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The Biggest Flaw in NYT Pay Plan: It’s Backward-Looking

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I didn’t get a chance to write about the launch of the New York Times (s nyt) subscription plan last week for a number of reasons (okay, I was on a beach) but I’ve since read most of what others have written about it, and the general consensus seems to be that it is a) confusing, and b) a sign of obvious desperation by the NYT. But while both of these things are arguably true, my big problem with the newspaper’s money grab is that it is fundamentally backward-looking. More than anything else, it feels like a defensive move to buy some time while the paper figures out what it wants to be when it grows up.

There’s no question that the details of the plan (which is being rolled out as a beta test in Canada first) are somewhat bewildering, as Felix Salmon of Reuters has noted: occasional readers get to see 20 “items” for free in a month — with the definition of an “item” subject to the restrictions described in the newspaper’s FAQ on the topic — and then they have to sign up for a plan. Paying $15 a month gets you access to the website and the iPhone app, but not the iPad app. For $20 a month you get both the NYT website and the iPad app, but you don’t get a subscription through the iPhone app. If you want access across all platforms, you have to pay $35 a month.

Once you get past these nuances, however, it becomes fairly obvious that the pay plan has little or nothing to do with promoting the iPad app or the iPhone app, or even the newspaper’s website. Instead, it seems pretty clearly designed to protect the subscription numbers for the printed version of the Times: if you subscribe to virtually any version of the paper, including the Sunday-only option, everything digital comes along with it for nothing. In other words, you can pay as little as $30 a month and get the entire contents of the newspaper in whatever form you want.

In that sense, the Times pay plan seems to be motivated by the same impulse as other paywalls at newspapers such as the Times and the Sunday Times in Britain — where News Corp. erected subscription plans last year — and at New York’s Newsday, which launched one in 2009. As I pointed out in a post at the time Rupert Murdoch was planning to launch paywalls at his British papers, the main point of these walls was to keep people in, not keep people out. Since print continues to deliver the majority of revenue for newspapers such as the Times and the NYT, it’s crucial to keep readers from cancelling their print subscriptions and simply moving to read everything for free online.

Is this a compelling financial rationale for a pay wall or subscription plan? Perhaps. There’s no question that, as the New York Times admitted when it announced the new plan, newspapers need to find new sources of revenue to replace declining advertising income. But I’m skeptical that the pay plan is going to produce the $100 million or so in new revenue that some seem to think it will.

Even more than that, however, the Times’ subscription model seems fundamentally reactionary, and displays a disappointing lack of imagination. The newspaper seems to be saying: “What we do is valuable, and you have been getting it for free, so it’s time to pay up.” Some readers may accept that rationale, and sign up — but others are going to go elsewhere, or reduce their NYT consumption to links that arrive from blogs, Twitter and Facebook, which the newspaper has (wisely) decided will be exempt from the subscription wall. And so the paper will continue to use its new digital assets primarily to subsidize its declining print business.

The success of aggregators like The Huffington Post — which NYT executive editor Bill Keller recently ranted about — is only the most recent sign that the way many people consume their news has changed forever. It is no longer about picking a specific outlet like the Times, and then relying solely on that for news and opinion about the world. Traditional media like the NYT have lost the control they historically had over distribution and consumption, and attempts to reimpose that scarcity are futile.

The exemption for Twitter and other social media is a sign that the Times understands this on some level at least, but why not go further? Why not offer people a subscription to special Twitter direct messages or Facebook Q&A sessions with writer Nick Kristof as he reports on the uprisings in the Middle East? What about offering real-world events that involve some of its most prominent voices, where people can meet them and network with each other? The music industry seems to be waking up to the fact that individual songs are a loss leader that drives demand for other services, but the New York Times is still trying to charge people monthly fees for undifferentiated news content.

Will the subscription plan bring in some money? No doubt. But putting meters on its existing content is not going to save the Times. In order to really take advantage of the revolution that is underway in the content business, it needs to start thinking about what it does in a whole new way, and there are few signs of that happening any time soon.

Post and thumbnail photos courtesy of Flickr users Giuseppe Bognanni and jphilipg

16 Responses to “The Biggest Flaw in NYT Pay Plan: It’s Backward-Looking”

  1. N. Paper

    Basically they are saying we are going to give up and ride out our paper subscribers until they die off. And then fade away into obscurity.

    My assumption is the paper subscribers are older and aren’t being replaced with new younger subscribers at the same rate in which the older ones die off.

    It is ridiculous because I think many of the older subscriber will continue to get the paper no matter what. It is what they are used to. Not everyone mind you, but quite a few.

    Also ridiculous because they could be cementing their future with the younger crowd. High pricepoints don’t do that. You can always raise the price in the future. For now get them used to paying something however small.

    And be transparent with your cost structure. I would publish my cost structure right on the front of the webpage somewhere.

    Also why not let subscribers access and pay only for the parts of the newspaper they want. If they have absolutely no interest in sports then they don’t pay for sports. NO interest in editorials? They don’t pay for them. No interest in theatre? Don’t have to pay.

    Just want local news? Ditto.

    Digital distribution allows this. And again my theory is charge a bit to get consumers used to paying and put your cost structure on the front of the page somewhere.

    Last improve the webpage. IT’s a mess. There are so many stories and links that it is overwhelming. And there is little differentiation between the NYT site and other sites. I would think a less is more strategy would fare better.

