New York Times paywall: Savior of journalism or confusing debacle?

The New York Times begins forcing users who read more than 20 articles a month online to buy a subscription. It seeks to break new ground in the bid to make online content profitable.

On Monday, The New York Times rolled out its newest plan to entice readers to pay for web-based stories. For an industry whose very existence could depend on finding ways to raise revenues from online content, the Times scheme is being watched closely by media consultants eager to see if this might be a model that providers of online content can emulate.

In short, the Times will let readers access 20 articles a month for free, but further reading will require a monthly subscription. The Times has unsuccessfully tried charging user fees before, and this time, too, it could confront problems as users tussle for awhile with a multitiered approach that charges different fees depending on how you access the material, experts say.

But the Times pay model, which cost $40 million to implement, might be a pivot point for the online news content industry, says Dale Carr, CEO of LeadBolt, a firm that helps online companies maximize ad revenues. He calls it one of the largest experiments in online journalism

“Many treat this as a huge gamble,” he says via e-mail. But he points out that since the Times's last effort to charge for content, seismic changes have overtaken the digital marketplace – most notably the explosion of “apps" on mobile devices such as the iPad and Kindle.

'Eureka' moment

Not only have apps helped pioneer microbilling and pay-per-use applications directly relevant to The New York Times's plan, but also they made the concept of paying for premium content more acceptable.

The proliferation of apps was the “Eureka” moment for online publishers, says Matt Shanahan, an executive at Scout Analytics, which helps digital publishers optimize revenue. “Apps woke the public up to the fact that there are other revenue streams they can create,” he says.

Whether it will work for online content the way it works for digital music or movie tickets is not clear.

Users can view as many as 20 articles per month without charge, but after that they must pony up. Scanning headlines on the homepage is free, and users can read stories that have been shared via social media – Twitter or Facebook – without impinging on their monthly allowance. However, depending on the search engine, stories that turn up from a search will count against the monthly tally.

Price by platform

The new pricing model is priced by platform. For example, the basic four-week subscription, which includes an app for a smartphone, is $15, while a four-week subscription with an iPad app is $20. If you want apps for your smartphone and tablet, you must pay both fees for a total of $35.

The model is one to watch closely, says Thomas Ksiazek, assistant professor of communication at Villanova University in Pennsylvania. It remains to be seen whether this slightly confusing quota system will lead to more subscriptions or merely more creative access routes, he says, calling the model a “leaky fence,” rather than a blunt paywall.

The most successful online pay models, such as ESPN and The Wall Street Journal, both have flat premium pricing for their content. Moreover, they both offer a specialized product that is in high demand, Mr. Ksiazek says via e-mail. The Journal is the must-read publication for high finance, and ESPN is the same for sports junkies.

While widely respected as a newspaper of record, the Times is still a general-interest newspaper, he points out. “Herein lies the biggest hurdle to the success of their pay model: Won't users just go elsewhere to get their news for free? Without offering a specialized product with a clear benefit to the consumer, it's likely that many users will seek out their news elsewhere,” Ksiazek says.

Paywalls may also hurt smaller newspapers, says Huntly Collins, an assistant professor of communication at La Salle University in Philadelphia. “My key worry is the impact of paywalls at metropolitan papers that don't have the national and international reach of papers like the Times, “ she says via e-mail. These papers “are in real jeopardy of losing their readership by charging for content."

'Nuanced' approach

Others suggest that the Times's pay model is an attempt to take various concerns into account. As a general news site, the Times needs to provide a variety of access points, says Yaron Galai, CEO of Outbrain, which helps online publishers and bloggers increase readership. He calls the smorgasbord approach “nuanced,” noting that the strategy provides a way for “New York Times junkies” to continue paying for the product while cultivating the idea for the next generation.

It’s a start, if somewhat muddled and half-hearted, says Lewis Goldberg, managing partner at KCSA Strategic Communications. Valued content should be paid for, he says and the Times has “tremendous value.” He raps the Times for the tiered pricing, saying, “Why should the digital version be less expensive than the print? The content is the same,” he says, but adds, “at least they are moving in the right direction.”

The price package needs to be simpler, agrees Richard Levick, president of Levick Strategic Communications In Washington. “Clearly they had too many people involved, and they tried to satisfy too many concerns,” he says. He suggests the Times would have been better served with a simple, clear rate, noting while this may be seen as an experiment, failure is not a good option.

“The Times is important to a free society," he says. "It is important to a marketplace of ideas that the New York Times share in that pantheon of great leadership."