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June 20 2013

14:13

The New York Times adds a meter to mobile apps

Since 2011, the Times’ web paywall and app paywall have functioned differently. The website gave nonsubscribers a maximum number of articles per month; its apps set aside a subset of top stories that were free to all, but put everything else beyond reach.

The newspaper just announced it would be normalizing that divide, creating a meter for readers of the company’s mobile applications. Starting June 27, nonsubscribers will be able to read three articles per day through the app before being prompted to sign up for a subscription. After that, they’ll still get to browse headlines and article summaries. Videos will remain free inside the app, as Denise Warren, the Times executive vice president of the digital products and services group, previously told the Lab in April.

This spring, Times CEO Mark Thompson promised the company would be introducing a new suite of digital products to broaden its base of readers. But the Times’ mobile meter doesn’t come at a new price point. For an app-centric reader, the cheapest option for reading the Times starts at $15 every four weeks, which provides access to NYTimes.com and smartphone apps.

The timing may just be a coincidence, but the Times’ soon-to-be sold sibling, The Boston Globe, introduced a new mobile app subscription plan Wednesday which will cost readers $3.99 a month.

June 13 2013

07:02

The newsonomics of Hearst Magazines’ one million new customers

Take this quiz. The era of paying for digital access (a.k.a. digital circulation or paywalls) is about:

  1. Getting more money out of core subscribers;
  2. Getting new money out of new subscribers; or
  3. Getting money any way you can.

Okay, 3 is a gimme. But 1 and 2 are very different strategies. While most newspaper publishers are leaning heavily on their long-time core bases by promising and delivering all-access, Hearst Magazines is taking a contrarian turn in the market. It’s a strategy that is largely at odds with peers Condé Nast, Time Inc., and Meredith, as well as most newspaper publishers. It’s betting almost wholly on new customers.

“We want unique paying digital customers,” says Chris Wilkes, VP for audience development and digital editions for Hearst Magazines. “We’re not interested in people reading print and digital together. We want people who are engaging with our digital products, and we’re attracting people who want to read in the digital format.” The company has experimented with a little bundling — at “fair” (higher) and not “ride-along” prices — Wilkes says, but that’s a minor part of the business.

He can now offer up one big seven-digit number to back up that strategy: One million paid digital subscribers. That’s the number of new subscribers Hearst Magazines was able to announce in May. Hearst Magazines president David Carey met that magic number just a few months behind his target. At one million, it’s still only about 3-4 percent of Hearst’s total print circulation — but it’s a milestone. The company is aiming to make 10 percent of its total circulation digital by 2016.

It’s not that Hearst is saying it won’t do all-access ever. But its reason for zagging while other zig is clear.

“It’s easier for us to pivot out of a paid model to authenticated than it would be for others to go the other way,” Carey explained to me earlier this year. In other words, Hearst can go all-access, but would do it at higher prices, reflecting dual value.

Those million subscribers are spread unevenly among 21 digital magazines. The biggest title is Cosmopolitan, with 175,000 paying digital subscribers, or 6 percent of its total circ. O, Oprah’s mag, is second at 108,000. The Food Network’s is third.

Carey’s big digital push encompasses a lot more than digital editions. The Hearst Tower is seeing lots of shake ups, new hires, and new projects. At the top, longtime COO Steve Swartz has finally moved into the CEO’s suite as Frank Bennack’s remarkable three-decade tenure has drawn to a close. He now heads a well-diversified private media company reaching into magazines, TV, newspapers and business media.

Hearst just hired digital native Troy Young as president of Hearst Magazines Digital Media. Young’s digital business associations — xoJane, ReadWrite, Refinery29, Spinmedia, and CrowdSurge — lead to this job where he’ll be responsible for “digital content, technology, operations, revenue, product, and business development strategies.” The company has now made it possible for advertisers to buy across its digital titles through Totally Global Media. Its two-year-old App Lab is home to 40 staffers. Its embrace of native advertising is recent, warm, and wide; it has just announced five new products in the field, and raised some editorial eyebrows as its magazine staff is writing commercial copy as part of their jobs.

Hearst’s strategy here is one to watch. There are good reasons (more on that below) why daily newspapers have opted to go for door number one and get more money from long-time subscribers while making new subs a largely second priority. But they know that’s a two- to three-year strategy. As 10,000 baby boomers turn 65 every single day through 2031, the older-reader market inevitably winnows and must be refreshed with new, paying customers. For daily newspapers, getting younger (yes, younger means under 55) readers to pay is mostly phase two.

