There is still time to work with users and understand their needs. Earlier research indicated that users want flexibility and options. A one-size-fits-all model seems likely to fail if The Times decides to implement it. Derek Thompson from The Atlantic has offered The Times his advice in a recent article, "A Five-Point Plan to Save the New York Times' Web Site." Derek and many others have offered advice, as few want to see the metered plan fail. The industry is certainly behind The New York Times and wants it to find the magic bullet. Newspaper holding companies all over the U.S. are filing for bankruptcy and looking for some avenue to a successful transition to the web or for any sign of life in the newspaper industry.

While few have commented on libraries, there is a general interest in how all the metering is going to affect the library community. Most libraries have a subscription to the print version of The New York Times; in fact, many public libraries have subscriptions to multiple print copies. Will print subscribers still have free access to the electronic version? Can libraries expect some form of license for access to the walk-in reading room users? Will libraries be saddled with site licenses? There are many unknown and unanswered questions out there for how this will impact libraries. My past experience with The New York Times leads me to believe that libraries are not even on its radar. I sent an email to The Times media person seeking some answers, but I received no response.

So what is the future of The New York Times and other major newspapers? As a researcher, I looked up The New York Times announcement in Google News and found that, by the end of the first day, there were nearly 500 articles on the topic from major news sources and many blogs. By the second day, there were more than 1,200 articles, with 40% appearing from sources outside of the U.S. Has the world of news reporting changed so much that users are less interested in the in-depth reporting and willing to just take the situation? Recently, Outsell reported that 44% of users are happy using just the citation and seldom go to the original article. If that is the case, then the golden age of in-depth reporting by leading authorities is perhaps past, except for in the history books. The user community has learned to live with far less depth, and the Gray Lady and thousands of other newspapers may have to move into immediate local news reporting and leave behind the in-depth authoritative news-writing organization that has made them an award-winning institution of the day.

Will the metered model work? Will the advertisers support the move and not bolt? We are all interested in this outcome. Stayed tuned.

Links

http://newsbreaks.infotoday.com/NewsBreaks/Demise-of-TimesSelect-Deals-Blow-to-PayforNews-and-Alters-Access-to-Archives-39678.asp

Online usage: http://siteanalytics.compete.com/nytimes.com+wsj.com

James McQuivey, Forrester Research: http://paidcontent.org/article/419-how-the-new-york-times-should-charge-for-content

Survey of consumers by Forrester Research: http://blogs.forrester.com/consumer_product_strategy/2009/11/new-forrester-report-consumers-weigh-in-on-paying-for-content.html

Librarian view of NYT: http://agnosticmaybe.wordpress.com/2010/01/21/information-access-in-the-balance

David Carr: http://mediadecoder.blogs.nytimes.com/2010/01/20/dialing-in-a-plan-the-times-installs-a-meter-on-its-future

Derek Thompson: http://business.theatlantic.com/2010/01/a_five-point_plan_to_save_the_new_york_times_website.php

Russell Adams: http://online.wsj.com/article/SB20001424052748703626604575011382674354598.html

Outsell report: http://paidcontent.org/article/419-survey-many-google-news-users-dont-go-on-to-news-sites


 Dan Tonkery, president of Content Strategies, is currently an industry consultant with 40 years of experience in the library and information businesses.

Email Dan Tonkery
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