    Especially if the less is unique content. YOu can read headlines anywhere.

    • Many of you miss the point. You won’t be able to get the news elsewhere for free, because the NYT will shut down the aggregators.

      OF COURSE Huff Post can make it work, they get stuff for free. If I could take stereos out of the store for free, then sell them even for $10, I’d look smart and rich. The pay model will work fine when more and more reputable papers move to it, along with professional reporters. Then Yahoo (which does a good job with original sports content), HuffPo, Google News, etc., will be dried up wells and folks will get what they value — independent news — at a fair price.

  2. The Paywall is an effort to give the ‘appearance’ of value to subscribers of the NY Times hard copy. As it stands, it is cheaper for their paper’s subscriber to take their paper and toss it into their recycling bin, only in order to access the paper on their portable device of choice than to subscribe only to the Paywall. Their Paywall is meant to keep / get subscribers to the paper edition, which is where they need the eyeballs to justify their its existence and for their bottom line.
    Sure, there are work-arounds for savvy, determined readers of the online NY Times – but the NY Times likely see those additional steps as not attractive to their regular reader. These folks just want to open an app and read the paper – and again, its easier to do so if you’ve already got the paper subscription.

  3. Nanker Phelge

    Comrade, many companies charge for things in capitalist system. Calling this a money grab makes it obvious you are not familiar with capitalist thinking. Report back to Moscow immediately.

  4. Another interesting point is that apparently no one at The NY Times has thought about business customers. I am a librarian at a law firm. When I called to inquire about enterprise licensing I was informed that nothing is offered except the individual subscription and no decision has been made for any other type of subscription.
    Most of the 100 plus electronic subscriptions that we maintain have a scale for number of users such as 1-5,6-10 and up. You reach some economy of scale and many have firm wide access with IP authentication so we, the librarians do not have to manage over 700 individual accounts with individual user names and passwords.
    How can they have overlooked the corporate customer?

  5. Obviously the times needs to find a way to increase revenues. And it’s bad for everyone if they fail: the New York Times has been instrumental in breaking some of the biggest stories about corruption in our own government, just to name one example. So we should all be cheering for them to find a way out of the terrible spot they’re in, because the alternatives (including HuffPo) aren’t showing signs of filling their shoes any time soon.

    So across the web there’s a lot of hate for this plan, which is easy, and maybe even intellectually lazy – because I’ve not seen any of the bloggers who has ranted against this plan so far provide and defend their own alternative plan. So, let’s have at it – what should the Times be doing today INSTEAD of this?

      • Good points here but fixing “Flaws in how they develop online” isn’t going to generate significant revenue even if adopted wholesale.

        The only thing in here where I strongly agree on revenue generation is the creation of satellite brands. For example a NYT spinoff politics site with some unique content and all the politics-related content cloned from NYT would be an obvious net revenue win, even considering that it will take a few views away from the main NYT site.

        On the other hand “Custom designing features and services that will help companies market their products” sounds like dangerous territory for an enterprise based on journalism. I have a hard time seeing how you draw a bright line to prevent this from devolving onto a full on sell-out.

    • Jeff,

      Well, I’ve run some very profitable and highly respected news businesses online, so all I can do is speak from my own experience.

      As for designing services and features, there’s no problem as long as there’s a clear demarcation between journalism and promotion (i.e. a mobile phone sponsorship for citizen journalism).

      – Greg

  6. Or if I let the Web do its job, they will filter out what is worth my time, links …. Which will then via Google/FB be free. In other words they want me to pay for the stuff nobody is interested in, since it will not show up anywhere else via mentioning.
    Do I miss something?

      • But free or not, what’s the point? Why should I have to worry, I click on a link – will I see it or get a subscription appeal? The NYT is toxic. Any information that comes from them is not worth the trouble. I’ve watched a page load halt for a good long while for meter.nyt or whatever, for stories, editorial and NYT blogs. It isn’t worth it, they are off my radar as links to follow. I suggest everybody just ignore them as if they never have existed. Problem solved.

  7. So if they sell ad space based in the print edition based on the volume of subscriptions, yet the subscribers are buying the print subscriptions to get the online access (which is not riddled with the same volume of as ads as the print edition) – how can advertisers in the print version be guaranteed eyeballs?

    The NYT needs to be umbrella, the online and print editions needed to be treated as individual models with unique strategies.

  8. Mathew,

    I think you’re right, but I think it can be more clearly stated as they are confusing editorial value with consumer value (Newsweek made the same mistake).

    They believe the consumers who appreciate them most will be more valuable to advertisers (And even quoted a Starcom exec, whose parent company is investing lots of money to aggregate sites so that it doesn’t really matter where they come from).

    Another strange non-sequitur is that they are allowing people to click on social media and search engines, but making it harder to surf their site to find articles to link to. In effect, they are just “playing the numbers” and not paying attention to the quality of their audience (i.e. a reader who links to them is worth more than a reader who clicks).

    Finally, they completely misunderstand what “quality” does for a news product. Great content is actually loss leader. It breeds loyalty and makes you the first choice for the regular articles. They are actually encouraging readers to cherry pick their best stuff and leave – not very smart.

    There’s a good general rule that I always follow unless I have a very good reason to think it won’t apply: Marketers will pay more for consumer than consumers will pay for content.

    Once The NY Times accepts that they’ll be much better off.

    – Greg