Is charging users for online content an act of slow-motion seppuku? The New York Times may be about to find out. But the real risk is that it is neither a runaway success nor an abject failure, but rather a slow, steady decline.

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UPDATED: Can you implement a paywall at a newspaper web site in 2010, or is charging users for content an act of slow-motion seppuku? What if it isn’t a paywall exactly (such a crude term, after all) but a series of turnstiles, or possibly a metered approach, like a hydroelectric utility? These are the kinds of existential questions that gallop through the fevered brain of many a newspaper executive these days, as ad revenues continue to slump and shareholders grow anxious.

Now the New York Times is (finally) poised to pull the trigger and commit to such a venture, if a recent report by New York magazine is to be believed. The magazine says that the Grey Lady is going to implement some kind of payment system soon — perhaps as soon as next month — and that the debate over doing so has split the paper into two camps (or perhaps only revealed a web-paper split that already existed). Mexican billionaire Carlos Slim Helu, the paper’s largest individual shareholder, is also apparently a fan of charging for content online. Update: The Times has confirmed that it is launching a metered-access system. Reuters has the news and the WSJ has the memo.

It’s hardly a secret that the NYT has been considering a paywall, or at least some kind of content-payment mechanism (you can almost feel executives at the paper wincing when someone uses the “p” word) for some time now. The paper was reported to be working on a new pay model as long as a year ago, and NYT Co. chairman Arthur Sulzberger Jr. confirmed as much in March 2009.

In May 2009, now-former NYT writer Jennifer Lee talked about a potential tiered-membership model on Twitter, after the idea was raised during an internal staff meeting. The paper’s president and its executive vice-president of digital have both talked about the debate over charging readers, and at one point last year the president said a decision would be made by June. In November, however, executive editor Bill Keller said that the decision had proven to be more difficult than expected (hardly surprising), but that an announcement was likely “within weeks.”

According to the NY magazine report — which it says is based on a source close to Sulzberger, as well as others within the NYT newsroom — the paper has apparently decided to go with a “metered” model similar to that implemented by the Financial Times. Under the FT system, which was launched in 2007, readers can see 10 pages for free per month, and then they are met with a subscription wall. Reuters media writer Felix Salmon (who wrote about his issues with the FT metered model here) has recommended instead a more subtle version, in which a reader’s actual consumption is measured, and then at some point they are billed for it — possibly through an iTunes account, if the NYT becomes part of Apple’s much-anticipated iTablet ecosystem.

So what will become of the NYT if and when it actually launches a pay system? The response from many observers seems to be binary — either it will succeed or it will fail. But the real danger is that it will be somewhere in between: neither a runaway success, nor an abject failure, but a slow and steady decline (Jeff Jarvis thinks it will likely be the latter).

The paper’s previous paywall experiment, Times Select, which was dismantled in 2007, arguably fell into that chasm too; plenty of people paid the monthly subscription, but not enough to make a real difference to the bottom line (for what it’s worth, the newspaper I used to work for had much the same experience with its own version of Times Select), and eventually the number of people paying leveled off. In the end, the paper decided (as my former employer did) that it just wasn’t worth it.

Will a metered model produce a different outcome? Perhaps. On the other hand, someone once said that insanity consists of “doing the same thing over and over but expecting different results.”

Image courtesy of Flickr user Transguyjay.

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  1. Hey Mathew

    Welcome aboard and congrats on your debut post. I think it is going to fun times to read your views on this whole concept.

    In my opinion, I think the big media is afraid to do what innovator’s do: cannibalize its business and think differently about itself. The whole notion of what is “media” is changing. You and I have talked about this in the past. From where I sit, pay wall is a bandaid for now.

    1. Thanks, Om. Completely agree.

  2. I think you and Jeff have it. Some people will pay, many won’t, and the NYT won’t get a clear indication one way or the other – or rather no better an indication than it should already have – about what’s next for it.

    At the end of the day, too much of what the NYT produces is essentially fungible, and – as much as I love it – there is no one thing there I can’t live without. A pretty toxic combination.

    1. Agreed, Rob — fungibility is the key. What is unique about the Times, and does that have anything to do with frequency of access? I don’t think so.

  3. John Philip Green Monday, January 18, 2010

    Mathew, you mentioned Apple’s tablet briefly… do you think, as I do, that mobile devices could be the savior of newspapers?