So let’s see what Hearst learning, as it leads both newspaper companies in that quest and its fellow magazine chains as well.

There’s a lot to like about the demographics of the digital audience. According to the company’s data, the readers are 10-20 percent more affluent, 10 years younger, and more educated. Wilkes acknowledges that those good demographics may be skewed by early tablet demographics themselves, but they are directionally vital.

Make no mistake: The tablet is the linchpin here. How much of the reading of these magazines happens on the tablet? An amazing 98 percent. For many, the tablet is a truly becoming a replacement for the print magazine.

Wide distribution is key to gaining numbers; subscriber growth is now moving at about 10 percent a month. Hearst uses all the platforms out there, from the Apple, Amazon, and Android stores and beyond. It is also testing magazine aggregation: It’s an owner of Next Issue (“The newsonomics of Next Issue magazine future”), which offers dozens of titles at two price points, and it partners with Zinio (which just debuted its first multi-title offer).

The tablet, of course, has become the lifeline of the magazine, a bequest of Steve Jobs, soon to be refreshed by the changes coming in iOS 7. While the horizontal web page always proved an awkward fit for vertical magazines, the tablet is oh-so magazine like.

“It was a small novelty business [on the pre-tablet web],” Wilkes says. “We knew when the iPad came out, we would finally be able to build our business.” The iPad revolution completely changed the magazine industry’s potential trajectory.

Newsstand sales continue to crash — down 8.2 percent in the second half of 2012, in part, of course, because of the millions of tablets that readers are carrying into airports and on trains. (And soon, when the FAA finally relaxes tablet reading on takeoff and landing, the necessity of having a print piece packed away will lessen further.)

Hearst, while arguably leading the magazine pack, certainly has its own challenges. Its single copy sales lost 1.9 percent in 2012, even though its 2.3 percent overall circulation increase to 30.7 million stands out among its peers.

For the first quarter, print ad pages were down 4.9 percent for U.S. consumer magazines, though only 0.1 percent in revenue due to price increases. Hearst Magazines was up 6.6 percent.

Given the across-the-spectrum drop in print advertising, both Time Inc. and Meredith have recently laid hundreds of employees. Time Inc. is, of course, in turnaround — yet again. First up for sale and now to be spun off from Time Warner, it let CEO Laura Lang go after but a year of ongoing strategic review and seems significantly behind Hearst in digital innovation. It is now playing catch-up with notable hires for Time.com, but is climbing out of its indecisive recent past; ad pages were down 12.2 percent in 2012, though up 0.6 percent for Q1 2013.

It’s intriguing that Hearst has — so far — embraced a double-edged bundling philosophy. While it won’t, largely, bundle print and digital subscriptions, advertising is mostly bundled. If you buy an ad in House Beautiful or HGTV Magazine, you are paying for the whole rate base, including that three percent of the readership that’s tablet, says Wilkes. At this point, a buy is a buy, though, Hearst, like so many others, is going to town on all the new possibilities of customizing advertising for top brands. It’s not just those latest buzzwords, content marketing. It’s interactive ad creation. Advertisers who buy print can tweak their tablet ad to use its capabilities.

Wilkes notes a real movement in the ad creation business. Last year, he says, 85 percent of the ad customization done for the e-edition ads were done by his App Labs staff, with only 15 percent of advertisers, or their agencies, doing the tweaking. This year, brands or their agencies have assumed the work in about 40 percent of the cases, with the Apps Labbers doing the rest.

Wilkes anticipates the work will continue to migrate back to the advertiser. That’s a big lesson for all the publishers jumping into the agency business: As traditional agencies step up, increasingly fearing their own obsolescence, the custom/content marketing units of publishers will get more competition. Many inevitably will fall back to doing what they’ve long done: sell space. Those — nationally or locally — who see riches in becoming agencies — may find the going a lot tougher than it may be in 2013.

The pricing of the digital magazines is a big question and still a work in progress.

Magazines, which long used token reader payments just to print hundreds of pages of lucrative advertising, have a price problem. As John Loughlin, GM of Hearst Magazines, recently put it at MPA Swipe 2.0, “a magazine subscription needs to be valued at more than two venti cappuccinos.” Magazine publishers realize, just as their newspaper brethren do, that the challenges of digital advertising will only grow, as print ad pages decline — and that readers must pay more of the freight going forward.

