This week's
termination of the New York Times' two-year-old premium news service is a newspaper industry landmark –- and disappointing to true believers in the market value of online news.
If paid news content doesn't play as a business proposition in the Big Apple and for the
Times' elite national audience, why think it would succeed anywhere else? So let's drop the curtain on this oft-floated scenario (get online readers to pay) for saving the industry –- for now and maybe forever.
The math driving Times Co.'s decision to liberate its columnists, its archives and some other special content from behind a paid wall is straightforward. Clearly the bet is that advertising gains for the
Times online will make up for the $10 million a year in lost subscription revenue. Since subscriptions had leveled after a fast start, pulling the plug on the paid model was all the easier.
Immediately the
Times can expect more visitors to its site and longer visits. Those are the two main criteria for pricing of online advertising. Archived articles, until now only free for 14 days, will see a particularly big boom in traffic with concurrent advertising possibilities.
What Changed?TimesSelect rolled out with considerable fanfare in 2005. Its demise raises the question of how the nations leading newspaper, with a highly developed Web presence, so misread the market.
Here, too, the
Times announcement was forthcoming. "What changed was that many more readers started coming to the site from search engines and links from other sites instead of coming directly to NYtimes.com."
These "indirect readers," as the
Times announcement called them, are both a dilemma and an opportunity as the industry banks on a Web future to help sustain news gathering and profitability.
Some of us who read or contribute to Web sites may not be aware, as managers certainly are, of current trends in traffic. At a Poynter seminar this summer, I was astonished to hear from Jay Small, who directs online operations for Scripps Howard newspapers, that at the company's showcase site in Knoxville, more than 80 percent of traffic enters someplace other than the homepage. Google and an assortment of side doors are the way in for most users.
This carries heavy implications for content and advertising. Many of us are learning that a well-written online head is keyword-tailored to search. A graceful play on words that might work in print with the right illustration and subhead doesn’t cut it .
As Rusty Coats, director of online efforts at the
Tampa Tribune, noted at the same seminar, the attention currently being lavished on de-cluttering and vitalizing home page design is only half the issue. Reader-friendly and ad-friendly design on article pages, together with and some navigation options, may be equally or more important given how these sites are actually used.
Small said that many of his
KnoxNews readers head directly to an ad category of interest like job or auto listings. News content may be of secondary interest or none at all, but newspaper sites would be foolish to blow off customers who are there primarily for ads and e-commerce.
Also, now more than ever, finding a way to match the reader/user to a specific category of advertising that will be of interest is key to unlocking value from this rather chaotic stream of traffic. That can be the simple match of an article being read with an associated product or service -- though what might work for a takeout on fitness obviously won’t for the latest from Iraq. Or the ad matches can be generated from captured information tracking a user’s past behaviors at the site.
All this may come as deflating news to journalists who continue to assume that their work and the overall excellence of an online news report with Web-specific enhancements are the core of what is attracting traffic. It is a crucial part -– but only a part.
Not so long ago, New York Times CEO Arthur Sulzberger Jr., among others, was saying that as consumers choose to read their papers online, editorial and advertising will move with them, perhaps in time supplanting print entirely.
No one has been saying the transition would be quick, orderly and bump-free. Now, though, it begins to looks as if consuming news online, even for the reader loyal to a given site, is quite different from sitting down with a print edition. Advertising is even more different, driven by what the reader is looking for rather than a predictable part of the predictable environment of paging through a daily news report.
TimesSelect demonstrates again that getting people to pay for general news content is still not a viable business model. That is not safe to say for Web content generally.
What Will People Pay to See?Even as this is being written, Poynter is drawing paid participants in the latest of its fledgling webinar series, started just months ago.
Our sister publication group
Congressional Quarterly (an affiliate of Poynter’s
St. Petersburg Times) successfully put the premium electronic news alert part of its business online years ago. It costs plenty, and lobbyists and others will pay for essential professional information.
(The
Wall Street Journal has attracted lots of attention as it considers whether to take its big online subscription base free. That may amount to deciding whether the service is more like professional business information that customers can expense or more like a general interest news site that can boost traffic and ad revenues by being accessible for free.
WSJ Online is a hybrid of the two).
Also, if direct paid news does not work as a business, that still leaves open the possibility of licensing fees or other partnerships with aggregators big and small. The Associated Press, which has almost no direct advertising revenue, is not about to fold on the licensing model.
Returning to the
Times itself, this week’s decision creates two business risks, one obvious and one less so. First, with all online eggs in the advertising basket, the
Times must keep that figure, now just over 10 percent of total newspaper division advertising revenue, growing robustly.
Current performance is encouraging. The Times Co.’s Internet ad revenues through the first two quarters grew by about 22 percent compared with the same period in 2006. That is slightly higher than the industry average (about 20.5 percent) and similar to overall Internet advertising growth (variously estimated at 20 to 28 percent so far, this year). Since NYTimes.com is a mature site, the growth comes on an already big base.
Second, this week’s online strategy shift again raises the question of why someone would pay $700-plus a year (the cost of a seven-day print subscription outside New York) for something you can mostly get for free. Arguably, Maureen Dowd or Thomas Friedman on a good day may be worth $1.25 themselves. Getting the whole op ed stable for $49.95 a year was the initial value proposition for the premium service.
How many people are willing to lay out meaningful money for the convenience, design, navigability and familiarity of print? Right now there are about 1.1 million of us. By giving the whole paper away free online, the
New York Times just made a big bet that the remaining cadre of print edition enthusiasts has staying power.
Great article, Rick. Thanks for hitting some important points. You...
