the audit

The NYT Will Charge Online

That's a good thing
January 20, 2010

It’s official. The New York Times says it will stop giving away its expensive-to-produce paper online and institute a metered model a la the Financial Times Web site.

The Audit has called for this many times and is glad to see the NYT go for it. But in a move that gives insight into a big reason why newspapers can’t or at least haven’t prospered on the Net, the Times says in a memo it won’t actually start charging until early 2011 (Congrats to Gabriel Sherman, who broke this story the other day).

Ultimately, we recognize that the success of our ideas will be judged by how well we execute this effort in the months to come. That is why we are waiting until 2011 to introduce this new system. To pursue this new approach requires that we utilize the full energy and intellect of all of you. All that work begins today.

Arthur Sulzberger had something similar to say to the Times this morning:

“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 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.”

In other words, these guys have bigger problems than you thought. This is not how you run a business. The hulking mothership will take a year to reposition itself in a medium that enables (and rewards) speed and flexibility. I think the Times might be able to order and install new printing presses in less time than that.

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A lot can and will happen in a year’s time, and whatever passes by Paywall Time is probably not going to be good for The New York Times. The company went from revenue of $2.2 billion in the first three quarters of 2008 to $1.64 billion in the same period of 2009—a 27 percent plunge. Let’s just say the Times had better arrest that rate of decline this year (which it likely will as long as the economy doesn’t plunge again) or there’s not going to be much to put behind that paywall come January 2011.

That said, it’s better late than never. The Times takes in somewhere north of $100 million a year from ads on its Web site these days. Its newsroom alone costs upward of $200 million. Ads alone will not take the Times or any other paper to the other side of the print-digital divide while retaining its current scope, depth, and quality.

A metered model will allow the Times to continue to get traffic from the millions of casual readers and preserve most of its current ad revenue while getting a significant second revenue stream directly from heavy readers. As we’ve said, the press must focus on its core minority of readers, who bring in the vast majority of pageviews and revenue. Shaving off some Digg traffic or something is not going to make that big a difference to the big picture. The top quarter of readers account for 86 percent of all pageviews at newspaper sites, according to one survey.

The Times didn’t announce what it will charge, but it ought to lean higher than lower. Fifty dollars a year, what it charged for the ill-advised TimesSelect, won’t do. Make it closer to a hundred-fifty and you’re talking.

Remember it gets about a million people to pay an average $604 a year for the print newspaper and that the print paper now brings in more money from circulation than from ads—even though they can read the same thing (with video and audio!) online for free. And the Journal has about 1.1 million paying subscribers online, though I’ve roughly estimated they pay an average $60 or $70 a year.

Will charging online work? Let’s hope so, but I don’t know—newspapers are in an awful state. What we do know is that not charging won’t.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.