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April 21 2011

16:45

A New York Times TimesSelect flashback: Early numbers are nice, but growth over time is nicer

The New York Times Co., as part of its earnings announcement today, gave the first concrete numbers for its new digital subscription offerings, noting that “paid digital subscribers have surpassed 100,000” in the three weeks since global launch. (Canadians had a one-week head start.) The Times itself has reported that the goal for year one of the paywall is 300,000 subscribers.

The general reaction around the web seems to be “Not bad!” (“This is encouraging,” “pretty impressive,” “very encouraging,” and so on.) But the most important question, I think, is one we’re not any closer to answering: not where that number is today, but what the growth curve will look like over time. And the Times’ past experience with charging for content shows that’s a harder nut to crack.

Let’s say that those 100,000 subscribers stick around. (Note that they’re currently paying heavily discounted introductory rates — 99 cents a week instead of the $3.75 minimum they’ll have to pay when their offer runs out.) If we guesstimate an 80/20 split between the cheapest and most expensive pricing packages, that would generate almost $25 million a year in new revenue for the Times. Now, that’s not $25 million in new profit — the paywall costs money to run and market — and it’s still small in the context of a company that generated $566.5 million in revenue just in the last quarter. It’s something, and climbing revenue is better than declining revenue — and of course if that 100,000 number grows, even better.

But let’s go back in time. Check this MarketWatch piece from 2005 from the last time the Times put up a paywall, with TimesSelect:

The chief of the New York Times’ digital operations said he is “delighted with the enthusiastic response” to the company’s subscription package offering access to editorials, opinion pieces and columnists, as well as the paper’s archives. TimesSelect is priced at $49.95 for a year and $7.95 a month.

Martin Nisenholtz, a Times senior vice president, reported that TimesSelect has signed up 270,000 subscribers in the two months it’s been available. Half the number represents home-delivery customers who get the package included with their print subscriptions.

So of the 270,000, half — 135,000 — are digital-only paid subscribers, the closest equivalent of the 100,000 number the Times announced today. That was after two months of TimesSelect.

Comparisons between TimesSelect and the new system are always imperfect. One only affected a small portion of the Times’ content; the other affects nearly all of it, but only for certain users who consume it above certain quantities and through certain channels. One had a flat and relatively low price; the other has a menu of options, all more expensive than last time. And the environment for paid content in 2011 is different from 2005′s in lots of ways.

But both new and old faced the same fundamental question: Will the paywall continue to convert new customers, or will it eventually tap out the supply of existing Times lovers? Flash back to 2007, when TimesSelect was pulled down:

TimesSelect had about 227,000 paying subscribers as of August. People who receive the paper at home get access to it for free, as do students. In total, about 787,400 people have access to TimesSelect now, the company said.

So, from September to November 2005 — in the first two months — the Times signed up 135,000 subscribers to TimesSelect. Then, between then and September 2007 — 22 months — it signed up only another 92,000.

We actually have a few other data points. In January 2006, the number of paying subscribers was 156,000 according to Editor & Publisher. In September 2006, the number was 198,690. This MediaPost article quotes 220,090 in April 2007 and 224,580 in June 2007.

Plot those known numbers on a chart and this is what you get:

Yes, there was an initial rush of digital subscribers. I suspect these were disproportionately the kinds of Times readers that Martin Nisenholtz was referring to in his chat with Peter Kafka last month:

When you look at the research that we’ve done, tons of people actually say, “Jeez, we’ve felt sort of guilty getting this for free all these years. We actually want to step up and pay, because we know we’re supporting a valuable institution.”

These are the people who love the Times and have no problem ponying up a few bucks a month as soon as they’re asked, both because they see the value in the paper and out of a civic-minded spirit. (I’m one of them!) They’re the primary target of the Times’ paywall efforts past and present.

The problem is that there are only so many of them around. And TimesSelect, at least, had a difficult time getting a lot of traction beyond them — with subscriptions increasing by only about 7,000 in the last four months.

