Loopholes in New York Times profit-model

    Newspapers should think twice before making readers pay for news online.

    In 2007, The New York Times canceled its previous online subscription model because they believed “offering unfettered access to New York Times reporting and analysis best serves the interest of our readers, our brand, and the long-term vitality of our journalism.”

    After two years of market research, the fetters have reemerged.

    The New York Times announced Wednesday that it will begin charging NYTimes.com users on a metered billing system starting January 2011. Readers will have free access to an undetermined number of articles each month before hitting a pay wall. International and domestic readers will pay the same price and subscribers to the print newspaper will not be charged. The price is yet to be determined.

    However, they announced on their website that readers “will still be able to read individual articles through search sites like Google, Yahoo and Bing without charge.”

    Certainly a fair share of die-hard New York Times fans consider it to be the gold standard for news and believe the content is worth paying for. However, those readers likely already subscribe to the print edition and are therefore exempt from paying for online content.

    In December 2009, NYTimes.com had nearly 15.5 million unique visitors, according to Compete.com. These readers should expect a significant drop in traffic, as many will simply find other sources of news.

    There is no dearth of media content online and the New York Times is not the beacon of enlightenment for the bourgeoise. Readers are inundated with far more news content than they could ever hope to consume. Once reaching their monthly article quota at NYTimes.com, they can simply avoid paying by going to other reputable news sources, like the Washington Post, for free stories.

    Unless the New York Times can offer something readers cannot find anywhere else on the web, there is no real incentive to pay for access. Exclusivity is nearly impossible to achieve. Even if NYTimes.com breaks a big story, in mere minutes, other major news sources will have similar content available.

    For New York Times followers determined not to pay for access, all it takes is a little extra time searching on Google to access articles for free. For anyone with a few minutes to spare, this could be an opportunity to save hundreds of dollars by skipping the subscription. It may be tedious, but beats having to pay a monthly fee.

    It will be another year before the new pay system is implemented which gives other digital news outlets ample time to devise competing strategies.

    We may find that a number of readers will be roped in by the new pay scheme, but it does not solve the real revenue problem.

    Newspapers struggle online because advertising revenue is plummeting. According to the Pew Research Center’s 2009 Report on American Journalism, display advertising, the primary ad-revenue source for news, is declining. Although overall online ad spending is growing, it largely benefits Google and other search providers.

    Advertisers that flock online are a completely different crowd from those that advertise in newspapers. It is easy to reach a very specific demographic or market niche online. For example, an advertiser targeting teen girls can put up an ad tailored for young women on Alloy.com. There is no narrow market for news – for the most part, it concerns the majority, therefore everyone reads it. Why would any advertiser waste money fishing for customers in general news?

    If the New York Times marketing committee believes it has found a sustainable business model for new media, it is sadly mistaken. It would be better off soliciting donations from devotees instead of choking them to cough up cash.

    Successful future business models for journalism have yet to be invented. Consumers will never be yoked into paying for content online again. There is still simply too much high quality free content in cyberspace. We have Google News now.


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