The New York Times Big Gamble: Paywalls (Again)


Will there be holes in the New York Times new paywall?

Starting on March 28, the New York Times will dive headfirst – yet again – into digital subscriptions and… take a deep breath… paywalls.

Or should I say the dreaded and much maligned paywalls.

The last time the New York Times tried this they dove into the shallow end of the pool and nearly broke their collective necks on the concrete bottom.  Injured and near drowned, they climbed out of the pool.

Now they are going to try again.  The paywall is indeed back, but they are tweaking the strategy based on the last failure.  For example, readers will get 20 free stories a month and be allowed to share content on Facebook, Twitter and other social channels.  People will be able to click the links and read the content, but it counts as part of their 20 reads a month.

Interestingly, the Times will limit people who arrive from Google to only five article views a day.

Paywalls have not been popular – especially among media pundits.  Here’s BuzzMachine blogger Jeff Jarvis on paywalls:

“I believe building pay walls around online news is a bad business decision. Charging is also a distraction from the real goal: profitability and sustainability. We must rethink the entire ledger of the business of news, starting with costs, which must and can be reduced through collaboration, working in networks, and through the efficiency that comes with the specialization the internet demands.”

Here’s author and industry critic Clay Shirky on paywalls:

“The “paywall problem” isn’t particularly complex, either in economic or technological terms. General-interest papers struggle to make paywalls work because it’s hard to raise prices in a commodity market. That’s the problem. Everything else is a detail.”

I don’t agree with everything Jarvis or Shirky are selling.  I don’t believe, for example, that journalism in a commodity.  News reporting might be, but journalism, especially expository and investigative journalism, certainly isn’t.  People will pay for excellent journalism.  It just needs the right model.

We’ll see if the New York Times can make it work this time.  I like the idea of still being able to link and explore the Times without buying one of the three packages they are offering (starting at a low $15 per month).  So casual readers will still get free content.  It’s the die-hards and news junkies that will pay.

Ultimately, consumers need to come to the startling realization that “free journalism” means “no journalism.”  Free isn’t a business model that works.  Highly trained and knowledgeable news reporters and editors stationed across the globe cost money.  It’s the price of getting professional news and analysis instead of relying on the sporadic quality of news gathering done by amateurs.

There is a definite roll for citizen journalism in the new media marketplace.  Getting first hand accounts from people on the ground at major events – like the rebellion in Libya or the earthquake in Japan – is priceless.  But we need now – more than ever – professional journalists to give us perspective and to help us sift the hyperbole and fiction from fact.

I’m willing to pay for that.  Are you?

Links:

The Times on the Times digital subscription program

Jeff Jarvis’s BuzzMachine post “The Danger of the Wall”

Clay Shirky on paywalls

Reporting is Now a Commodity, but Journalism Isn’t

Why Free Won’t Work for Journalism on the Web

13 Responses to “The New York Times Big Gamble: Paywalls (Again)”

  1. I say bravo to the Times for this attempt.

    It’s ironic that the regular cadre of paid-content naysayers are deriding the Times as lost in the past for trying a paywall system, because it is those naysayers who are actually the ones stuck in an evolutionary rut. The Times is innovating, trying new ideas — and that’s how a new, workable industry model for journalism will be found, not by throwing up our hands and and fusing our minds to the assumption that it’s impossible to charge for content.

    It seems entirely possibly to me that the market conditions have changed significantly in the past decade or so since the naysayers formed their ironclad assumption that paywalls will never work. The NYT has a differentiated product — high-quality journalism. That is increasingly NOT a commodity, and I suspect the Times is right that there is a substantial willingness to pay for their product.

  2. Hi Peter:
    Hopefully, the public agrees with us former ink-stained wretches. Because I agree wholeheartedly (but I doubt there’s enough ex-reporters around to make the Times profitable in this venture).

    I think you’re right. Markets move. But the big mistake is going to be difficult to overcome and that mistake was giving out free content in the first place. Unfortunately, newspapers can’t go back in time and start all over again.

    It’s hard to charge for content after you’ve been supplying for free, but maybe this time around people will put more value on what the Times brings to the table.

  3. That’s the prevailing argument — that the genie can’t be put back into the bottle. However, I hasten to point out that there is an enormous precedent for genie-stuffing success: cable television. TV content was free for decades until cable came along, but virtually everyone readily agreed to pay for TV content so long as it was substantially better than what they could get for free with an antenna.

    I also think online news will eventually adapt the tiered, bundling model of cable TV. Until recently I couldn’t figure out how such a model would evolve, as we’ve been kind of stuck in a sub-optimal Nash equilibrium. But now I think I see how it could happen: If the NYT is successful with their own content, they can advance to offering packages where other outlets piggyback on their content. Say, for instance, your paid NYT account also gives you full access to your local and regional news sources. I can see a tiered, bundled model starting that way and evolving into an industry-wide paradigm.