On average, Hearst’s digital mags cost 30 percent more than their print equivalents, Typically, they are $19.99 for a year, $1.99 for a month. Buyers can pay for a single issue or per year, depending on the title. A majority opt for the annual sub.

“It’s not pricing up — it’s pricing back,” says Wilkes, meaning magazines need to regain value lost in the heavily discounted print subscriptions that can now be found in seconds simply by Googling.

It’s true that most of that 30 percent in higher prices never reaches Hearst, as it deals with Apple and others of its more than a dozen distribution points, many of whom take cuts in the 15-30 percent range as commission. Wilkes says that’s not the reason for the 30 percent upcharge — it’s meant to convey a new value for the tablet age.

Might the price go higher? Early data says it could. A magazine’s price isn’t among the top reasons readers buy — or don’t. As Hearst interacts with consumers and reads app reviews, it sees that customer satisfaction with the product is by far the key driver in gaining and keeping subscribers. “We’re not seeing much price sensitivity,” says Wilkes.

The pricing conundrum is at least two-sided. Magazines have a greater ability to draw in new subscribers. Getting someone to one-click for $20 is one thing. Getting them to commit — after cheap trial subs — to $200 to $300 for a year’s newspaper subscription is another.

So here magazines may have an edge at gaining new customers — unless newspapers can figure out cheaper subset products that may provide more saleable price points. The Wall Street Journal’s test with Pulse, on three cheaper products, may not be producing big results, but expect to see more such tests; The New York Times’ first-quarter earnings announcement about new niche paid products is one to watch here.

Yet newspapers’ weakness is also their strength. Their all-access plans have been front and center for a reason. On average, those putting all-access plans into place have increased subscription prices 40 percent, according to Press+, the leading supplier of paywall technology to the U.S. industry. Forty percent of $250 is $100. Newspaper publishers will tell you they’d rather increase rates for readers across the board than expect “onesie or twosie” new sales to propel their businesses and make up for ad loss.

The New York Times, now getting close to 700,000 digital subscribers and offering all-access to print readers is the best example of a daily having it both ways.

The bigger money that newspaper publishers are taking in makes magazine publishers envious. It’s important to acknowledge the differing cost bases of the newspaper and magazine industries — but still, the ability to yield significant new reader revenue has largely been a newspaper advantage.

Hearst Magazines, in reaching the golden million number, is the leader in new consumer magazine reader revenue. It has added, we can extrapolate, about three to four percent of new reader revenue to the mix. That’s impressive, but not world-beating. Literally, at $20 price points, or even $30 prices, they need millions of new readers — which is David Carey’s plan — to fundamentally alter publisher economics.

One further hope may be niche paid products. Hearst Magazines’ own experience with those may be cautionary. It has produced numerous standalone apps out of its shelter, food, and health properties, but is now de-emphasizing that development. Why? Too much noise in the marketplace, so too little return for the investment. Rather, it will concentrate on improving its digital editions.

There’s one more long-term business strategy playing out here. It’s hard to see in 2013, but it will enjoy high visibility by 2020. Hearst’s cost in printing and distributing magazines are 30-40 percent of its overall cost base, on a par with newspapers. As its readers cross over (“The newsonomics of crossover”), paying as much or more for digital as they do for print, profit increases markedly. At three percent of circulation today, or 10 percent in 2016, Hearst won’t be at crossover. Expect, though, that crossover to move more quickly for Hearst than for other publishers.

As it reaches 50 percent and more, it’s a new business, and strategies, like Hearst’s, may make even more sense in the rear-view mirror.

February 28 2012

18:12

From Salinas to Burlington: Can an army of paywalls big and small bouy Gannett?

Brick wall with window

Gannett is mounting the biggest campaign yet to make readers pay for journalism online. And the newspaper company’s size means its success or failure could ripple throughout the marketplace.

By the end of the year Gannett plans to launch digital subscriptions for almost all of its newspapers, a kind of unified paywall that would operate on the web, mobile and tablets and cover 80 of the company’s news sites, with the exception of national flagship USA Today.

For newspapers it may signal a turning point, since readers are now looking around the marketplace and finding fewer free papers. That doesn’t mean a change in the amount of free news (aggregation and sharing remain rampant), but it could have an effect on people’s perception, or even willingness, to pay for news. It’s like looking around for cheap gas in your neighborhood: If all the stations list unleaded at $3.85, you’re more likely to believe $3.85 is the going rate for fuel.

