After suffering years of doomsday headlines about plummeting advertising revenue and personnel cuts, the New York Times is reportedly near a decision to charge for access to its website. Currently, all content on NYTimes.com is free to read and watch. But the paper's guardians are looking to boost online revenue by making readers pay -- even if it means a fall-off in overall traffic and advertising. Gabriel Sherman has the report at New York Magazine's Daily Intel blog:
New York Times Chairman Arthur Sulzberger Jr. appears close to announcing that the paper will begin charging for access to its website, according to people familiar with internal deliberations. After a year of sometimes fraught debate inside the paper, the choice for some time has been between a Wall Street Journal-type pay wall and the metered system adopted by the Financial Times, in which readers can sample a certain number of free articles before being asked to subscribe. The Times seems to have settled on the metered system.
This is the right choice. It's also the only choice.
I can understand that the Times wouldn't want to adopt the Wall Street Journal model, which makes top stories free and puts deeper analysis behind a paywall. After all, that isn't terribly different from the TimesSelect strategy it tried and abandoned last decade. TimesSelect made most news stories free, but built a wall around the stable of op-ed columnists -- Friedman, Dowd, Krugman, etc -- and longer stories. The paper later tore down the paywall in the hopes that a spike in traffic would boost advertising revenue. Traffic did spike, and ad revenue did jump, but not nearly enough. The paper lost $35 million in the third quarter of last year.
The Financial Times model lets registered users read 10 articles a month. Past that, you have to pay for access. It's a harsh model for readers seeking free news, but it's been very successful for the FT.* I can see the NYT implementing a combination of FT's "meter" model that also keeps some main stories free. In other words, the first iteration of the NYT's strategy would be a soft blending of WSJ and FT models. Free lead stories would keep casual readers coming back, maintaining a solid baseline of online traffic. Meanwhile, the meter system would suck in dedicated Times readers, and their monthly subscription dollars.
There's a deeper story here. It's nothing less than the slow death of advertising revenue. For the first time ever, the NYT is making more money from circulation than advertising. Next year, the FT expects content revenue -- "cover price rises, online charging and corporate clients" -- will eclipse ads. Worrying about traffic numbers and ad figures is important, but it's becoming secondary. A newspaper like the New York Times -- with a monstrous staff reporting stories, writing pieces, taking pictures, and designing original multimedia and graphics -- cannot stand on a foundation of freeloading readership. The survival of the news business requires readers to (re-)learn that the news is a business that produces a product -- that has a price.
So of course in the short-term, the New York Times will lose traffic. That's the trade-off. If your website is all free, you hope to raise readership and risk losing money. If you create a paywall, you hope to raise money and risk losing readership. The Times finds itself on a crumbling cliff these days and the only option is to jump and hope you hit land that isn't crumbling as quickly. I wish them all the luck in the world.
*There's an ongoing debate about whether the FT and WSJ thrive with a paywall because (a) they offer financial information you can't find in generalist publications like the Times and (b) accordingly, many of their clients are corporations who buy large subscriptions for their companies and are less sensitive than an individual web browser to minor changes in subscription fees.