N.Y. Times to start charging for online content
UPDATED at 6 p.m. with quote from The Post's Weymouth:
The New York Times Co. said this morning that, beginning next year, it would start charging for online content, a move it had been hinting at for some months.
Make no mistake: This is not a media story. This is a story about the economy.
The Times, like other newspaper companies, has been hurt by long-term declines in advertising revenue and circulation, as readers turn elsewhere for their news and information. But the Times has struggled especially badly in recent years for a couple reasons:
a) It is not a diversified company, meaning it does not own businesses other than the Times that generate substantial revenue.
b) It built a brand-new skyscraper headquarters in Manhattan at the height of the boom. Now, it has been been forced to sell large chunks of that building to pay off debt and to rent back the space from the new owners. It has also been forced to sell off other properties, such as its TV stations, to pay down debt.
Because of these problems, the Times was forced to turn to Mexican billionaire Carlos Slim for a $250 million loan last year at near-loan-shark rates: 14 percent. (As a friend said at the time, "What? The Times couldn't get a Capital One card?")
So the Times has been forced to follow despised rival Rupert Murdoch's lead and start charging for online journalism. Murdoch said last May that he would start charging for his company's journalism. Murdoch's first community paper put up its pay wall earlier this month.
Details are sparse so far, but the Times said it will use what is called a "metered" system. That means you can read a certain number of articles online for free per month, and after that number has been reached, you'll be charged a flat fee that is yet to be determined.
The system is similar to the one used by the Financial Times. How's that one doing? In the most recent financial report issued by Pearson, the FT's parent company, paying online subscribers to the FT rose by 18 percent from July 2008 to July 2009. Overall publishing revenues were down 13 percent for that time period, driven downward by the drop in ad revenue and a 6 percent decline in the FT's print circulation.
When the FT put its metered system in place in 2007, it allowed readers to consume up to 30 articles per month for free before having to pay. That number has since been reduced to 10 per month.
In a trading statement released on Jan. 19, Pearson said that its "subscription-based revenues remained resilient."
The Times tried this pay wall idea once before -- a different kind of pay wall, to be fair -- and it flopped. From 2005 to 2007, the Times put its star columnists behind a pay wall, called Times Select, assuming that readers would pay for the insights of Maureen Dowd and Paul Krugman. They didn't. All the pay wall did was remove these big guns of opinion from the national debate.
You're probably going to see more newspapers start charging for online content, though not anytime soon at The Post. I asked Post publisher Katharine Weymouth about The Post's plans for charging for online content and she wrote via e-mail:
"There are a number of pay models being tested by content providers of all types and we will be very interested to see how consumers respond. At this time, we have no plans to charge consumers for access to our stories on the Web."
Key phrases in that quote: "at this time" and "our stories on the Web." The latter means that you'll still be able to read stories that ran in The Post newspaper online for the foreseeable future, but the paper may dream up other pieces of content that it may charge for.
The best statement I ever heard on this came from the Canadian rock band Barenaked Ladies. It concerned online music piracy but I think it applies just fine to online journalism: "When the Gap went online, T-shirts didn't become free."
-- Frank Ahrens
Follow me on Twitter at @theticker
January 20, 2010; 6:00 PM ET
Categories: The Ticker | Tags: Barenaked Ladies, Finanical Times, Katharine Weymouth, New York Times, NewsCorp, Pearson, Rupert Murdoch, The Washington Post
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