  4. I don’t think the comparison with cable works for a few reasons:

    1. Cable offered exclusive access to content that wasn’t on free TV – movies, prize fights, 24-hour news stations, etc.

    2. At first, cable was mostly commercial free.

    3. Reception on cable was better than from an antenna.

    People were willing to pay for these improvements. Cable also didn’t offer these improvements for free first and then yank it back and ask for money.

    The New York Times is not offering any improvements – only the content that yesterday was free of charge. This is a much harder sell.

    Many people also know the Times tried this before and gave up. So many people now might try to wait them out to see if it happens again.

    Going to be a tough climb…

  5. But the premium content on cable TV carried an extra charge also from the get-go. If you wanted HBO (movies, big boxing matches, etc.) even in those early years, you had to pay extra. The basic non-premium content in the package was really not much more than the channels people could already receive with an antenna, except that the signal was clearer. 24-hour news came later on when Ted Turner invented it. There was no CNN or similar channel in the early days of cable. Other specialty cable-only channels also proliferated later but were scarce in the early years.

    Also, basic cable was never commercial-free. Only the premium-paid channels were commercial-free. The basic channels still carried all the regular advertising of those channels (as is still the case). And the market supported this model — people voluntarily paid for higher-quality content in sufficient numbers that there were still ample eyeballs on the ads.

  6. “Name (required)” was me.

    … rather ironic that this system defaults to conferring that alias upon posters, when you think about it. ;-)

  7. We’ll have to agree to disagree on this one. And I figured it was you!

  8. Hi George,

    This is going to be an absolute disaster for the NY Times. You have not mentioned the biggest problem yet – the price. $15 a month is far too high for many people, especially the lower classes, students and the unemployed that the Times ironically champions. Many could live with a flat fee of $99 a year, but almost double that is too expensive for the masses.

    The second is what has already been discussed in the comments – would someone suddenly pay to get something they have been getting for free for many years? For most people, absolutely not. And can that same content be found in sites ranging from Fox News to the Washington Post? Of course. And I’m sure there will be renegades who will copy Times content for free on their respective web sites and blogs, just as they did the last time the Times tried and failed to put a paywall down.

    The consequences here will be dramatic. Page views will sink, meaning the Times can’t charge as much for online advertising. Online subscriptions will have a brief surge and then wither fast. Diehard news junkies are unfortunately a tiny minority, as are people who can easily afford $180 a year in this economy.

    The Times will respond by either shifting its prices downward or dropping the whole experiment like last time as the model fails. Most significantly, the paper will fade as a brand and the top go-to source for important and well-written news as readers around the world go elsewhere.

  9. Hi David:
    Fifteen dollars a month is about 50 cents a day – certainly not a hardship for anyone currently subscribing to a newspaper or paying for an Internet connection.

    With the up to 20 free stories and the ability to freely seed links in blog posts, tweets and Facebook status update, I don’t think the Times page views will plummet as much as you think.

    Newspapers have to do something to recover the money they spend on reporters and editors. So I applaud the Times for experimenting with new pay models. This might not be the ultimate answer, but I’m sure they will learn a lot about what works and what doesn’t.

    On another note, I cringed at your reference to the working class as “lower class.” Accuse me of being the PC police if you like, but that’s a terribly loaded term and rather degrading. Don’t think you meant it that way, but food for thought…

  10. We can call them the working class if you wish, but every dollar matters to these folks and $180 a year is far too expensive in this economy. When the Times announced the new policy, the comment page was full of college students and international readers who said they could not afford to subscribe and would read other sources once their 20 articles were up. The overall reader feedback was about 9 to 1 against the fees, primarily for the high price. This will not have a happy ending.

    Newspaper Financing Ideas: I think the Christian Science Monitor is on to something by completely ceasing print production and moving to an online only model. Weeklies like The Boston Phoenix and Village Voice used to charge more, and then switched to a complementary distribution for higher circulation and ad revenue. None of those papers are exactly like the Times, but they didn’t raise their prices beyond the reach of so many of their readers.

  11. Ceasing print publication is extremely risky given that right now it is the cash cow that literally makes it possible for newspapers to publish an online edition.

    No doubt print editions will eventually be phased out, but the Times still sells more than 900,000 print editions. Kill that now and the whole enterprise would collapse.

    Of course people complain about paying for what they once got for free. But $15 a month is hardly a hardship given that newspaper subscriptions have always cost money. And if you subscribe you get the online edition for free. Drink three fewer lattes at Starbucks each month and those “poor” college students get all the news that’s fit to print.

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