Back in April, I was very skeptical that The New York Times would achieve its leaked goal of getting 300,000 paying digital subscribers, and I put my money where my mouth was, entering into a bet with John Gapper. John wouldn’t bet me that the NYT would get to 300,000 within a year, so we pushed it out to two years instead. But he needn’t have worried, as Seth Mnookin explains:
It will take years for the ultimate wisdom of the Times’ strategy to be apparent, but the company’s second-quarter-earnings report proves that its digital-subscription plan has thus far been an enormous success. The internal projections have been closely held, but several people have confirmed that the goal was to amass 300,000 online subscribers within a year of launch. On Thursday, the company announced that after just four months, 224,000 users were paying for access to the paper’s website. Combined with the 57,000 Kindle and Nook readers who were paying for subscriptions and the roughly 100,000 users whose digital access was sponsored by Ford’s Lincoln division, that meant the paper had monetized close to 400,000 online users. (Another 756,000 print subscribers have registered their accounts on the Times’ website.)
There seems little doubt that, barring something enormous and unexpected, I’m going to lose my bet; the only question is by how much. Total digital subscription revenues are still going to be a drop in the bucket—if the NYT gets 500,000 digital subscribers at say $200 a year each, that’s $100 million a year, which is a lot of money in absolute terms but still just a fraction of the more than $2 billion that The New York Times Company sees in total annual revenues. Digital advertising revenues alone are running at about $350 million a year. The subscription revenue is nice, but it’s not in and of itself going to allow the Sulzbergers to start paying themselves a dividend again.
Those paying digital subscribers, however, are much more valuable than their subscription streams alone would suggest. They’re hugely loyal, they read loads of stories, they’re well-heeled, and advertisers will pay a premium to reach them. Judging by the second-quarter results, which is admittedly early days, it seems as though total digital ad revenues are going up, not down, as subscriptions get introduced: the holy grail of paywalls.
Mnookin concludes:
As a profession, journalism of the kind the Times practices can be dangerous. And as a business, in a metaphorical sense, more so. You’re depending for your living on the seriousness and high purpose of a substantial segment of the American public. In that sense, the Sulzbergers have always been involved in a fool’s game. The current Sulzberger’s bets have at times seemed the most outlandish, as if he’s willfully refused to read the writing on the wall. But for the Sulzbergers, whatever their faults, even when the paper was making money, it has always been a calling rather than a business. Insisting that people would pay for their content when a consensus of media savants said that they would hemorrhage readership was the work of an eccentric family. Which the Sulzbergers are and always have been. And for now, cross your fingers, it seems to be working.
My fingers are crossed: I was very much a skeptic with regard to the paywall experiment, but I’m extremely happy that it’s working, I’m a big fan of the NYT, and I sincerely hope it has found a predictable and dependable new revenue stream in the volatile and treacherous media business.
I’m particularly glad that the NYT has proven that a very porous paywall can work—one in which just about anybody online can read just about any NYT article for free very easily. The media business has never been about denying access to people who want to read your publication, but the paywalls at News Corp., as well as the one at the FT, are based around that model. The NYT, by contrast, has proven that people will pay even if the paywall is extremely porous.
Felix Salmon, I would be interested in your suggestions for improvements to The New York Times. I usually buy the Sunday paper, and I intend to subscribe to the digital version. (I almost never buy the FT, even if I almost always do pick up the weekend WSJ.)
If we were to compare British, American, and Australian papers, we would note that The Guardian and Telegraph on Murdoch hacking have put together excellent live news blogs--despite some powerful coverage by The NYT, the right place to start every day is with these two UK live blogs. What should NYT do in this area?
What I like at The Australian is the formal Higher Education section. Unlike The NYT's Education Life, this is not an advertising supplement. (NYT chatter about the GMAT is not serious education reporting.) How do you account for The NYT's strange coverage of the Marc Hauser story? How would you set up a powerful Higher Education section for the Sunday paper and online?
The dull typeface of "The New York Times" sends the wrong message. It seems to say: "expect pedestrian design." Murdoch's Sunday Times and TLS are exceptionally good, by contrast.
#1 Posted by Clayton Burns, CJR on Tue 26 Jul 2011 at 12:01 PM
But I thought news wanted to be free on the Internet? Quick, somebody do a Google search and out all the people who made that claim. Reality has proven them wrong.
#2 Posted by keith roberts, CJR on Wed 27 Jul 2011 at 04:22 PM
Look at the URL of an over-the-limit Times article. They all end with an equals sign followed by a string of caps and numbers. Erase the equals sign and everything after it. Hit enter. You'll get the article unblocked.
#3 Posted by Tom Jones, CJR on Thu 28 Jul 2011 at 09:24 AM
Tom Jones: It appears that you are right. However, that does not change my opinion that the NYT digital subscription is a good deal.
I wonder how The NYT could have failed to anticipate this problem?
In America, the backwardness with information cycles and IT is astonishing. By convention, students simply do not learn how to read. Columbia's journalism school should introduce a close reading cycle for all students starting in September, composed of every weekend print WSJ, Sunday New York Times, and Murdoch Sunday Times for the academic terms. There should also be a daily 20 website international media reading cycle.
The goal would be to notice if The Wall Street Journal were targeting enemies instead of reporting the news objectively. A careful reading of all of this Wednesday's WSJ would reveal curious coverage such as "Who Elected the Rating Agencies?" right after News Corp. problems of this very type.
Would you ever see a student spontaneously read the papers meticulously and explain or deny the pattern? Do we know whether Harvard and Columbia students can read? Do we care?
#4 Posted by Clayton Burns, CJR on Thu 28 Jul 2011 at 12:48 PM
"224,000 users were paying for access to the paper’s website."
For what length of time? - What's the churn?
"Combined with the 57,000 Kindle and Nook readers who were paying for subscriptions"
See above. And weren't there short-term Kindle/Nook promotions? See below.
"and the roughly 100,000 users whose digital access was sponsored by Ford’s Lincoln division"
Hello, churn? What happens once somebody else stops paying the previously-heavily-discounted freight?
"that meant the paper had monetized close to 400,000 online users."
Only if too-soon-to-tell book-cookery is swallowed whole.
I know the exsanguinated oligopolists of the dying liberal MSM get a death-throe woody at the thought that their good old monopoly of the societal microphone might be returning, but this alleged NYT "success" comes with a ton of asterisks so far.
#5 Posted by cas127, CJR on Thu 11 Aug 2011 at 02:01 AM
And you don't push the "success" story out at the comfortably fellating environs of New York Magazine if you really think the story can stand up to close scrutiny - that's the outlet you go to if you want to be "interviewed" by someone whose panties get wet at the size of your...building.
#6 Posted by cas127, CJR on Thu 11 Aug 2011 at 02:08 AM