Flexible Or Paradoxical? Why The NY Times' Plan Is Inherently Self-Limiting

from the putting-business-lines-in-conflict dept

The New York Times has followed up on their initial coverage of the choice to go metered with a column by David Carr discussing the move. It's worth reading, and though there are a lot of points he makes that I can't really speak to, there's one section that I think highlights the flaw in the plan:
"The decision announced Wednesday morning represents a hedge, an operating model that puts maximum flexibility in the hands of the leadership of the newspaper. As the digital czar Martin Nisenholtz said over and over in a meeting about the decision on Tuesday, "the idea is to maximize revenue" with an eye toward the cyclical state of the advertising business. With Times Select, The New York Times lost eyeballs at precisely the time when sheer tonnage of readers became the defining metric in advertising. By building a metered system, the executives have installed a dial on the huge, heaving content machine of The New York Times. Access can be gradually ramped up or down depending on macro trends in the market. Given the dynamic state of the advertising business and how quickly things change on the Web, not so dumb when you think about it."
Sounds great, right? Except that where they see flexibility, I see conflict. They've saddled themselves with two opposing business models: the old one, where the audience is the product and the advertisers are the customers, and the new one, where news is the product and the audience is the customer. The "dial" is going to become a tug-of-war between an advertising team that wants more eyeballs to sell and a subscription team that wants more walled-up content to sell. It will be virtually impossible to make business decisions that are good for both sides, and by trying to have the best of both worlds they may end up with no growth for either.

One could argue that this conflict has always existed in news organizations, but it's never been as charged as it's about to become at the Times. In the past, readers were readers, and increasing circulation was always the number one goal. But a newspaper that sacrifices casual readers, challenges the loyalty of dedicated readers and reduces its value to advertisers, all in one fell swoop, and succeeds? I'll believe it when I see it.


Reader Comments (rss)

(Flattened / Threaded)

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    Robert Ring (profile), Jan 21st, 2010 @ 4:25am

    Yeah, this sounds like one of those ideas that seems fantastic when you dream it up, but then once you start trying to implement it, its flaws become immediately apparent.

    (Also, Mike, I think you need to get rid of the that quotation mark at the very end of the article. Pretty sure it's just a typo, but it's significantly confusing.)

     

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    Sneeje (profile), Jan 21st, 2010 @ 5:07am

    I'd be pissed...

    So if they "turn the dial" to lock/unlock more content, would it impact the cost of the subscription? If I were a subscriber and the Times arbitrarily decided to decrease the value of my subscription (charging me the same) based on their assessment of the marketplace, I think I would be upset. That would get old real quick--and yes, I would expect that the subscription price I paid to NOT go up when they locked more content, because I would assume the price I paid to be that which gives me maximum access to the content.

    Sounds like marketing speak to smooth over something they know is consumer unfriendly.

     

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      Marcus Carab (profile), Jan 21st, 2010 @ 6:17am

      Re: I'd be pissed...

      Felix Salmon discusses this on the Reuters blog. He's been offering some of the best coverage and analysis of the Times move, so I suggest checking it out.

      He breaks it down and explains that really there are two dials: the maximum number of free articles and the cost of subscription. His bet is that they will focus mainly on the first dial since, as you say, meddling with the second one is much more likely to annoy customers.

       

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        Dark Helmet (profile), Jan 21st, 2010 @ 6:27am

        Re: Re: I'd be pissed...

        "He breaks it down and explains that really there are two dials: the maximum number of free articles and the cost of subscription. His bet is that they will focus mainly on the first dial since, as you say, meddling with the second one is much more likely to annoy customers."

        Here's why this all strikes me as very odd. If you pay attention to advertising in general, particularly with a critical interested eye in trying to figure out what they're doing, you notice some of the same things when ads discuss products or services.

        1. They clearly define what their product is

        2. They repeat their ultra awesome super low one-time price over and over again so that it's stuck in your head

        3. They make a big deal about their brand, repeating their brand name and showing their brand image several times each spot

        So now we have the NY Times giving us a multi-tiered product, such that I don't know exactly what it is at any given time, at a price they say will fluctuate as they please, so I don't even know what I should expect to pay, and all this will reduce the recognition of their brand name.

        I'm extremely curious as to why they expect this plan to work....

         

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        Marcus Carab (profile), Jan 21st, 2010 @ 6:42am

        Re: Re: I'd be pissed...

        I realize I linked the wrong one of his two columns. Here's the one that discusses the two dials:

        http://bit.ly/7IDBoK

         

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      Danny (profile), Jan 21st, 2010 @ 1:43pm

      Re: I'd be pissed...

      I came to comments to say exactly what Sneeje said. And if we both thought of it right away, so will many of the paying subscribers.

      My subscription is worth more if it gets me into content I can't get into for free. If they keep tinkering with the dial, they keep tinkering with the value of my subscription.

       

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    Ima Fish (profile), Jan 21st, 2010 @ 5:16am

    "Access can be gradually ramped up or down depending on macro trends in the market."

    First, when he says "ramped up or down" does that mean the prices will sometimes go up or sometimes go away completely, or does it mean the prices will sometimes go up and sometimes get lower, but still exist.

    If he's talking about occasionally getting rid of the price when advertising dollars are plentiful, his assumption that readers will suddenly come back might not work out so well. Some people will start reading again, but by the time a good number of readers come back, the advertising swing would likely go the other way. Thus, the paper would not have had the time to take advantage of the upswing.

    And I highly doubt he means that they'll occasionally get rid of the price when advertising dollars are plentiful because that also means they'd have to lay off their entire subscription department. Which makes no sense.

    That means the paper will keep the price, but fluctuate it, but that won't work either. When confronted with paying even a nominal amount for online news, the vast majority of people will simply go elsewhere. The whole notion of plugging in your credit card information or paypal information and setting up yet another account is simply not worth it when there is so much free news out there.

     

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      Marcus Carab (profile), Jan 21st, 2010 @ 6:19am

      Re:

      The ramping up and down will likely focus on the number of free articles people are allowed to read, rather than the cost of subscribing. Check out the column I linked in the comment above this one.

       

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        Ima Fish (profile), Jan 21st, 2010 @ 6:52am

        Re: Re:

        Wow, that's even worse. As others have pointed out, you never know when you can link to an article because you'll never know a priori when it'll be available online in the future. So few people/bloggers/aggregators will bother to even link to the NYT because it'd be simpler to avoid it. So even when advertising is paying well, the NYT will not benefit.

        This is going to be a confused mess.

         

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      Richard (profile), Jan 21st, 2010 @ 10:39am

      Re:

      That means the paper will keep the price, but fluctuate it, but that won't work either. When confronted with paying even a nominal amount for online news, the vast majority of people will simply go elsewhere. The whole notion of plugging in your credit card information or paypal information and setting up yet another account is simply not worth it when there is so much free news out there.

      Yes the annoyance factor of paying is often more than the actual cost.

      All they are doing is setting up the electronic equivalent of the Swinford tollbridge ( http://scrapthetoll.blogspot.com/2008/12/facts.html ).

       

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    Simon, Jan 21st, 2010 @ 5:18am

    Way too complex.

    So should I link to the NY Times this week or not? Where's the dial set to today? Would I be referring folks to a whole lot of nothing? Let's face it, I'm not going to take the risk of linking to them.

    I've never read the New York Times, but is there anything they do that isn't available elsewhere? Because if they have no kind of scarcity, who's going to pay to go there?

     

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      Ima Fish (profile), Jan 21st, 2010 @ 5:31am

      Re: Way too complex.

      "is there anything they do that isn't available elsewhere"

      They have a number of columnists who can't be read elsewhere. Those guys get pissed every time the NYT locks up their stuff because then no one reads them. But since you've never read the paper/site, I guess you won't miss anything.

      Great comment about the complexity too. This plan reminds me of the Three Stooges drilling holes in their sinking boat to allow the water to drain out. Utterly complicated but in the end it only exacerbates the problem.

       

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      Chuck Norris' Enemy (deceased) (profile), Jan 21st, 2010 @ 6:22am

      Re: Way too complex.

