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The NY Times: Un-Free At Last!

newspapers, online publishing By March 21, 2011 Tags: , 28 Comments

On March 28th, after much handwringing, the New York Times will finally deploy a paywall. NYT fans, your author included, rejoice: We see this as a necessary condition for the newspaper’s survival. Necessary…but not sufficient. A “small matter of implementation’’ remains an obstacle on the paper’s path to greatness in the digital era. A matter that, so far, doesn’t seem to have received sufficient attention from NYT execs.

Let’s start with a test…and no peeking: How much do you pay for an iTunes “song”?

If you answered “about $1,” you pass. A little less, a little more, the exact number depends on the whims of unseen seers, but, yes, about a dollar. And that reliable debit, give or take a few pennies, feeds an important psychological criterion. You’re free to focus on choosing your music, unencumbered by price considerations.

You’ve graduated to the next level: How much for a New York Times digital subscription?

The pleasant reassurance of a readily available “close enough’’ answer is sorely missing.

See the NYT’s Publisher’s nearly impenetrable calculus in his letter to readers, dip into the lengthy FAQ, and finish with this buggy article in the paper’s otherwise excellent Media & Advertising. You may also want to peruse the 2141 reader comments. By itself, the number gives a temperature reading.

You’ll need an accountant and an attorney to traverse the maze of plans and to decode the fine print in the NYT’s paywall T&Cs, but as I understand them:

  • The first 20 articles in a “calendar month” are free. After that, you’ll be nudged towards a $15 subscription for 4 weeks of Web access.
  • Smartphones? An iPhone, Android, or Blackberry app is included with the $15 deal. For one year of 52 (4 * 13) weeks, you’ll pay 13 * $15 = $195. Yearly subscriptions aren’t offered. But do I have to pay twice if I own both an iPhone and a Moto Droid?There’s no Web-only deal. The basic $15 rate bundles Web and smartphone access.
  • If you have an iPad you’ll pay extra: $20 per 4-week billing cycle = $210 for one year.
  • Other tablets? Not yet.
  • You want access from all of your devices? PC, smartphone, iPad, Times Reader 2.0, the NY Times app from the Chrome Web Store…that’ll be $35 for 4 weeks, $455 for a year.
  • If you’re a paper subscriber, the NYT elders smile upon you: You’ll have access to everything from all your devices with no unseemly display of surcharge. But it depends on the deal you make: new subscriber, renewal, special offer, a conversation with a Customer Retention Specialist… It all sounds like dealing with a cell phone carrier or a cable network provider or an airline. Three well-loved businesses.
  • For e-book readers such as the Kindle and the Nook: Sorry, no access at this time. (Amazon will sell you the NY Times newspaper, but it doesn’t give you access to the site.)
  • What happens if you touch a page through a search engine, through your friend’s Facebook wall or Twitter tweet, through a link on someone’s blog? Free…unless it’s not. Some visits fall within the 20 articles/month rule; others, such as through Google links, will have a 5 free articles-a-day limit. One can see what an enterprising geek could make of this. How does the NYT know it’s you coming back for one more hit of their good stuff? They do it through cookies. $195/year is a good incentive for a little bit of “cookie management” and IP address spoofing.

I might have misrepresented a clause or two, but the overwhelming truth remains: This is a failure of the Mind more than a failure of the brains. The NYT decision makers are without a doubt exceedingly intelligent and hardworking. But are they steeped in the Web’s culture, in the smartphone/tablet revolution?

Customers don’t make decisions with their neocortex, an organ that is too easy to bullshit. They decide within deeper, comforting recesses, and they rationalize when the culture demands a seemingly logical, socially acceptable “post-planation”.

What price do NYT’s execs put on simplicity, on ease, on reader enjoyment vs. catering to their own internal discourse? If they don’t like talking to Steve Jobs (and vice versa) they could turn to Jeff Bezos for tips on simplicity.

iTunes has taught us that customers are willing to pay for content if the process is simple, if it’s easy on the mind and the wallet. One could argue that consumers aren’t paying for the content, they’re paying for the delivery service.  Regard Netflix on Demand, to use another example. Restricted content, instant delivery, success.

