Friday, March 18, 2011

A Little Bit of Free

In 2009 I made a series of predictions for the year, starting with the prediction that the New York Times would start to charge for it's online access. I was a little short on my time frame, but anyone who understands even the basics of the business of publishing could see the day coming. On March 28, the Times will initiate a pay for use system where users can access 20 pages per four week period for free and then have to pay, starting at $15.00/month.

The outcry against it indicates that the Times online is indeed worth paying for. People are upset because they recognize the value of the content and recognize the cost of being cut off from it. That right there says this will succeed at some level. If the announcement had been met with a collective yawn, it would have been a terrifying signal to the Times' executive team.

To demonstrate the value of the New York Times you can engage in a very simple experiment. Try life without the New York Times online. If it is worth the price, pay for it. If it isn't worth the price, don't.

Journalists and Photojournalists should be applauding this move. It signals an effort by the New York Times to uncouple content creation from direct dependence on online advertising. Without online subscription prices or online newsstand sales, there simply is no other way of generating a predictable online revenue stream. For online pieces there has been a direct one to one expense to advertising income ratio. That means that for every dollar spent on creating and distributing content one dollar has to come in from advertising to break even.

The publishing business model has always depended on three main sources of revenue; subscriptions, newsstand sales, and advertising. This created a more balanced and diverse method of allowing the readership to pay for content. Subscribers built a steady stream of predictable revenue, newsstand sales were driven by the content of individual issues, with sales surging for more popular--or valuable--content, and advertisers paying to pair advertising with the content. Subscription and newsstand sales provide a way for content creation to be recognized as both valuable and sustainable. It is a thing worth paying for, and requiring the audience to pay for it demonstrates its value.

If advertising is the only reliable mechanism for generating revenue, then the real value of content falls through the floor. The inevitable business conclusion in an online advertising only model is that content that is more conducive to advertising gets more lubricant in the system. A truly free model could only sustain itself over time if the content shaped itself around the advertising. In that case the reader is her or himself a product delivered by the publication to the advertisers. By paying for the content, the reader becomes the client again, shifting the scales back towards a balance between serving both the readers and the advertisers.

For that, just a little bit of free sounds about right.

Update: With early reports from the Times subscription rollout in Canada coming in, it seems that there are some very large holes in the paywall. Whether they are intentional or not, this certainly is not shaping up to be a black and white pay-or-don't-access situation. There's a good piece on Nieman Journalism Lab about how four lines of code are all that are needed to disable the content blocking system. 

No comments: