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The Online Subscription Dilemma

Jun 15th, 2011 by Max Tokman

The New York Times is known as “The Old Gray Lady” in the industry for its adherence to traditional, proper journalism in both form and substance. These principles have earned the paper more Pulitzer Prizes than any other news organization and made it the paper of record for generations. But generations have come and gone, and though the paper has seen the world change so much through two World Wars and a man walking on the moon, the only thing it couldn’t see changing was it’s role in an increasingly technological world.

It’s humbling to think that the NYT was reporting before the nation was linked by Transcontinental Railroads, but today it isn’t rails and spikes that connect our nation’s people, it’s fiber-optic cable and wireless signals. Some said the newspaper industry would perish with the advent of radio, some said it would be made obsolete with television broadcasts, but neither were true. No hour-long broadcast could cover the news with the same breadth and focus as the newspaper, nor draw as many sets of eyes. Today, the Internet has revolutionized the way the current generation gets its news, combining always-on, 24-hour presence—a wide enough reach to report on every worldwide event no matter how trivial—and a cost-of-entry that in some cases is absolutely nothing.

The NYT began publishing their stories online to an audience grateful to be able to read their favorite news source in their new primary medium. While it was successful in helping The Old Gray Lady bridge the gap into the digital age, it did nothing to fix the paper’s failing revenue streams. That’s why, beginning on March 28th, The New York Times instituted a pseudo-paywall to limit access to their free online content and create digital subscription plans that would give non-subscribers access to the Times online. So how does it work? This question is surprisingly complicated since the NYT is not using a “paywall” in the strictest sense of the word. First off, you can access 20 articles a month for free from NYTimes.com. You can also access 5 articles from Google a day. On top of that, articles shared on social media sites are unlimited.

In addition to the paywall, The New York Times also announced their new digital subscription plans. Yes, that’s plans, plural. As if changing their entire distribution strategy wasn’t confusing enough, there are three different digital subscription plans. For simplicity’s sake, we’ll just chart them out for you:

chart

Did we mention that none of this applies to New York Times print subscribers? Those who still get (or sign up to get) any home delivery, no matter if it’s every day, just the Sunday paper or anything in between, get unlimited digital access to NYTimes.com as well as the smartphone AND the tablet app. The least expensive option would run you $12.50/month for 3 months, then $25/month afterwards. That’s cheaper than the all-access plan, yet still offers things that digital descriptions don’t, like crossword puzzles.

This has led many to accuse the NYT of petty protectionism, that they are not so much offering a new way to enjoy their content as they are creating an elaborate system to get you to subscribe in print. Not everyone agrees, and most would concede the Times puts out an amazing product and ideally deserves to be compensated for their service, but detractors say it’s clear that they don’t really know what they’re trying to accomplish. The lack of clarity on what their overall goals are is something to be expected from this company that attempts to conquer the middle ground with its “not-a-paywall” paywall. This article from Yahoo shows how, as many expected, traffic to their site has declined since its implementation despite them making so many efforts, counter-intuitive to what a paywall should actually do, to remain a leading source of news online.

Some people believe the New York Times could learn a lot from the music industry. Or rather, maybe it could learn from the lessons that the music industry is still trying to master. DRM and paywalls, they argue, are technologies that impede the flow of information and ultimately and invariably wind up being subverted or made moot. In the field of music, many small Indie bands have found success not by fighting illegal downloads but by adding additional content to legitimate purchases. The idea is that this identifies purchases instead of challenging the ego of hackers everywhere. Another major lesson the RIAA had to learn was that people were simply not willing to pay $20 for a CD anymore, so by moving to MP3 downloads they were able to match the constantly changing demands of their customers.

Now compare this all to The New York Times. By offering restricted (at least in principle) access in limited formats, they have put themselves at odds with their increasingly tech-savvy customer base. And unlike the RIAA, The New York Times is not the only game in town. What many say they should be doing is finding new sources of revenue, premium services like expert discussions on world events, more elaborate commentary and VIP-only events. Services like Flickr and LinkedIn have proven the viability of the ‘freemium’ marketing plan which add additional features while not alienating casual users. If the New York Times wants to retain the position of the go-to source for free press, it cannot afford to not remain free.

This same lesson could be applied to any media company. The way people are using media is changing, and simply taking away features that were at one time free may alienate your clients. Like many influential bloggers who have rallied against the changing pay structure of the Times, taking away services can lead to a serious backlash, but adding additional features would theoretically only increase your reputation. It’s always important to understand that no matter how secure you believe your brand to be, there will always people nipping at your heels.  Taking away content can only close the distance between you and your competitors.  

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