Until now there has been no paywall rollout of this scale for U.S. newspapers, with most digital subscription plans emerging piecemeal at places like The New York Times, The Baltimore Sun, and The Boston Globe. The Gannett plan reaches readers across 30 states (and Guam!). In other words, the number of paywalls in the United States will jump dramatically, as well as the number of people exposed to them.

Gannett is pushing a total digital transformation, not just a paid content strategy.

Like all paywalls, the success of Gannett’s plan largely hinges on people’s willingness to pay for news online. (That, and how easy it is to pay. More on that in a bit.) The company is betting readers will pony up, projecting at least $100 million from the new subscription program by next year.

The paywall should be easily scalable, since Gannett likes to take advantage of consolidating resources within the newspaper group. The paywall mechanics and back end will be the same for all 80 papers, but details about pricing and metered access get decided on the local level. Gannett’s papers run the gamut of small to big, and no two communities are alike when accounting for factors like Internet use and penetration of mobile devices. That’s likely why the company began testing digital subscriptions at select papers in St. Cloud, Minn., Poughkeepsie, N.Y., and Lafayette, Ind., among others.

If Gannett has any data about its paywall experiments, it’s keeping it quiet. (The company has, however, been preparing employees to answer questions about the change.) Since the paywall test sites were announced in 2010, no numbers have been released on subscribers or circulation revenues. So what have they learned? Here’s what a Gannett spokesperson told me via email:

On the previous pilots, we learned a lot about consumer engagement and willingness to pay for unique local content from our experiments in Greenville, Tallahassee and St. George. This new model builds on that, responding to consumer demand to have the news and information they value available on whatever platform they choose. Obviously, we feel those early tests were successful or we wouldn’t be building a new subscription model around those learnings. However, we are not going to discuss confidential business data at this time.

Gannett is pushing a total digital transformation, not just a paid content strategy. There will be dozens of tablet and phone apps, which, aside from color schemes and branding, will likely look and work similar across the 80 properties. Again, Gannett’s size is a boon for small and mid-sized papers, as the company can bring them to market faster than the individual papers could have alone. As tablet usage continues to grow, apps or other digital access can incentivize digital subscriptions.

There is some evidence that paywalls for small and mid-sized newspapers can succeed, or at least shore up circulation and not be a drag on revenues. At the same time, in some cities a paywall has boosted circulation of the Sunday paper in particular (the “Frank Rich Discount”). Newspapers in Memphis and Minneapolis have seen bumps in the Sunday circulation, but for others that increase has has yet to fully materialize.

For each community it comes down to how a digital subscription plan is executed, said Ken Doctor, a media analyst and the Lab’s resident expert in Newsonomics. Specifically, he said, it’s a question of how to charge readers, existing versus new, or whether to offer a print discount versus an additional charge for web access.

“What Gannett is saying is, ‘We think we can bump revenues by 10 percent from essentially being flat.’”

For other publishers the decision is simple: Increase subscription prices across the board and promote the value of bundled access to mobile, tablet and desktop. Taking all of that into consideration, and Gannett’s $100 million calculation, doesn’t seem impossible. “What Gannett is saying is, ‘We think we can bump revenues by 10 percent from essentially being flat’,” Doctor said.

Hitting that target is easy when you factor in the conversion of existing print subscribers to digital subscribers. The challenge for most local and regional papers with paywalls is bringing in new readers, who are getting their news elsewhere. And most people signing up for digital subscriptions are older readers, he said. “I haven’t heard of any regional paper that produces substantial digital only customer numbers and revenue numbers,” Doctor said. These are problems that point to whether paywalls can have long term success for locally focused journalism.

Since each site has the ability to determine the pricing for its subscription plan, there will undoubtedly be tension between what individual markets will bare and what the mothership needs to improve its bottom line. For Gannett, one paper’s success with digital subscriptions can be another paper’s failure. The fate of Gannett’s plan rests in whether the Sioux Falls Argus Leaders of the world offset the likes of The Indianapolis Star or Cincinnati Enquirer.

Image by Darwin Bell used under a Creative Commons license

December 19 2011

15:20

Getting a Tablet Is Easy; Getting Digital Magazines Is a Pain

Buying that new iPad, Kindle or Nook for Christmas is just the first step to becoming a digital magazine reader. While shopping for books and movies is a fairly straightforward process, getting your favorite magazines onto your new e-reading device can be trickier.