Now, there’s no reason the new digital subscriptions have to follow the same course as TimesSelect. The metered model, with its unusual correlation to the calendar month, will mean that many readers will hit the paywall inconsistently, and I wouldn’t be surprised if the subscriber numbers weren’t on as smooth of a time curve as TimesSelect’s were.

But the last time there was a rush of people wanting to pay for nytimes.com, it was followed by a long plateau of slow growth — and eventually, by Times executives deciding that the lost advertising revenue (plus the mistaken public perception that the entire paper was behind a paywall) was too big a price to pay for its strategy. 2011 isn’t 2007, but the only way we’ll learn how this time is different is to wait it out.

January 22 2010

15:06

This Week in Review: The New York Times’ paywall plans, and what’s behind MediaNews’ bankruptcy

[Every Friday, Mark Coddington sums up the week’s news about the future of news and the debates that grew up around them. —Josh]

The Times’ paywall proposal: No question about media and journalism’s biggest story this week: The New York Times announced it plans to begin charging readers for access to its website in 2011. Here’s how it’ll work: you can view an as-yet-unidentified number of articles for free each month before the Times requires you to pay a flat, unlimited-access fee to see more; this is known as a metered system. (If you subscribe to the print edition, it’ll be free.) Two Times execs answered questions about the plan, including whether you can still email and link to articles (you can) and why it’s different from TimesSelect, the abandoned paid-content experiment it tried from 2005-07. Gabriel Sherman of New York’s Daily Intel, who broke the rumor on Sunday, has some details of the paywall debate within the Times.

There’s been a ton of reaction to the Times’ plan online, so I’ll tackle it in three parts: First, the essential reading, then some other worthwhile opinions, and finally the interesting ephemera.

Four must-reads: It makes sense to start with New York Times media critic David Carr’s take on the plan, because it’s the most the thorough, cogent defense of the Times’ paywall you’ll find. He argues that Times execs “have installed a dial on the huge, heaving content machine of The New York Times,” giving the site another flexible revenue stream outside of advertising. If you’re up for a little algebra, Reuters’ Felix Salmon has a sharp economic analysis of the paywall, arguing that the value of each article will become much greater for subscribers than nonsubscribers. For the more theoretical-minded, CUNY prof C.W. Anderson has some fascinating thoughts here at the Lab on how the paywall turns the Times into a niche product and what it means for our concept of the “public.” And as usual, Ken Doctor thoughtfully answers many of the practical questions you’re asking right now.

Other thoughtful opinions: Poynter’s Bill Mitchell poses a lot of great business questions and wonders how the Times will handle putting the burden on its most loyal online-only users. Steve Yelvington reminds us that we’re not going to learn much here that we can apply to other papers, because “the Times is fundamentally in a different business than regional dailies” and “a single experiment with a single price point by a single newspaper is just a stab in the dark.” Before the announcement, former Editor & Publisher columnist Steve Outing, Forrester Research’s James McQuivey, and Reuters’ Felix Salmon gave the Times advice on constructing its paywall, almost none of which showed up in the Times’ plans. Two massive tech blogs, TechCrunch and Mashable, think the paywall won’t amount to much. Slate’s Jack Shafer says people will find ways to get around it, NYU’s Jay Rosen echoes C.W. Anderson’s thoughts on niche vs. public, and CUNY’s Jeff Jarvis doesn’t like the Times’ sense of entitlement.

The ephemera: The best stuff on Twitter about the announcement was collected at E&P In Exile and the new site MediaCritic. Steve Outing and Jason Fry don’t like the wait ’til 2011, and Cory Doctorow is skeptical that that’s even true. Former E&Pers Fitz & Jen interview a few newspaper execs and find that (surprise, surprise) the like the Times’ idea. So does Steven Brill of Journalism Online, who plans to roll out a few paywalls of his own soon. Dan Gillmor wants the Times to find out from readers what new features they’d pay for, and Jeff Sonderman makes two good points: “The major casualty of NYT paywall is sharing,” and “Knowing the ‘meter is running’ creates cautious viewing of the free articles.”