    I bought my wife a Kindle (the smaller one) because she reads a lot of books and, among many other good reasons, we were running out of shelf space. But I love the screen (!) and would much rather consume the NYT every morning on that than in any other way. (I use the iPhone NYT app a lot, but the experience is totally different.) Amazon charges $14/month for the Kindle version of the NYT. Seems like a deal to me.

    Everybody wins, no? You know this industry… how do the mobile device subscription economics work?

    I am waiting to hear Apple’s plans for a tablet on 27th before putting in an order for a Kindle DX of my own.


    1. It’s funny you should mention that, John :-) I’m working on a post about mobile and the iTablet as well, and how they aren’t likely to be the saviour of media. Could they help? Sure, as Rob suggests — but I don’t think there is any magic bullet at this point, and I certainly don’t believe in any magical “iTunes of news” model.

  4. I’m with Rob in that I love the Times but I can (and do for periods) live without it. I can’t believe that this won’t result in a slow steady decline. It’s a bandaid, as Om puts it, not a cure.

  5. I like this debate because it strikes to the heart of what had been the lifeblood of media; advertising. When digital distribution is super-cheap and if circulation is the key to Ad rates, it’s a bit of a paradox… er, catch-22… something!

    I kind of liked the Turnstile idea. But, have the turnstile be Advertising. The FT tiered system is okay, but it still leaves questions for the purchaser about how and when to blow past the freebies. Maybe this month I would be motivated to view 11 articles (1 over the limit). So, in effect, I’m paying the monthly fee for 1 article in this case.

    Consumers need an easy system. Newspapers need readers. Advertisers need to know they are getting value. Within this context, the answer lies.

    Great debate. No easy answers. Cheers.

  6. They need a much better job monetizing their page-views. As an example, they should be an Amazon affiliate of Amazon and have links to purchase books directly from their book reviews.

    1. I agree, Mo. That said, however, Amazon affiliate links don’t really pay a whole lot.

  7. Jeff Sonderman Monday, January 18, 2010

    Good to see your first post up, Matt. I’ll append my point, if you don’t mind, that the details matter on this. The amount of free pageviews allowed will be important.

    Also, Steve Outing has some good recommendations of how NYT could build in a lot of nuance and options to give this a better chance.

    1. Thanks for the comment, Jeff — and for linking to your piece, which I read with interest. It’s interesting that the FT has actually dramatically scaled back the number of pageviews they allow for free. I wonder what that says about their success with that model.

      Steve’s post is also a good one, along the same lines of Felix Salmon’s piece. Thanks for the link.

  8. David Chandler Monday, January 18, 2010

    This is an interesting post, and it will be interesting to see what they actually do and whether it works. I think the 10-stories-free-then-subscribe model could work, if the subscription fee is low enough.
    One small but embarrassing error, however. You wrote:
    “Mexican billionaire Carlos “Slim” Helu, the paper’s largest individual shareholder, is also apparently a fan of charging for content online.”
    “Slim” is not a nickname, as your putting it in quote marks suggests. It’s his actual family name (in typical Spanish style, the family name is in the middle). He is generally known simply as Carlos Slim.

    1. Thanks for pointing that out about Mr. Slim’s name, David. I wasn’t aware of that. I will make sure it is changed.

  9. It’s a good question, John. I got a Kindle as a gift recently, and the first thing I did was subscribe to a magazine and a newspaper.

    I’m intrigued by the question of whether increasing the utility of content will make it more valuable to consumers. Not sure.

    But I’m waiting for the Apple Tablet too.

  10. In a sense, I want to pay for content because in paying for it I assert some control over the business. I become a revenue source and not just part of the ad fulfillment process. But the majority of people won’t apply this reasoning. They’re coming to the paper not directly but from search engines and they’ll go to the next result if the first one is behind a paywall.

    Absolute best case scenario papers like The NYT, Guardian etc pull the paywall model off. But less prominent metro dailies, which carry way more syndicated wire content than original articles, will have a harder time implementing the same model.

    In the end, I think you’ve hit the nail on the head… some die-hard fans will fork out (more in the case of the premium newspaper brands) but not enough to budge the needle in the long run.

    The sad part of the story is not the print industry being in trouble but quality journalism and writing being on the line. Sure, writers can blog and sometimes blogs have more integrity than print or online media (because they seem to serve readers over advertisers). But if those journalists can’t bring home the bacon, how can continue producing the same quality?

    1. Thanks for the comment, Jane — if I knew the answer to that, I would be a wealthy man :-)

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