      Yes, because confusing customers about the price of a product is the best way to get people to buy your product. I would suspect they are hoping for an app that tracks the current price of their articles and people will be intensely waiting for the perfect time to buy. /sarcasm

       

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      Marcus Carab (profile), Jan 21st, 2010 @ 6:24am

      Re: Way too complex.

      I'm willing to bet that the complexity is also going to give rise to the [NYT link] disclaimer becoming a common sight online. After all, anyone who *does* link to the NYT will want to warn people that they are using up a free view by clicking - just as they warn people when they are being linked to a PDF.

      That'll be great for business.

       

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    fogbugzd, Jan 21st, 2010 @ 6:02am

    Control, control, control

    Modern managment-think says that you have to control everything. Managing itself is the objective, not giving better products or building a large customer base. To modern executives, it seems that they don't even care if they mismanage more than they manage, as long as they are in control.

    Unfortunately this is hitting at a time when the Internet is giving people more freedom to choose, and at a time when people want more flexibility. The next generation of successful entrepreneurs will be the ones who figure out how to give people what they want.

     

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    Griff (profile), Jan 21st, 2010 @ 6:12am

    Old vs New - And where dio you actually add value

    Mike writes

    two opposing business models: the old one, where the audience is the product and the advertisers are the customers, and the new one, where news is the product and the audience is the customer

    That would make google the "old" one, right ?
    I think your "old" model may be what they used to have but they have never really honestly recognised it as such.
    The Londing Evening Standard, perhaps, has now !
    Your "new" model (where customers pay for their newspaper) is what they have been pretending to do for years.


    At the end of the day, they need to reframe the debate away from "news". News is the same wherever you get it, just a bit earlier in some places. It's basically facts. Analysis is where they add value.

    So I imagine a situation where the freely accessible page says "Car bomb in Kabul" and explains what happened today, and then there is a link to a walled Seymour Hersch piece saying "How the fall of Karzai would affect the US Economy".
    That is, the "news" is free, and used as bait for selling the "analysis", which is unique, high value, and expensive to produce. All the time selling highly targeted ads on the free AND walled pages. You cosy up to aggregators and google for the free news pages (which include the tasters for the analysis pages too) but use robots.txt to completely block access to the walled content. Then if google make money and you sell ads too, you toast each other and keep co-operating.

    I'm not saying it's always going to work. But it makes some rational sense, selling what is actually of value. And you get what is probably the bulk of the short attention span traffic through your free site with ad revenue.

    Same with other content. A national weather summary on the free pages. A zipcode targeted customised 5 day outlook on the pay site. An easy crossword on the free page, the famously difficult signature cryptic puzzle on the pay site (maybe 2 days behind, or the answers on the free site).



    Regading registration, I've found myself that a free registration wall to read content is a disincentive, but registration to be able to post a comment is more worth it. Go figure...
    I guess it's because by then I've read the article, invested some time in the process, and feel strongly about what I'm commenting on.

     

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      Marcus Carab (profile), Jan 21st, 2010 @ 6:22am

      Re: Old vs New - And where dio you actually add value

      Mike writes

      Not Mike, me :)

      That would make google the "old" one, right ?
      I think your "old" model may be what they used to have but they have never really honestly recognised it as such.
      The Londing Evening Standard, perhaps, has now !
      Your "new" model (where customers pay for their newspaper) is what they have been pretending to do for years.


      That's why I called it the old one. But I don't really think they have been pretending to have the new model - anyone involved in the economics of newspapers has always recognized that the money comes from advertising, not newsstands or subscriptions. It's actually misinformed consumers who have believed they were paying for the news, and now the newspapers are playing dumb and leveraging that misunderstanding with all their statements about how damaging this "new" "problem" of free news is.

       

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        Dark Helmet (profile), Jan 21st, 2010 @ 6:28am

        Re: Re: Old vs New - And where dio you actually add value

        "Mike writes

        Not Mike, me :)"

        WTF? I didn't realize you were on the staff....

