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Will You Pay for Your News? The New York Times Is Counting on It

by Elena on January 23, 2010

New York Times Building in ManhattanWe are a spoiled bunch.  With just the punch of the enter button on your keyboard you are seconds away from the answer to any question you may have.  How much does it cost to buy a condo in Long Island City?  How many calories are in kumquats? What the heck is ROI? Online users are accustomed to unlimited access to free information on the web.  With social networking sites like Twitter, it is possible to get updates on the latest news events, in 140 characters or less.  This is a small part of the reason why the New York Times’ new business plan is causing such a stir.  The New York Times plans to charge its most loyal readers, readers who will not doubt go over the set amount of free articles each month.  Don’t worry just yet; the plan won’t kick in until 2011.

From a purely business standpoint it makes sense that a newspaper of the Times’ size would charge people to read its content, but as we know, the online world works differently than the print world.  If you want the print version sent to your door everyday, you expect to pay for it; however if you want to read the online version every morning before you check your email, you expect it to be free.  I mean why not?  Most everything else is free online.

The prevalent business model for online media has generally been to offer free content to readers and to rely on advertising dollars in order to stay afloat.  This has put some strain on well-established and new publications alike.  Staff writers get cut and freelance writers make less money, hence the reason most writers are turning to unconventional methods to support themselves.  There is no doubt that media is changing, as it has many times before, people just have to figure out a way to change with it.  The question is, how do we do it?

While publications are suffering in general, The New York Times is of course very different than your small local paper or your daily blog reads.  It is much more costly to run such a huge operation, with reporters all over the world, as well as writers, editors, line editors, deliverymen, and distributors.  As Craig Moffett of Bernstein Research states, Google ads can’t pay for everything:

The notion that the enormous cost of real news-gathering might be supported by the ad load of display advertising down the side of the page, or by the revenue share from having a Google search box in the corner of the page, or even by a 15-second teaser from Geico prior to a news clip, is idiotic on its face.

He is right.  It is crazy to think that the high cost of maintaining such an operation can be covered by advertising, and if it can’t, how else can it support its daily operation?  David Firestone, a deputy national news editor elaborates this point.  “As painful as it will be at the beginning, we have to get rid of the notion that high-quality news comes free.”

The New York Times is worried about many things.  Their biggest worry is simply whether or not people are willing to pay for their news.  The changes won’t affect the occasional reader who stumbles upon an article after searching Google News, but rather the avid readers of the Times who return day after day.  Will these readers turn their back on the publication?  Another worry is of course ad dollars.  If the paper loses some of its audience, it will inevitably lose some advertising dollars.  It is risky, but with revenues down, they have to do something.

Some publications have found success in charging their readers.  Cook’s Illustrated charges its readers for unlimited access to their database of recipes.  If you check out their website you will notice something very strange.  There is absolutely no outside advertising, yet they were able to grow 30% in 2008.  This strategy works well for niche markets, but the Times is not for a niche market with its breadth of topics and news stories.  The Times will have to find a balance between subscribers and advertising.

Now this begs the question, would you pay for high quality news or other high profile news sources like the New York Times?  Sure people may say that they will pay, but when the time comes will they really pay up, or will they be looking elsewhere to get their news fix?  Other papers currently use the paywall method, such as the Wall Street Journal and Newsday.  The Times has tried to charge its online readers in the past, without much success.  From 2005 to 2007 the newspaper started TimesSelect which charged for its editorials and columns.  Columnists such as Maureen Dowd and Tom Friedman began to complain about their drop in readership.  Friedman noted that reader’s abroad, in particular readers from China and India, stopped reading his content because it became too expensive, especially for a country where $50 is a huge investment.

On a personal level I can relate to both sides of the argument.  Out of pure selfishness, I understand the draw of free content.  Times are rough and I want as much free information as the next guy.  As a writer who has been in contact with many publications that are having a hard time paying its contributors, I understand the importance of paying for high quality content.  I also believe that if a product is remarkable, then people will pay for it.  You may lose some consumers here and there, but it seems absurd to continue offering free products forever.

One thing that is certain in our information saturated world, industries are changing and little good has come from freaking out.  The music industry didn’t gain much from trying to sue every person that downloaded music illegally, and while it’s true that the music industry is struggling, products such as iTunes and Pandora has managed to keep people paying for their music.  We can stream free movies online, but that hasn’t stopped people from going to see movies on the big screen (Avatar already topped 500 million in the US).  Late night television has suffered in the ratings (such as Conan) because of its ever fickle audience; however other shows (even some non reality shows) have managed to gain large popularity by breaking the mold, such as Fox’s Glee.  What companies need to do is figure out new ways to reach consumers and hold their attention, which may be easier said than done, what with all the options we have to chose from.  Despite the blogs and new sites popping up, there is still space for a respected and high quality news outlet like the Times, where reporters are at the scene and are expected to exemplify a certain quality of excellence, even though they too make mistakes.  I don’t see this type of reporting changing anytime soon.

Image via: paalia

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Beyond The Hype: Can Technology Save The Day?
January 27, 2010 at 3:32 pm

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Michael January 25, 2010 at 8:08 pm

I agree that as a society we need to support high quality investigative journalism. It is expensive, and unfortunately, a dying breed. If that means regular readers have to pay a fee for online reading (print subscribers will still get online content for free), then so be it – at least in the U.S..

Elena January 26, 2010 at 12:53 am

I completely agree Michael. It may be hard to get people to subscribe at first because publications like the Times are so vast with their topics and information. It is much easier to monetize a niche market (such as a car magazine or cooking site) where true aficionados will pay up in order to get information that is specialized to their interests. I believe that the way we consume media is changing, however I don’t think that we are anywhere near completely relying on social networking sites or microblogging as our main news source.

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