The spark: The New York Times just confirmed that it will start charging for at least some of its content in January 2011.
US newspaper circulation falls 8.7% in latest 6-months.
The Wall Street Journal 2,092,523
USA Today 1,826,622
The New York Times 951,063
Los Angeles Times 616,606
The Washington Post 578,482
An old tale...
Suzy in her blog mentions that the move towards a subscription based pay-per-read method to generate revenues for newspaper companies is nothing new. New Century Newspaper was established in 1995 which was a year before Larry Page and Sergey Brin were working on their project at Stanford that became Google. NCN one of the first attempts to collaborate all news paper giants in a consortium of sorts.
According to this Business Week article from 1998, none of the nine new media companies could agree on a business model to follow and were seeking other streams of revenue; the adventure lasted three years and did very little for the online world.
It works for WSJ...
The Wall Street Journal, famously, charges about $100 a year to about 1.1 million online subscribers, for more than $100 million in revenue. That's good money, but it's a unique circumstance, driven by the Journal's high-quality business-targeted content, expense-account-paid subscriptions and nearly 15 years with a paid model. It's highly unlikely that any other paper could match numbers like that (yet).
Answers to several raised questions:
- A paywall revenue model will add to the several revenue streams which include advertising and print circulation. Readers may flock to “free” news which may decrease advertising dollars since it is mostly tied with site traffic. Most people just look elsewhere for the news they want when faced with a paywall.
- The new phase of subscriptions and paywalls from online content providers will allow smaller news and entertainment media outlets to gain on advertising dollars if they attract those who hit the “wall” on media gaints. YouTube and Blogger will not be the only source of free intellectual content.
- Subscriptions work for WSJ so it may work for NYT. The impact will be felt as the advertising revenues shrink from less site traffic but the revenues from subscriptions will balance it off if NYT plays its cards right.
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2 comments:
I think that your assessment of readers going elsewhere for their news when they hit a paywall site may be accurate; however I think that there will be a period of time where "free" quality content may not be as available as needed. This situation could force people to subscribe although this may be a small percentage.
In addition, I tend to think that the WSJ is not a great example in favor of subscription models. The reason is that the WSJ targets affluent customers and has always charged a lot for their services. That means that online users already expect (or assume) to pay to access their services.
Revenues models change, evolve and the publishing industry is trying hard to get new models with fresh money. It seems that the internet is making powerless every single drop of ink.
It´s a deadly landscape for newspaper, magazines, so the new strategy is a niche-strategy focus in those customer that are not price sensitive and who are willing to pay for quality.
How big could be this segment? How many newspaper will follow this strategy? Is there enough room for those newspapers who want to charge for suscription? How much quality we will find in free information in the years to come?
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