Apple’s tablet to go public: Apple announced that it will unveil its “latest creation” (read: its new tablet) next Wednesday. Since the announcement came a day after word of the Times’ paywall plans broke, it was only natural that the rumors would merge. The Daily Intel’s Gabriel Sherman, who broke the story of those Times plans, quoted Times officials putting the Times-tablet-deal rumors to rest. The Wall Street Journal detailed Apple’s plans for the tablet to do to newspapers, magazines and TV what the iPod did to music. Meanwhile, Columbia j-student Vadim Lavrusik and TechCrunch’s Paul Carr got tired of the tablet hype — Lavrusik for the print industry and Carr for tech geeks. (The Week also has a great timeline of the rumors.)

MediaNews goes bankrupt: Last Friday, MediaNews Group — a newspaper chain that publishes the Denver Post and San Jose Mercury-News, among others — announced it would file for bankruptcy protection. (A smaller chain, Morris Publishing Group, made the same announcement the day before.) For the facts and background of the filing, we’ve got a few sources: At the Lab, MediaNews veteran Martin Langeveld has a whole lot of history and insight on MediaNews chief Dean Singleton. News business analyst Alan Mutter tells us about the amazing fact that Singleton will come out of the filing unscathed but Hearst, which invested in MediaNews to save the San Francisco Chronicle, stands to lose $317 million in the deal. And MinnPost reports that the St. Paul Pioneer Press was the only MediaNews paper losing money.

Looking at the big picture, Ken Doctor says that bankruptcies like these are just a chance for newspapers to buy time while adjusting their strategy in “the fog of media war.” Steve Outing takes a glass-half-full approach, arguing that the downfall of old-media chains like MediaNews are a great opportunity for journalism startups to build a new news ecosystem.

How much do Google News users read?: An annual study by research firm Outsell and Ken Doctor on online and offline news preferences made waves by reporting that 44 percent of Google News users scan headlines without clicking through to the original articles. PaidContent noted that Outsell has a dog in this fight; it openly advocates that news organizations should get more money from Google. Search engine guru Danny Sullivan was not impressed, giving a thorough critique of the study and its perceived implications. Syracuse j-prof Vin Crosbie also wondered whether the same pattern might be true with print headlines.

In a similar vein, BNET’s David Weir used comScore numbers to argue that Google, Yahoo and Microsoft support big newspapers, and Jeff Jarvis made one of his favorite arguments — in defense of the link.

Heartbreak in Haiti: I’d be remiss if I didn’t mention the journalism and media connections to the largest news story in the world for the past two weeks — the devastating earthquake in Haiti. Several sites noted that Twitter led the way in breaking news of the quake and in raising money for relief. The money aspect is new, but as Columbia j-prof Sree Sreenivasan noted last June, Twitter came of age a long time ago as a medium for breaking global news. That’s what it does. The coverage also provided an opportunity for discussion about the ethics of giving aid while reporting.

Reading roundup: In addition to being out in front of the whole New York Times paywall story, Gabriel Sherman authored a nice, long think piece for The New Republic on the difficulties of one of America’s other great newspapers, The Washington Post. For what it’s worth, Post patriarch Donald Graham thought it was “not even a molehill.”

Over at Snarkmarket, Robin Sloan uses the economic concept of stock and flow to describe the delicate balance between timeliness and permanence the world of online media. It’s a brilliant idea — a must-read.

Finally, a promising new site named MediaCritic, run by Salon veteran Scott Rosenberg, citizen journalism advocate Dan Gillmor, and Lucasfilm’s Bill Gannon, had its soft launch this week. It looks like it’s going to include some nifty features, like Rosenberg’s regular curation of Twitter commentary on big media subjects.