The ways you can buy a magazine are rapidly multiplying, making it harder for readers to evaluate their choices. Major magazine publishers, digital newsstands and magazine customer service companies are trying to simplify the process of setting up digital magazine subscriptions, but so far, it's still sometimes a confusing process. Here's one strategy to get your digital magazine subscriptions set up for e-reading enjoyment.

Check Subscription Expiration Dates

It's helpful to know when your print magazine subscriptions expire if you really want to switch fully to digital-only subscriptions. If you have only one or two print issues left, you might wait until the print subscription ends to sign up for a new digital-only subscription, if that's offered by the publisher. The reason for delaying the move is that the "midstream" print-to-digital subscription switch is challenging for publishers right now. Some magazines can immediately convert your subscription to digital and stop your print issues from arriving in the mail; some can't.

zinio.png

Zinio, one of the major newsstands for digital magazine subscriptions on iOS and Android, is developing a way to make this conversion easier, but it's still in the works.

"For example, if you had Men's Fitness and you wanted to switch it midstream, you would let Zinio know, and Zinio would contact the publishers to handle it for you," said Jeanniey Mullen, Zinio's global executive vice president and chief marketing officer.

Mullen said magazine publishers might model this process on Canada's epost service, which provides a centralized location for consumers to request e-bills instead of paper bills from a variety of billers.

For now, don't count on being able to immediately go all-digital for your existing magazine subscriptions. Depending on the magazine's policies, you may be better off waiting until the end of an existing print subscription, or may have to continue the print subscription to get digital access. You may also find that some of your favorite publications don't even have digital editions yet.

Investigate Your Options

When you're ready to pursue digital subscriptions, your first step should be to review -- thoroughly -- each magazine's website. Information about digital editions and magazine apps can sometimes be hard to locate, so rather than sifting through the magazine's website, opt for a Google search for its title and "digital edition" or "tablet edition."

strategicss.png

"Over time, I'd like to see a standard way of communicating what formats are available and a standard way of getting to them," said Tony Pytlak, president and chief operating officer of Strategic Fulfillment Group, which provides fulfillment services to a number of magazine publishers. "Right now, even a lot of the newsstands that are coming out don't provide things clearly."

You might find that you can access a digital edition for free as a perk of your existing print subscription. For example, subscribers to the print editions of The New Yorker or Wired can immediately get access to their tablet editions for free. Later, when you renew your subscription, you might seek a digital-only option if you find you're enjoying the digital editions more than print.

Publishers are experimenting with package deals, meaning offerings will vary widely among different magazines.

"Our publishing partners are trying to find, for their unique audience, what's the right combination of print/digital, at what price points -- and what does a subscriber to one or the other, or both, actually have access to," Pytlak said.

SFG gathers customers' responses to various print and digital subscription package deals in its database so that publishers can analyze their success. "If you're going to test print only, or digital only, at one price or another, or digital at a slightly higher upsell, capturing the customers' responses to those kinds of offers will help our partners understand them," Pytlak said.

Some magazines have chosen dedicated apps as their only digital content option (other than their websites). That means you'll have to visit the app store for your device (such as the iTunes Store) to download the app, and then likely will purchase the subscription to the magazine's content through the app. You'd then revisit the app on your device to access new content as it's made available.

Additionally, some magazines' digital editions are offered through a newsstand-type app like Zinio, which serves as a storefront for digital magazines. Amazon also sells digital subscriptions for Kindle devices through its Kindle Store, just as Barnes and Noble does on its website for the Nook.

Make the Switch

Once you know what subscription choices a magazine offers, you can either attempt to switch your print subscription to digital by using the magazine's website, if that's an option available online, or -- more likely -- you'll need to call customer service to get help.

"The best proactive approach is to contact the publisher directly, and let them know what they're trying to transfer to digital, and let them know what digital platform," said Zinio's Mullen. "If they've got an iPad, they can say, 'I want to transfer my print subscription to the digital version you have on [the iTunes] Newsstand' ... It will be extremely helpful for the customer service team to know that."

Still, there's no guarantee that customer service representatives will be able to help you. Pytlak said your success may differ from publisher to publisher.

"It varies in how they let their service providers help them," Pytlak said. "Some service providers are not able to handle the transition from print to digital. It's a function of the publisher and the service provider working together to sync those things up and make it easy for the customer to do that."

Form a Digital Magazine Habit

Once you've successfully made the switch to digital subscriptions, it can be hard to remember that you have new issues to read without the physical reminder of a new issue arriving in the mail.

