After years of enjoying free content, the NYTimes announced that from 28 Mar 2011[1] the newspaper would start to charge for its content. The price tag of 15$ per month would allow general access but it seems it will be a hard threshold for many of its readers, as their used to have access for free to a news source that made a difference at least in the US (in Europe there is a more heterogeneous newspaper market with a greater variety of quality papers to choose from).
Newspaper and advertising was from the beginning a legitimate business concept to pay for the cost of a newspaper but in times of online content it was also clear that it can’t be enough to cover the cost, particularly with a declining print readership. While switching barriers are low (don’t have to cancel the newspaper and delivery, just change the URL) in awaking of the internet newspapers in general had challenges to build a loyal community that pays for its content and at the same time stays loyal to the content provided.
Therefore the move is certainly necessary but at the same a risky one, in a consumers mind the internet is perceived as to allow free access to all sort of sources and this mis-perception has been maintained for years. The step towards a subscription based readership will drive away readers that made the online newspaper one of its kind in terms of its reach and influence but the questions remains, about what is a vital online business concept, where consumers are willing to pay for quality, premium content with other sources are still accessible for free? Is the price tag of $15 not a not a bit too high and if $15 for a month unlimited access is the threshold why not have entry schemes that allow participation on a lower cost base(see below) without pushing away consumers from the start.
What to Do?
People might be willing to trade-off a lower subscription price with a cap on articles that are bundled with advertisement and might decide later that the $15 for unlimited is not that unreasonable or you could charge per article (iTunes method) on a price such as $0.20 per article. Meaning that you don’t drive people away and their still have a way to keep the cost base on an individual level.
Segmentation is key in driving this business concept to success but I don’t think that the segmentation has been communicated right.
| Type | Access | ||
|---|---|---|---|
| News hopper | 20 articles/month free | advertising supported | |
| Occasional Piper | 20 articles/month free | plus $5/month = 50 articles free (1.5 articles/day) | bundled advertising |
| Steady Watcher | 20 articles/month free | plus $10/month = 150 articles free (5 articles/day | bundled advertising |
| Loyal Reader | unlimited | $15/month = unlimited access and | no advertising |
In case this subscription program of NYTimes is established as a success others will follow and the time where quality content is a freebie will no longer be the business model to go for but if this experiment fails it will hurt people who enjoyed the quality of the newspaper and it will hurt the NYTimes as advertisers see a large readership driven away by a not carefully enough developed concept in terms of readership and audience participation. The NYTimes will eventually face increased cost to keep up their journalistic standard with a lower advertising revenue basis.
Note
[1] The Times Announces Digital Subscription Plan, 17 Mar 2011 <http://www.nytimes.com/2011/03/18/business/media/18times.html>