All of this is well known, analyzed, taught in business schools. The brains at the NYT should know all of this.

Instead of the cellular plan language above, the Grey Lady could proudly offer the following:

  • A 4-week subscription costs $15. It works across any combination of the following devices: [list here. more devices as we go].
  • Paper subscribers…thank-you, and you’re welcome to our digital content on all supported devices, gratis.
  • Not a subscriber? Not a problem. You can “touch” 20 articles a month for free, regardless of the source.
  • We know there will be “enterprising” individuals who will try to circumvent our paywall, and we understand the seduction. We’ll stick to positive countermeasures: we’ll protect our content by offering superior apps that deliver superior joy of use.

So…why doesn’t she?

We know readers will pay for content. Consumer Reports and The Wall Street Journal prove it, but with an important difference: They’ve always charged for their content so they’ve never had to face readers’ withdrawal symptoms.

Or perhaps I missed an essential cog in the NYT money pump. Looking back to the 5 articles per day limit when coming through Google, vs. 20 per month by other means, including links on the NYT main page…I smell a deal. Is money flowing from Mountain View to Manhattan despite the Lady’s rage against aggregators such as Google News (while never cutting them off)? Does Google subsidize 5 daily articles by kicking back a fraction of its advertising revenue to the NYT?

From an advertiser’s perspective, this becomes a dubious proposition. Ostensibly, the paywall strengthens the NYT’s pitch to advertisers: You know we have a “bankable” audience; our readers are willing to buy in. The first 20 articles a month are free. They’ll get hooked. But (the advertisers respond) if anyone can have 140 free articles a month through Google…doesn’t this weaken your “select audience” argument?

Advertising dollars aside, business model transitions are hard, some say impossible. As my compadre Frédéric has shown many times in previous Monday Notes such as this one, the ARPU falls dramatically when moving from paper to pixels pushed around the Internet.

The transition conundrum is this: The Internet is killing paper and Web advertising won’t keep a newspaper afloat, hence the recourse to a paywall after years of free access. This might explain the Grey Lady’s unseemly contortions.


Expanding Into New Territories

advertising, newspapers, online publishing By October 24, 2010 Tags: 27 Comments

In defining business strategies for modern medias such as online newspapers, the most difficult part is finding the right combination of revenue streams. Advertising, pay-per-view, flat fee… All are part of the new spectrum media companies now have to deal with.

The gamut looks like this:

As we can see, newspapers mostly consist of one product line, confined to the mainstream, value-added news category. By going digital, this segment is likely to lose most of its value (expect a 60% meltdown as expressed in revenue per reader). Therefore, for these companies, it becomes critical to expand into new territories already taken over by other players. For instance, big media outlets endowed with strong brands should go into commodity news and participatory/social contents. This doesn’t mean a frontal attack on Facebook or Twitter, obviously; instead, the new reality dictates using and monetizing through them (see last week’s Monday Note on Facebook monetization).

Ancillary publishing should also be considered a natural expansion: news outlets retain large editorial staffs that could be harnessed to produce high value digital books (see this earlier Monday Note on Profitable Long Form Journalism). The “Events” item, on the list/graph above, is more questionable, but it remains a significant source of potential income tied to the brand’s notoriety. I left aside the classifieds business: except for a few media groups (Schibsted all over Europe or Le Figaro Group in France) that boarded the train on time, positions are now too entrenched to justify an investment to gain a position in that segment.

Advertising is likely to remain the biggest money maker for the two dominant categories: Commodity/Participatory/Social Media and Mainstream Value-Added. Unfortunately, in its digital form, advertising has run in deflationary mode for the past decade due to flat (at best) CPMs, with huge inventories putting further pressure on prices.

Print doesn’t look great either as investments shift en masse to digital; this reflects the growing imbalance between time spent by users on print and advertising investments in the medium. According to Nielsen Media Research, the Internet now accounts for 38% of time spent but only for 8% of ad spending; newspapers are on a symmetrical trend as they captured 20% of advertising dollars for only 8% of users’ time.