Some magazine and newsstand apps will provide a notification on your device that a new issue is available to read. Those notifications can pile up and become easy to ignore, however. If notifications aren't available, you'll have to remember to reopen the app and see what's new. It can be easy to forget about apps, especially considering app users' habits: 26 percent of apps downloaded are never opened again after their first use. If you're paying for a subscription, though, your motivation to revisit an app might be higher.

Some magazines' digital editions will give you the option of receiving an email notification whenever a new issue is available, which -- depending on your email habits -- might be a more effective reminder to read your magazine.

Improving the Process

Clearly, making the switch from print to digital magazine subscriptions isn't always an easy process. And not everyone is choosing to switch completely just yet.

"I'd call it a shift in consumers' media habits, but not necessarily a transition from print to digital," Pytlak said. He said today, SFG receives more requests from readers to change subscriptions "either print to print, or print to digital and print, more so than print to digital."

Mullen said that rather than just converting existing print subscriptions, many new e-reader users are trying out magazines that are new to them, especially when promotional offers are available.

"They'll buy a single issue of a magazine they've never bought in print before," she said. Additionally, using Zinio, "a very high percentage of people will subscribe to magazines they've never subscribed to in print."

Both Pytlak and Mullen say that standardization of print and digital subscription management is necessary both to make subscribers' lives easier and to improve publishers' ability to gather and analyze data about their subscribers.

"I see 2012 as a big year of change around subscription management on the back end and in fulfillment processing," Mullen said. "It's a very consumer-oriented challenge that we all need to address. A lot of publishing houses are interested in making the midstream switch as easy as possible. The lack of standardization is really the challenge, and where I think we will see advancement in 2012."

Susan Currie Sivek, Ph.D., is an assistant professor in the Department of Mass Communication at Linfield College. Her research focuses on magazines and media communities. She also blogs at sivekmedia.com, and is the magazine correspondent for MediaShift.

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July 06 2011

20:00

Another perk for NYT subscribers: “Share your access”

Are you a New York Times subscriber? Are you related to one? If so, today’s your lucky day: The Times, in an email just sent out to print subscribers, is announcing that subscribers will now be able to share their digital access with a family member of their choosing. Think of it as the Frank Rich Discount, bring-a-plus-one edition. (The Times is also offering the deal to digital-only types who subscribe to the most expensive, $35-every-four-weeks package.)

It’s an interesting move. For one thing, it’s another way for the Times to differentiate its price points, which for digital-only are currently $15 for web and smartphone app, $20 for web and tablet app, or $35 for web, smartphone, and tablet. That $35 top-tier item has always seemed a little high next to its peers, and bringing this sharing mechanism only to those subscribers could give another reason for some to pony up.

But, more interestingly, the move shifts the calculus of the NYT’s porous paywall, for which the locus of subscription has been a single person. In print, a family was able to share the paper among husband and wife, son and daughter — maybe even with a neighbor. Digital subscriptions, with their logic of one-subscription-per-person, reframed that community ethos: When the paper rolled out its pay meter, its core consumer became the individual, not the group.

So while today’s share-a-subscription move may be a way, of course, for the Times to collect more email addresses and other user data, and to build its user base, and to encourage Times subscribers to sync up their print and their digital accounts…it’s a move that also seems aimed at recapturing some of the communal aspects of paper subscription and consumption — just on a digital plane. (I’m sure the Times would love nothing more than to spark a few intra-family squabbles over who gets to share Mom’s digital access.)

And its language announcing the new policy bears that out. As of today, the Times stresses, digital subscribers can share digital access with a family member — not a friend, not a coworker, not an acquaintance, but an actual relative. “Now you can share your All Digital Access with a family member at no additional charge,” the email says. Click on the link included in the email, and you’re sent to a “Share All Digital Access” page that, though fairly sparse, repeats the term “family member” three times.

And in the Shared Access FAQ, the “family member” count jumps to seven.

Which is curious, since the invite page uses a text field that could be filled in with the name and email address of anyone, family or no. (Dear Colin Firth: You don’t know me, and we’re not related. But I’ve got a New York Times Digital Access invite with your name on it…)

And leaving aside the pesky philosophical questions (what is family, really?), what the move also means is that people who are already NYT subscribers, as of today, have been granted one of the more powerful perks of the early adopters: invitations to a fairly exclusive party. (You didn’t have to be on Twitter the day Google+ rolled out to appreciate the sway of the phrase “I’ve got invites.”) Which is a nice thing for the paper’s existing subscribers — and a nice incentive for more people to join their ranks.

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.

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