NY Times Takes a Bold Step Towards Paid Digital Content

Two years ago I argued that it was imperative for Web 2.0 and content companies to create multiple channels of revenue to build and maintain a sustainable, growth-oriented business.

My perspective was directed at fast-growth players like Facebook, LinkedIn and Twitter that have relied primarily on advertising revenue to fuel the top-line.  However, it is the New York Times -- a company with a 150 year history -- that has moved aggressively to carve out a myriad of revenue sources in the digital age.

Here is a copy of the letter I received today from their publisher:

An important announcement from the publisher of The New York Times

Dear New York Times Reader, Today marks a significant transition for The New York Times as we introduce digital subscriptions. It’s an important step that we hope you will see as an investment in The Times, one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform. The change will primarily affect those who are heavy consumers of the content on our Web site and on mobile applications. This change comes in two stages. Today, we are rolling out digital subscriptions to our readers in Canada, which will enable us to fine-tune the customer experience before our global launch. On March 28, we will begin offering digital subscriptions in the U.S. and the rest of the world. If you are a home delivery subscriber of The New York Times, you will continue to have full and free access to our news, information, opinion and the rest of our rich offerings on your computer, smartphone and tablet. International Herald Tribune subscribers will also receive free access to NYTimes.com. If you are not a home delivery subscriber, you will have free access up to a defined reading limit. If you exceed that limit, you will be asked to become a digital subscriber. This is how it will work, and what it means for you: On NYTimes.com, you can view 20 articles each month at no charge (including slide shows, videos and other features). After 20 articles, we will ask you to become a digital subscriber, with full access to our site. On our smartphone and tablet apps, the Top News section will remain free of charge. For access to all other sections within the apps, we will ask you to become a digital subscriber. The Times is offering three digital subscription packages that allow you to choose from a variety of devices (computer, smartphone, tablet). More information about these plans is available at nytimes.com/access. Again, all New York Times home delivery subscribers will receive free access to NYTimes.com and to all content on our apps. If you are a home delivery subscriber, go to homedelivery.nytimes.com to sign up for free access. Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit. For some search engines, users will have a daily limit of free links to Times articles. The home page at NYTimes.com and all section fronts will remain free to browse for all users at all times. For more information, go to nytimes.com/digitalfaq. Thank you for reading The New York Times, in all its forms. Sincerely, Arthur Sulzberger Jr. Publisher, The New York Times Chairman, The New York Times Company

Media's New Reality

The promise of online advertising revenue must have stirred up feelings of comfort and convenience among the publishing elite. Yet, a reliance on the familiar has led to a near complete break-down in the viability of newspapers, magazines and trade journals in every niche and sector of the market.

As dollars once destined for print ads, inserts, circulars and classifieds shifted to the Web, publishers responded with a desperate grab for eyeballs. Give away the content for free via the Web site and the run up in page views will help capture enough of the online spend to make up the difference, or so they rationalized.

It was an understandable decision. For more than a century, publishing had been predominantly dependent upon the cost per thousand mind-set of advertisers. Although the return is tough to measure, the visibility and brand recognition delivered by print advertising made it a necessary part of most corporate marketing campaigns.

Search changed this. Google, Yahoo and a host of other engines are the door-way for information seeking Web users. Their business model is advertising driven as well, however search engines deliver eyeballs with interest in a more measurable way. Plus, search engines are merely aggregators, bypassing the significant costs associated with developing content.

Print publishers face a new reality that demands a rapid evolution of their business model. A single revenue stream of advertising will no longer sustain the business. It’s time to change or die.

Here’s my take on the three steps publishers must take to get back on a solid financial footing:

1. Get skinny…get focused. Although the media industry has swooned due to multiple rounds of layoffs, publishers should go through the difficult evaluation of content development and reporting. The evaluation criteria: if we can’t be a market leader or have a compelling differentiation in a particular area of coverage, then it needs to be cut.

The Washington Post has been roundly criticized for its decision to drop sections like the Sunday Source and fold business/finance reporting into the main section. It’s a savvy move though, designed to allow the newspaper’s leadership to focus on more critical areas of coverage.

2. Demand that readers cut a check for print and online access. Yes…publications will realize a shrinking subscriber base and dwindling Web traffic from this decision, and that will negatively impact top line revenue. But, the readers who remain will be a more engaged and loyal lot.

Additionally, the notion of actually making customers pay will reinforce the value and quality of the content. Publishers such as Hearst Newspapers, The New York Times and Time, Inc. are already said to be considering fees for Web access.

3. Block Google, Yahoo and every other search spider scouring the Web. This too will reduce readership, yet will further enhance the value of the content which is, of course, a publications’ most important asset.

As I see it, the newspaper and magazine of the future will be smaller in page count with fewer readers and advertising. However, the accuracy and integrity of the content should stand tall among a seedy pool of non-peer reviewed blogs and trade rags.

And make no mistake, it’s the high quality content that a certain set of readers will gladly pay for.