Digital Future of Media

New York Times to Charge for Frequent Access to Its Web Site

Taking a step that has tempted and terrified much of the newspaper industry, The New York Times announced that it would charge some frequent readers for access to its Web site - news that drew ample reaction from media analysts and consumers, ranging from enthusiastic to withering


By RICHARD PÉREZ-PEŃA
Story from The New York Times
Published: January 20, 2010


Starting in January 2011, a visitor to NYTimes.com will be allowed to view a certain number of articles free each month; to read more, the reader must pay a flat fee for unlimited access. Subscribers to the print newspaper, even those who subscribe only to the Sunday paper, will receive full access to the site without any additional charge.

Executives of The New York Times Company said they wanted to create a system that would have little effect on the millions of occasional visitors to the site, while trying to cash in on the loyalty of more devoted readers. But fundamental features of the plan have not yet been decided, including how much the paper will charge for online subscriptions or how many articles a reader will be allowed to see without paying.

"This announcement allows us to begin the thought process that's going to answer so many of the questions that we all care about," Arthur Sulzberger Jr., the Times Company chairman and publisher of the newspaper, said in an interview. "We can't get this halfway right or three-quarters of the way right. We have to get this really, really right."

For years, publishers banked on a digital future supported entirely by advertising, dismissing online fees as little more than a formula for shrinking their audiences and ad revenue. But two years of plummeting advertising has many of them weighing anew whether they might collect more money from readers than they would lose from advertisers.

Financial analysts and writers who follow the media business had mostly qualified praise for the decision of The Times. NYTimes.com is the most popular newspaper site in the country, with more than 17 million readers a month in the United States, according to Nielsen Online; analysts say it is the leader in advertising revenue, as well, giving The Times more to lose if the move backfires.

"You can't continue to be The New York Times unless you find" a new source of revenue, said James McQuivey, media analyst at Forrester Research.

Mike Simonton, an analyst at Fitch Ratings, said, "We expect that The Times will be able to execute a strategy like this," adding that other papers will try it in the near future, but few are likely to succeed.

But the response was far from universally positive. Felix Salmon, a respected writer on media for Reuters, wrote, "Successful media companies go after audience first, and then watch revenues follow; failing ones alienate their audience in an attempt to maximize short-term revenues."

Others endorsed the idea of a pay wall generally, while criticizing the approach of The Times. Thousands of readers sent e-mail messages to The Times or posted comments on the site, with those saying they supported the move outnumbered by others who vowed not to pay. Shares of the Times Company fell 39 cents, closing at $13.31.

All visitors to NYTimes.com will have full access to the home page. In addition, readers will be able to read individual articles through search sites like Google, Yahoo and Bing without charge. After that first article, though, clicking on subsequent ones will count toward the monthly limit. Among the nation's largest newspapers, only The Wall Street Journal and Newsday charge for access to major portions of their Web sites. A few smaller ones also do, including The Financial Times, The Arkansas Democrat-Gazette and The Albuquerque Journal, and more are expected to join their ranks this year.

The Times Company has been studying the matter for almost a year, searching for common ground between pro- and anti-pay camps. Company executives said the changes would wait another year primarily because they need to build pay-system software that works seamlessly with NYTimes.com and the print subscriber database.

"There's no prize for getting it quick," said Janet L. Robinson, the company's president and chief executive. "There's more of a prize for getting it right."

Within the newsroom of The Times, where there has long been strong sentiment in favor of charging, the primary criticism was about the wait until 2011.

"I think we should have done it years ago," said David Firestone, a deputy national news editor. "As painful as it will be at the beginning, we have to get rid of the notion that high-quality news comes free."

The Times has tried and abandoned more limited online pay models. In the 1990s it charged overseas readers, and from 2005 to 2007 the newspaper's TimesSelect service charged for access to editorials and columns.

Company executives said the current decision was not a reaction to the ad recession but a long-term strategy to develop new revenue. "This is a bet, to a certain degree, on where we think the Web is going," Mr. Sulzberger said. "This is not going to be something that is going to change the financial dynamics overnight."

Most readers who go to the Times site, as with other news sites, are incidental visitors, arriving no more than once in a while through searches and links, and many of them would be unaffected by the new system. A much smaller number of committed readers account for the bulk of the site visits and page views, and the essential question is how many of them will pay.

The Times Company looked at several approaches, including a straightforward pay wall similar to The Journal's, which makes some articles available to any visitor, and others accessible only to paying readers. It also rejected the ideas of varying the price depending on how much a consumer uses the site, and a "membership" format similar to the one used in public broadcasting.

The approach the company took was "the one that after much research and study we determined has the most upside" in both subscriptions and advertising, said Martin A. Nisenholtz, senior vice president for digital operations. "We're trying to maximize revenue. We're not saying we want to put this revenue stream above that revenue stream. The goal is to maximize both revenue streams in combination."


(Published: 09.02.2010.)