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The industry standard in journalism, The New York Times, is revisiting the issue of charging for online content.
New York Times (NYSE: NYT) Chairman Authur Sulzberger, Jr., told a Stony Brook (N.Y.) University audience Thursday that the company is considering "incremental" charges for website users, while keeping most of its site free, Bloomberg News reported.
The Times has cut jobs, eliminated its dividend, and completed a $221 million sale/leaseback of a portion of its gleaming, environmentally friendly, new office tower on Eighth Avenue in Midtown Manhattan, as part of an effort to cope with declining print ad revenue. Like most metropolitan daily newspapers, the Times is losing ad dollars as advertisers shift to the Internet. The Times main website is thriving, but revenue is nowhere near the amount that would be required to maintain the paper's current news/editorial budget.
Like nearly all metro dailies, the Times opted to offer its online news and content for free about a decade ago -- a move that hastened the transfer of print readers to the web. The Times tried a higher-end pay service, for opinion/commentary content, TimesSelect, but abandoned the package in 2007 after the service posted disappointing results.
Shares of NYT, which have fallen more than 85% in four years, closed Friday up 10 cents to $4.25.
Stock Analysis: The view from here argues that the the Times may experiment with a modest monthly fee, on the belief that a portion of its online audience will pay for signature Times content, namely its international and national news coverage and opinion/commentary section. One fee level making the rounds: a charge of $3-5 per month or $30-50 per year, possibly with deeper discounts for multiyear subscriptions.
The subscription model would, obviously, have to demonstrate that it will generate more revenue than a free site, which relies almost exclusively on ad revenue, and right now that's an unresolved question in metro journalism operations. The Times has an advantage -- it breaks the content mold -- in that it frequently provides the best, most authoritative national and international news coverage, but it remains to be seen whether there is an audience large enough that's willing to pay for this value-added content to enable the subscription model to succeed. Stay tuned.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
3-15-2009 @ 8:50PM
acpawiz said...
I already pay to read the Wall Street Journal on line, and would not mind paying for other subscriptions, as well. Unless we pay for what we use, the sources will dry up and we will be left with unedited opinion and unsubstantiated "facts."
3-15-2009 @ 9:22PM
Chuck Marunde said...
Print newspapers, including the NYT still don't get it. People will NOT pay for a subscription for Internet news, nor are they interested in a "premium" subscription news service. Listen, consumers will not go there. The NYT can play with that idea all they want, but consumers are delighted to get their news free from sources like my own online newspaper, http://Sequim-News.com, which I started for a small community. Online newspapers must redesign their business model, and if they don't they will fail. Hey, NYT if you want help shoot me an email. Seriously guys, you don't have a clue. Your heads are not wrapped around the Internet today. I know, you think it is, but you are proving it is not, and you're loosing a lot of money with your stubbornness.