         

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          Marcus Carab (profile), Jan 21st, 2010 @ 6:44am

          Re: Re: Re: Old vs New - And where dio you actually add value

          Staff? Nah, not staff. Mike was sick of writing about paywalls and I was urging him to cover the Carr column, so he asked me to do it. I was of course flattered-bordering-on-honoured :)

          It also reminded me how ridiculous it is that I haven't coughed up for an insider badge yet, so it's about time I do that.

           

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            Dark Helmet (profile), Jan 21st, 2010 @ 6:47am

            Re: Re: Re: Re: Old vs New - And where dio you actually add value

            If Yogurt hadn't long ago stolen my emotions with his moy-chan-dizing....well, I think I'd be a little bit jealous....

             

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              Marcus Carab (profile), Jan 21st, 2010 @ 7:01am

              Re: Re: Re: Re: Re: Old vs New - And where dio you actually add value

              This is why the DH needs to get on the Twitter!

               

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                Dark Helmet (profile), Jan 21st, 2010 @ 7:16am

                Re: Re: Re: Re: Re: Re: Old vs New - And where dio you actually add value

                "This is why the DH needs to get on the Twitter!"

                Sigh, I've procrastinated with Twitter for some time. I know it can be useful, but I went to the home page....and I just didn't like it.

                I dunno, maybe I'm an idiot....

                 

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                  Marcus Carab (profile), Jan 21st, 2010 @ 7:23am

                  Re: Re: Re: Re: Re: Re: Re: Old vs New - And where dio you actually add value

                  No, I understand. But Twitter is what you make of it. There's something fascinating about the fact that I can send messages straight to people ranging from Mike Masnick to Queen Rania of Jordan.

                  Like it or hate it, it matters. And honestly I think you'll like it, once you get the hang of it.

                  @DarkHelmet is taken though, I'm afraid.

                   

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                  Marcus Carab (profile), Jan 21st, 2010 @ 7:26am

                  Re: Re: Re: Re: Re: Re: Re: Old vs New - And where dio you actually add value

                  Actually I know exactly why you will use and enjoy Twitter DH: telling off idiots.

                  Company doing something you don't like? Publicly chastise their @name. Celebrity making indescribably stupid statements to the media? Call them out - they may actually respond. It's tremendously fun.

                   

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                Anonymous Coward, Jun 13th, 2011 @ 1:33pm

                Re: Re: Re: Re: Re: Re: Old vs New - And where dio you actually add value

                Marcus Carab = fucken lame ass

                 

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      Anonymous Coward, Jan 21st, 2010 @ 6:58am

      Re: Old vs New - And where dio you actually add value

      "That is, the "news" is free, and used as bait for selling the "analysis", which is unique, high value, and expensive to produce."

      Actually, I think that good analysis is pretty easy to come by for "free" as well. Unique, high-value analysis is extremely rare. In any field, there are several (at least) authoritative bloggers who offer very intelligent and high-value analysis of events in that field.

       

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        John Fenderson (profile), Jan 21st, 2010 @ 7:03am

        Re: Re: Old vs New - And where dio you actually add value

        Oops, this was me. I reposted my thoughts after noticing I wasn't logged in. Sorry!

         

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      John Fenderson (profile), Jan 21st, 2010 @ 7:02am

      Re: Old vs New - And where dio you actually add value

      "That is, the "news" is free, and used as bait for selling the "analysis", which is unique, high value, and expensive to produce."

      Hmmm, I don't think I agree.

      In any given field, there seems to be at least several authoritative bloggers who offer high-value, high-quality analysis of the events in that field. So analysis is "free" as well.

      As far as production costs go, straight news is much more expensive to produce than analysis. That's one of the reasons you see so much commentary from news sources. It's cheap to make.

       

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        Marcus Carab (profile), Jan 21st, 2010 @ 7:14am

        Re: Re: Old vs New - And where dio you actually add value

        Moreover, analysis just doesn't pull in the big reader numbers. You have to rely on a core group of dedicated readers who really care and are willing to pay, and if you want to sell ads against it as well, you are going to get terrible impression counts (these are articles people sit and read slowly and thoroughly, rather than skimming through 100 different ones in an hour) - and you won't be able to jack up the CPM either, because they eyeballs won't be there to justify it. You can try to charge premium CPMs on the basis of your audience demographics, but that's very very tough, and the NYT does not seem suited to such a model after its life as a general-interest daily.