January 19 2010

15:49

What thoughts about metered paywalls say about journalism, the public, and The New York Times

When I was trying to come up with a conclusion to my doctoral research on local journalism, I penned these thoughts:

The internet has deeply problematized local journalism’s vision of its public…Online, all publics appear fragmentary. There is always an element of the public that cannot be networked. There is always a fraction of this uncaptured public only a mouse-click away…Insofar as journalistic authority rests on its claim to give the public flesh, such a claim is no longer tenable — if it ever was. Insofar as local journalism’s image of the public is grounded in a vision that sees the public as a unitary, structural, or even interlocking entity that journalism can either confidently speak to or call into being, the authority of journalism has become deeply problematic.

The questions about newspaper paywalls, then, are more than simply economic questions. They are more than simply questions about “will the model work?” and “can we balance the ratio between clicks and advertising dollars that maximizes our paywall’s effectiveness?” There are also questions about how journalists see themselves, and whether they can live with the answers that a paywall provides.

In its article claiming that The New York Times was “close to announcing that the paper will begin charging for access to its website, [through the kind of] the metered system adopted by the Financial Times, in which readers can sample a certain number of free articles before being asked to subscribe,” New York Magazine took a trip back in time to the days of TimesSelect, the Times’ last major attempt to charge readers for content:

The Times’ last experience with pay walls, TimesSelect, was deeply unsatisfying and exposed a rift between Sulzberger and his roster of A-list columnists, particularly Tom Friedman and Maureen Dowd, who grew frustrated at their dramatic fall-off in online readership. Not long before the Times ultimately pulled the plug on TimesSelect, Friedman wrote Sulzberger a long memo explaining that, while he was initially supportive of TimesSelect, he’d been alarmed that he had lost most of his readers in India and China and the Middle East.

Its easy to attribute Friedman’s displeasure to vanity, and to some degree, it’s probably just that simple. But his attitude is a window into a larger newspaper mindset, one that sees the news provided by newspapers through reporting as creating the common language by which “the public” informs itself about issues of public relevance. As creating the public, as it were. It’s a world where “All the News That’s Fit to Print” is more than just an outdated slogan. It’s a world where the slogan is true.

I wrote last month that the emerging consensus about paid journalist content seems to be, “most people won’t pay anything for traditional journalism, but a few people will pay something, most likely for content they (1) care about and (2) can’t get anywhere else.” In other words, people will pay for niche content. Any sort of paywall — even the metered kind, like the Times is said to be proposing — is ultimately making a wager on the argument that it is enough of niche product that a wealthy enough niche of readers will pay for it. Putting up a meter represents the ultimate compromise between visions of news that are “mass” (“we want everyone to read this”) and niche (“we want to be unique enough that we will get unique people to pay”), because it ultimately amounts to a tax on the heavy users. (I have a sneaking suspicion that it is this compromise between the Times’ vision of itself as the crucible of the public and a vanity product that rich people will pay for that Jay Rosen was referring to when he tweeted that the alleged NYT plan “fit the mold” of previous attempts by the paper to strike the proper balance.)

In the days of advertising-funded journalistic content, there was no contradiction between the number of readers you had, your profitability, and the degree to which you could claim to print “all the news” that mattered. (This ignores, for the moment, the fact that even in the glory days of the industry business and circulation managers targeted particular demographic slices. But that was a decision largely hidden from editors and journalists, who could continue on under the illusion that they were writing for everyone.) These days, however, there is just such a distinction. In the world of the networked public sphere, putting up walls around your content ultimately moves you out of the center of the public network, which means you’re less linked to and less read. Putting up walls around your content means you can charge the niche but must sacrifice the illusion that you speak for and to everyone.

So there’s more to the New York Times’ decisions on meters and paywalls than just the question of whether the strategy will succeed economically. There are questions about how the internet has already changed the Times, and how the dawning world of niche-reader taxation will change journalists’ ideas about what they do and who they write for. And there are questions about how we ourselves see the “public” we are a part of. We live in a world where were our “nicheness” has never been more obvious, and one of the great questions in the years ahead is whether we are still capable of seeing ourselves as a part of something more. In order to do so, I think we need to radically rethink what we mean when we say the word “public.” Down with structural notions like “public spheres,” or even phrases “networked publics!”

These topics get us away from issues directly related to The New York Times, though, and might be better addressed in a future post.

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