The New York Times Company announced today that it would start charging for unlimited content on its Web site. While details are still fuzzy, the company hopes its “metered model” will provide a second revenue stream. According to the Wall Street Journal,
Other major newspaper publishers have announced similar plans, with News Corp. Chief Executive Rupert Murdoch saying recently that his company would begin charging online for news content across its stable of media properties.
News Corp. owns The Wall Street Journal, one of the few newspapers that have been able to maintain an online subscription business. The Financial Times, owned by Pearson PLC, has also had success with a metered model for charging online, leading some observers to conclude that financial news can generate subscription fees on the Web and general interest news can’t.
Times executives have been weighing the merits of a pay model for years, but their latest efforts began in earnest early last year, as the company struggled through a first quarter in which it posted a $75 million loss. Around that time, executives analyzed more than 30 businesses that charged for at least some of their Web material, including ESPN, Weight Watchers and Consumer Reports.
They concluded that the Times made more money from advertising on its mostly free Web site than most of the outlets it studied made from readers and advertisers combined. The company doesn’t break out its online revenue in detail, but people familiar with the matter say nytimes.com brings in more than $100 million annually from Web display ads.
But is this really the right decision for the New York Times, and should other newspapers follow. According to this Forrester report, no. In fact, the report found that 80 percent of the people surveyed would not pay to access articles on newspaper Web sites. Alienating the audience is not the way to get a second revenue stream.
Instead, the companies should be focusing on investing within and making the articles worth paying for before they go and start charging. I know that takes a long process, but it HAS to be done before they can move into a different model.