        The only potential in "selling" analysis is with financial stuff, where getting the info has a direct impact on the wallets of the readers. You will only find a handful of people who "need" NYT columnists the way people need WSJ columnists.

         

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    typical surfer, Jan 21st, 2010 @ 6:36am

    no thanks

    Like many do, I look at where the link goes before clicking. I didn't click nyt links in the past and will continue to skip them in the future. I doubt they will be attracting any new viewers of their site, most likely they will lose a few.
    Some sites / commenters include warnings about the supplied link, warning pdf or warning free reg. Issuing of these kinds of warnings will probably increase. Maybe I should patent a WarningMark, it would be a w encased within a squiggly circle followed by an a or r ... Think I'll charge $1.99 for each use.

     

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    Brad Eleven, Jan 21st, 2010 @ 7:10am

    I'll just stop when it's not free

    I like the Times. I don't typically read lots of it at once, but I have spent an hour or so from time to time, surfing through it.

    At the first sign of a pay request, I'll do exactly what I used to do with Times Select: I won't pay, period. I'll almost always stop reading, but I might look for some other [free] way to view the article content.

    Poor bastards. I pity them, and as an IT professional who's been at it since the 80s, I know how it feels to work in a fading market.

     

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    Rasmus, Jan 21st, 2010 @ 7:57am

    The cost of owning and operating a printing press

    I think there is one issue everyone forgets when the news papers business models are discussed.

    Traditionally a newspaper has had two major costs, content creation and printing. The cost of investment, maintenance and operation of a high volume, high speed printing press, made for low quality grades of paper, is enormous. And its mostly a fixed cost because the marginal production cost of one more paper is close to zero, so when the paper looses some 1000 readers from the print edition the printing cost stays the same.

    And newspapers of today think that they need to retain the printing press and the print edition to keep readers, At the same time they need to invest in building datacenters for high volume webtraffic to grow their numbers of readers because thats where the growth potential is.

    Problem is the new web-based readers don't generate enough revenue to pay for both the operation of the printing press and the webservice. A 1000 new readers on the web pays for the cost of adding more capacity to the datacenter. But it doesn't pay for operating the printing press. And the reason for this is that on the web ad-prices have to compete with ad-prices set by operations who only have a data-center and don't operate a printing press.

    To make a newspaper profitable today there is really only one thing to do. You close down the print edition and send the printing press to the scrapyard.

     

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      Rasmus, Jan 21st, 2010 @ 8:12am

      Re: The cost of owning and operating a printing press

       

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      Marcus Carab (profile), Jan 21st, 2010 @ 8:15am

      Re: The cost of owning and operating a printing press

      I didn't want to be the one to say it, but yes, you're right. I don't think anyone is forgetting it as you suspect - they just know it isn't a popular conclusion, even if it's becoming an inescapable one.

      The trailblazer of success for old-media-in-the-new-environment will be the first newspaper that finds a way to significantly slash its print operations without pissing off too many dedicated readers. That is not easy, which is why old media faces such a challenge - the new startups that are unencumbered by legacy operations are in a far better position to snatch up all the advertising dollars that are going to start pouring into the online market.

       

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    Danny (profile), Jan 21st, 2010 @ 1:47pm

    Cheap stale news anyone?

    Perhaps the Times is on to something big here. Maybe they should adjust their hard copy newsstand price to maximize revenue.

    They could charge less on slow news days and more whenever a plane crashes into the Hudson.

    They could charge less at the end of the day when the news is more stale (like bakeries sell donuts at half price before closing.)

    With networked computerized paper boxes, they could even do this without a human vendor involved.

    This way, you will never know what you are going to pay for the hard copy paper until you go to pay it.

    That ought to help them sell more papers!

     

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    bugmenot (profile), Jan 21st, 2010 @ 4:40pm

    rotten fruit

    Newspapers, including the NYT, contain too much misinformation. They are losing readers because they have a bad product: bias, errors, lack of depth, fluff, poor writing. Paying for a newspaper is like buying rotting fruit. Who does that?

     

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