The New York Times Co. is betting on a digital future, launching a long-awaited pay wall for its website in a bid to preserve its core subscriber base.
It's a defensive move to keep loyal readers from abandoning the Times' print product for the free online equivalent. The plan was originally announced in January, 2010, when the company said it would implement a payment plan for the website in 2011.
On Thursday, the Times said it will launch its pay wall in Canada immediately, and in the rest of the world on March 28.
All print subscribers - whether they get weeklong delivery or only weekends - will get unlimited digital access, but everyone else can view a maximum of 20 articles a month before being blocked - and asked to become digital subscribers.
There is a loophole: Search engines such as Google and social media websites like Facebook and Twitter can still post links to New York Times stories, and users who follow those links will be able to see the article, even if they've passed their limit for the month. Those links are not infinite, however: those using Google search results are limited to five articles per day before they're prompted to subscribe. (The work-around prompted one cheeky reader to establish a new Twitter account, @FreeNYT, on Thursday, pledging to post links allowing people to read for free.) Those links are important because they help protect The New York Times brand, said analyst Edward Atorino of Benchmark Co. Otherwise the paper might drop from the cultural conversation and readers might not be as inclined to search out its content.
"They want to get people to the site. … They want you to go down the road, and then come to the bridge and there's a toll," he said, adding that heavy users might not have enough patience for the work-around.
The newspaper is using Canadians as guinea pigs: In a statement Thursday it said the early Canadian launch would help it "fine-tune the customer experience prior to the global launch."
This is yet another kick at the pay-wall can for The New York Times. It tried to charge for digital access in 1996, but scrapped that plan after attracting roughly 4,000 digital subscribers. (The paper has an average daily subscription of 876,638, including 71,697 electronic subscribers, according to the most recent Audit Bureau of Circulations figures.) In 2005, it launched the TimesSelect service, asking $50 (U.S.) a year to read content by the paper's columnists on the website. TimesSelect pulled in roughly $10-million in two years. But limiting the number of people who look at the site also limits its attractiveness to advertisers. Web ad revenue fell, and that experiment ended in 2007.
Now The Times is trying again.
"We discontinued [TimesSelect]because at the time, our focus shifted to a search-driven advertising model," Times spokesperson Eileen Murphy said in an e-mail. "Now, in the app-driven world that we all live in, people have become much more accustomed to paying for high-quality information. We believe that this is exactly the kind of news and information that we produce."
Although pay walls limit the number of viewers a site can deliver to advertisers, One argument against the pay wall model for websites is that by restricting how much content people can view, the ads those websites sell become less attractive. But Web ads are not enough to sustain the business during its transition to digital, said Leo Kulp, an analyst with Citigroup in New York. The paper needs the second source of revenue that subscriptions provide, he said. "The proliferation of online ad inventory makes it really hard for any company to be an all-digital, ad-supported business," he said. "The big issue is the eventual iPad transition. What's really going to determine the success of the Times in the long term, is can they generate enough revenue on the tablet to offset the losses in print."
While the Times does not disclose its digital revenue, online advertising across the company - which also owns the Boston Globe as well as a number of smaller daily newspapers and more than 50 websites - now makes up roughly 26 per cent of its overall advertising revenues. But digital growth still does not make up for print losses: in the first nine months of 2010, print advertising fell 8.2 per cent.
The Times will still have to strike that balance between pulling in revenue from readers and hurting its ad sales. In a research note released in January looking forward to the pay wall, UBS analyst John Janedis, who has a Sell rating on the company's stock because of a weak print environment, estimated roughly 20 per cent of the paper's digital advertising revenue could be at risk. Pricing is also an issue, he wrote.
"We think there is a fine balance between pricing too high & limiting new [subscriptions]vs. too low and cannibalizing the print version, though potentially significantly increasing subscriptions."
Some other news outlets have pay walls - most prominently The Wall Street Journal, which usually charges $2.99 per week. for access to its website. The site is currently promoting a special discount for Canadian subscribers of $1.99 per week - still higher than the Times' promotional price of 99 cents for the first four weeks, and then the regular price.
But many other websites offer much of their content for free. The iconic New York-based paper has been a bellwether for the industry in the past; the question now is whether other news outlets will follow its lead and launch their own digital subscriptions.
"Our decision to begin charging for digital access will result in another source of revenue, strengthening our ability to continue to invest in the journalism and digital innovation on which our readers have come to depend," The New York Times Co. chairman and publisher of the paper Arthur Sulzberger, Jr. said in a statement. "This move will enhance The Times's position as a source of trustworthy news, information and high-quality opinion for many years to come."
JUMPING THE PAY WALL
Do you want to read New York Times articles online but don't feel like paying for them? Here's how:*
1. Browse The New York Times home page or any other section front, which you can do for free.
2. Copy the headline of a story you want to read.
3. Paste the headline into a search engine.
4. Clicking on the matching New York Times link will take you to the story, which you can read without charge.
*Also works for The Wall Street Journal and Financial Times, but not The Times of London. The other way to avoid paying for New York Times material is to limit your reading to 20 stories a month.
Note: Google is the only search engine with limits on linking - only five articles per day allowed. After that, you'll still see the search results but if you click through from Google you'll be prompted to pay.
Detail of New York Times digital subscription plan:
Free: Everything, if you're a print subscriber. Otherwise, you get 20 articles on the website per month, everything that appears (in brief) on the home page of the website or its sections, and the "Top News" section in mobile and tablet apps that are still free to download.
$15 (U.S.) for four weeks: Gives you access to the website, as well as a New York Times application for smart phones. (This plan is currently available to Canadians. All others become available March 28)
$20 for four weeks: Website access, plus the application for tablet devices such as the iPad.
$35 for four weeks: All digital and mobile platforms open - website, smart phone and tablet apps.