how will the new york times pay wall work?

January 21st, 2010 • posts i've written

Yesterday, The New York Times formally announced plans to erect a paywall for NYTimes.com content. I’ve taken my best stab at how and why they’ll charge for that content.

In contrast to the previous week’s rumor, the paywall is set to go into effect in 2011 – not in the coming months. But the rumor did get the model for the wall right – the Times confirms that it will be a ‘metered’ system.

From the press release (seriously NYTimes, to announce this you used a press release? huh? the article on your own site is from the AP, not even from you, take a clue from Conan, address the people of the earth when you have something to say):

The new approach, referred to as the metered model, will offer users free access to a set number of articles per month and then charge users once they exceed that number. This will enable NYTimes.com to create a second revenue stream and preserve its robust advertising business. It will also provide the necessary flexibility to keep an appropriate ratio between free and paid content and stay connected to a search-driven Web.

So what does that mean exactly and how will it impact you? While everyone is speculating on the adoption rate of the so-far-vague idea, I thought I’d explore what charging under a metered system could look like for the New York Times and for you.

First off, the release comes conspicuously one week before the big Apple tablet announcement. Whatever pay model is put in place in 2011, definitely expect it to encompass a vastly larger swath of devices and content mediums by then – and go ahead and assume the iPad will be included as a platform for the Times content.

The Times has also made it clear that print subscribers will retain free access to the full breadth of online content, which makes sense (many of Rupert Murdoch’s papers will actually still charge their print readers an extra fee for full web access).

On to the meter model itself: The Times could potentially copy the Financial Times model and allow a number of free pageviews before asking for a full sum for further access.

A quick look at the Financial Times pricing model:

You’ll also see that the Financial Times tiers pricing based on the availability of content through alternate mediums (email, mobile, etc) and offers various premium content packages as well for the highest-end registration.

But most likely, the New York Times will not copy this lump sum registration model. I believe they’ll opt for a more flexible model – the same model under which we buy most of our music these days – the one Apple helped cement with iTunes.

The New York Times will most likely pursue a micro-pay as you go model.

How this will work: the paper will allow some fraction of their content to remain free, especially if discovered (read: found during an external search) within the first few pageviews of a non-registered or non-subscribed user. After say 10 pageviews, the user will be prompted to register on the site. Perhaps after a few more pageviews (or maybe none at all) that same user will be asked to connect a payment account to their registration (expect iTunes as the first payment partner). For every subsequent pageview on the site, through their mobile app, on their iPad/Kindle/Nook, or by 2011 – their hoverboard, the user will be charged a very small fee. I’m going to guess 10 cents/story. I also expect the Times to offer a Platinum membership model for full access to everything for one lump sum. And I wouldn’t be surprised if you could pay your meter in advance and run down your credits as you consume content (exactly like you can with iTunes).

Why I think the Times will opt for the micro-pay as you go model: it’s the most flexible model available. The Times will be able to scale up or down how much content is made freely available (and indexed by search) and the incremental cost of each pageview (perhaps we’ll see popular stories/popular columns cost slightly more than the rest). Instead of a single fee to manipulate, the Times will be able to squeeze the balloon in several places to best manipulate the consumer’s total share of wallet. Also, I think the announcement to launch the pay model in 2011 signals that it will require some complex systems to be put in place – and surely this model requires lots of levers and switches.

Now the big question: will it work?

In a previous post I examined the numbers behind the original Times Select model and the total subscribers and revenue generated back then didn’t paint a very optimistic picture for the future of the paper.

And recent research on the topic isn’t making the gloom go away.

This recent report published by Forrester Research, asking consumers their opinions on paying for content, definitely suggests that the answer isn’t an immediate and clear ‘Yes’. The report offerred the following suggestions for publishers:

Publishers should continue to offer free, ad-supported products to the 80% of consumers who won’t pay for content online; and

Publishers should offer consumers a choice of multichannel subscriptions, single-channel subscriptions, and micropayments for premium product access.

This sounds a lot like the model I have in mind for the New York Times, except that I’m unsure whether they’ll offer a mobile-only, or single-channel subscription (though admittedly, I could see an iPad/Kindle/Nook only subscription being made available).

And although the model is based on how music is currently purchased and consumed, music files and digital news content are not the same.

From The Economist, On the Sustainability of Pay Walls,

The problem there is that the valuable good—the song—is a copyright-able piece of information. It was possible to make consumers feel bad about getting something legally protected for free, and it was possible to prosecute violators. Once a simple and affordable pay system arrived, the music theft penalities and stigma helped it become a sustainable system.

But news can’t be protected by copyright. Once the New York Times reports a story, there is nothing to stop a paying subscriber from distilling the key information into an easily digestible blog post, which can be made available for free. Indeed, if the New York Times takes itself out of the free online news business, that just increases the incentive for other start-up firms to collect, aggregate, and publish the key details faster and more effectively. Since such businesses would have very low overhead, they’d only need to capture a small share of the Times’ readership to make a profit, and to drain the Times of potential customers.

The Economist article goes on to argue that any content provider will have to produce additional work that it can assert a property right over – such as a utility or service provided by the site (meet readers like you, find content like this, connect with the journalists, etc) or the quality of the writing itself.

That brings us to the question of whether people will fundamentally support a functioning pay wall or will they tunnel under it?

Will the cognitive barriers to the pay wall be strong enough to encourage some extra effort to up-end it? Will services such as Bug Me Not get more sophisticated to outwit whatever the Times throws at it? Certainly for some people (many of them young and digitally savvy), they’ll never pay for content and will do almost anything it takes to save themselves the cost, including ignoring The Times completely.

I do think we should expect journalists to be worried over in anti-piracy advertising the way musicians, record labels, filmmakers and film studios are today (when you steal our content you steal the food out of our mouths).

But the future isn’t written yet. Certainly, The New York Times has as good of a chance as any other content provider to prove the model – and a strong partnership with Apple’s iTunes and coming tablet will be beneficial in tapping into established payment systems and consumption channels.

If I were speaking to the board of The New York Times, I would continue to urge them to look beyond search traffic to share traffic (friends and fans exchanging links through social media) as a funnel of readers that requires some additional protection from the pay wall clamp down.

Most content providers that I’ve worked with over the last year, when they’ve enacted social platforms like Facebook Connect, have seen dramatic traffic swells almost immediately and sustained over time (sometimes making up to 50% of the total site’s incoming visits). Content publishers should do everything they can to encourage and reward sharing – and displaying an immediate (or almost immediate) pay wall not only hurts the relationship with that visitor, it jeopardizes the motivations behind the original sharer. Why would they send a friend to check out a piece of content only to be stopped short?

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Tags: micro-pay as you go, new york times, pay wall

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